How to Evaluate Your 1099 Independent Contractor Healthcare Worker

Lately, I’ve been helping my clients with how to handle their independent contractor employees in their healthcare companies.

The issue comes when you need to evaluate a 1099 independent contractor doing services for you, like seeing your patients. The IRS would like to convert your independent contractor to someone on your payroll.

Without going in depth about the big differences between an independent contractor vs a bonafide worker, essentially, the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. (

That is, while you can't tell the contractor when to come, or how to do their job, you can still look at the work product they contracted to make for you and base your evaluation of them on that.

For many healthcare companies and for accreditation companies like Joint Commission, having a yearly assessment is very important.  

While it may be difficult to walk the line to keeping independent contractors truly 1099, you can still evaluate their performance and work product to ensure that your clients are receiving the high level of care they deserve. 

Whatever the case may be, the following are some examples of ways you could evaluate your 1099s:

  • Direct observation of the provision of care.
  • Audit of documentation, including clinical/case records
  • Review of incident reports.
  • Review of periodic reports (their notes) submitted by the person or organization providing services under contractual agreement.
  • Collection of data that address the efficacy of the contracted service.
  •  ...and more.

In the event that contracted services do not meet expectations, you can take steps to improve care, treatment, or services. 

In some cases, it may be best to work with the contractor to make improvements, whereas in other cases it may be best to renegotiate or terminate the contractual relationship. 

If you have to renegotiate someone's contract, or let them go, make sure that there isn't a disruption of their client's treatment. 

In case you need any guidance on how to do a yearly appraisal, Conan O'brien does a great job doing it here: 

At Khatri Medical Licensing & Law we handle employee contracts, including 1099 and W2 across all levels.