May 25, 2023
Title: Navigating Physician Employment Contracts: Key Strategies and Pitfalls to Avoid
In an era where physicians are increasingly choosing employed-model opportunities, and standardized contracts are becoming more prevalent, it might seem like negotiating contract terms is a diminishing practice. However, experts caution against this belief, emphasizing the crucial role employment contracts play in shaping a physician’s career and personal life. Here are key insights and strategies to navigate physician employment contracts and avoid potential pitfalls.
Strategies for Negotiating Employment Contracts
- Non-compete Provisions.
Challenge Onerous Terms: Contracts with overly restrictive non-compete clauses, such as preventing a physician from working within a broad radius, should be negotiated for more reasonable terms.
Specify Boundaries: Non-compete radius should be drawn from a primary location, not all facilities within a large health system.
Equitable Call Schedule: Ensure call duties are specified and, if not, state that duties will be “equally divided among all physicians.” - Call Burden and Practice Culture
Set Clear Limits: Physicians, especially in call-intensive specialties, should negotiate “not to exceed” numbers for call days per week or month.
Consider Practice Culture: Assess whether practice or bylaws allow senior physicians to opt out of call duties at a certain age. - Impact of “Super Groups” on Contracts
Evaluate Contract Framework: With the rise of private equity-operated super groups, physicians should be aware of potential changes in market salaries and benefits.
Conduct Due Diligence: Research the company’s management and speak to current physicians to understand the working environment. - Financial Risk Reduction
Shorter Contract Terms: Employers may institute shorter employment terms to easily terminate underperforming physicians.
Compensation Caps: Some contracts impose caps on compensation, potentially affecting high-income specialties.
Bonus and Productivity Compensation: Understand how bonuses and productivity-based compensation are handled, especially in terms of timing and criteria.
Pitfalls to Avoid in Employment Contracts - Vague and Employer-Favorable Language
Beware Discretionary Language: Watch for phrases like “at the practice’s discretion” and negotiate for fair and reasonable terms. - Restrictive non-compete Clauses.
Review and Negotiate: Scrutinize and negotiate onerous non-compete terms that excessively limit future employment options. - Benefit Start Dates
Ensure Reasonable Commencement: Verify that benefit start dates are reasonable, preventing potential gaps in coverage. - Indemnification and Liquid Damages Clauses
Understand Limitations: Be aware of any limitations in malpractice coverage and negotiate fair indemnification terms.
Review Language Carefully: Scrutinize clauses related to indemnification and hold harmless agreements, particularly regarding malpractice claims.
Conclusion
Physicians should approach employment contracts with a proactive mindset, recognizing the importance of negotiating terms that align with their professional and personal goals. Seeking legal review and understanding the intricacies of compensation structures, non-compete clauses, and other critical elements ensure a fair and equitable agreement that sets the foundation for a successful career. Onerous — or unspecific — indemnification or liquid damages clauses, especially regarding malpractice claims. The first order of business here is to understand any limitations that employer-paid malpractice coverage might have, and then ensure that the employed or contracted physician isn’t on the hook fully for additional damages that the policy doesn’t cover, Mr. Mayer advised. For example, if the malpractice coverage tops out at $1 million and the judgment comes in at $1.25 million, some contracts might shift the entire shortfall to the physician, explicitly or not so explicitly. “Such a provision might say that ‘the practice and the doctor agree to indemnify and hold each other harmless for any liability caused by the other,’” Mr. Mayer said. “It sounds and seems fair, but in practice, the malpractice claim will usually follow the physician, not the practice. This is something that requires careful review and possibly negotiation.”