Career Planning
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Reviewing the Job Offer
Understand Physician Contracts
Congratulations! You’ve successfully interviewed and have received an offer and a contract for evaluation. In most cases you will want to have an attorney review your contract.
With large organizations or health systems, the contracts may very well be standardized, with limited to no room for negotiation or modification.
Nonetheless, if there is an aspect that you or your attorney feels is a significant red flag, it is always reasonable to request accommodation.
Congratulations! You’ve successfully interviewed and have received an offer and a contract for evaluation. In most cases you will want to have an attorney review your contract.
With large organizations or health systems, the contracts may very well be standardized, with limited to no room for negotiation or modification.
Nonetheless, if there is an aspect that you or your attorney feels is a significant red flag, it is always reasonable to request accommodation.
See below to familiarize yourself with the basic components of a physician contract.
Basic Constructs
Every physician contract should include some iteration of the following:
This will name the employer or practice and you as the two parties in the agreement.
The effective date is the start date of the contractual agreement and terms.
This will define the length of the agreement and will likely reference the start and end dates.
It may also include details on the renewal terms as some contracts will have an auto-renew provision or process outlined.
This will determine how you can terminate the agreement. It will also outline the circumstances in which you can be terminated.
Without Cause and For Cause are two provisions typically included in physician contracts. These statements will allow your employer to terminate the contract as stated, without cause or for cause. A list of “for cause” items may be listed as well, which dictates when the other party can terminate the contract with you.
There will be notification requirements with both of these provisions dictating when and how termination notification must be given. There might also be language on conditions resulting in immediate termination. Be aware that searching for a new job, moving, and completing the credentialing process can easily take 6 to 9 months or longer. Be sure the contract has reasonable notification terms that will allow you sufficient time to reemploy should you be let go. It is also wise to set up an emergency fund for this reason as soon as possible.
Some contracts will require an initial practice commitment from you. If this is the case, it will be listed here and you will be contractually obligated to work for the employer or practice for that period of time.
It is important that you understand the term of your contract. This is the period of time you are agreeing to practice in accordance with the terms and details outlined.
Always seek the opinion of legal counsel well-versed in physician contracts to review your contract and explain what you are signing or what risks/issues may exist.
An attorney will help you understand the terms, areas of concern, and any limitations or restrictions. He or she should be able to provide advice on items for which you may want to seek further clarification, request additional details to be documented, or renegotiate.
Legal review can be time consuming for both parties, so do not delay if anything needs to be clarified or negotiated. Ultimately, you will have to decide what you are comfortable with and whether or not you will sign the contract as is, or if you will request changes to be made.
Never hesitate to ask questions or attempt to renegotiate terms. The time to understand and seek mutual agreement is when the offer is made to you. Take the opportunity if there is truly something you want to seek revisions on. The prospective employer or practice may not be willing to make those changes. All of this should be factored into your final decision to accept or reject the offer.
It is also important to understand how you can terminate the contract, the type of notification required, and what penalties you might incur. In a dynamic field like medicine, you never know what future situations or issues might arise, so make sure you know how to exit your agreement should that ever be necessary.
Equally important are the requirements for renewal. You should be prepared for what happens when the contract term is up and know how to renew your agreement. Make sure you understand this process as well and are prepared if the agreement is not renewed for some reason. Many contracts include a so-called “evergreen provision,” which allows the contract to automatically renew for a set period of time if neither party takes action to prevent renewal. This can be a reassuring safety net to ensure that you don’t suddenly find yourself with an expired contract in hand, without advanced warning.
- Is this the contract term I was expecting?
- Am I comfortable with this amount of time I am committing to in this agreement?
- How will I renew my contract? Is there an “evergreen provision?”
- What changes will I be subject to with the renewal process?
- Can I terminate this agreement without cause? What is the notification time and process?
- Am I comfortable with the “without cause” termination notification period?
- If terminated without cause, do I have adequate time to find an alternative practice or employment?
- What are the reasons I can be terminated?
- Are they acceptable reasons? Inappropriate? Too vague?
- Are there any conditions listed for immediate termination?
Obligations of the Physician
Every contract should outline information about what is expected of you in terms of your professional, clinical, and administrative or teaching duties as a practicing physician.
However, there will be varying amounts of detail and specificity. Always seek outside counsel to review any contract received before you sign.
This will indicate the nature of your relationship, employment status or affiliation with the practice, such as full- or part-time, associate, partner, shareholder, independent contractor, etc.
If you are offered an employed position, it will state who you will be employed with, such as a hospital or group. An exempt status may be noted, which is a typical for salaried employees expected to work more than 40-hour work weeks. This is dependent on the type of practice you are joining and whether or not you will be hired as an employee.
If there are any planned changes in your employment or affiliation status, such as shareholder or partner, upon completion of certain milestones or the initial contract agreement, it may be listed here.
If partnership and buy-in are options, the details on achieving partner status need to be outlined clearly. You should know exactly what is expected of you (time, productivity, etc.) and by when (eligibility period) and at whose discretion, along with the amount of buy-in required.
Status changes could also include an eligibility period or potential promotional opportunity.
This section is essentially the job description. It will outline requirements and core functions of the job, the type of medicine and specialty, and details around how you are expected to perform the job duties. There will likely be language on the clinical services expected of you, such as diagnosis, care and medical treatment of patients.
If you have follow-up clinic or other outpatient care obligations they should be listed here.
Sometimes contracts will include billing and reimbursement services expected of you or offered to you along with any administrative responsibilities to be fulfilled with your clinical duties.
There should be language on requirements and maintenance of licensure, malpractice insurance, continuation of medical education, and board certification, if required.
If you have any supervisory duties, they should be outlined here as well. Make sure you understand the any obligation to supervise advance practitioners, if they are included in the practice.
The address of the employer or practice location will be listed.
If there is more than one location, each should be listed especially if there are multiple locations related to scheduling or call coverage duties.
Your clinical schedule and call coverage duties should be outlined along with any office or non-clinical hours you are expected to hold regularly. If you are expecting an equal share or duties across the full group and practice, be sure the details are listed.
Note that since practice scheduling can be fluid depending on staffing changes, and since scheduling is often managed internally by the group, many contracts will put fairly high level language in the actual contract to avoid having to revisit and revise contractual language every time there is a departing or new physician. This language will frequently refer to an addendum or a separate Compensation Plan Description or Scheduling Plan Description. Don’t worry if this is how the contract is structured. It is simply a common sense way to allow management of fluid sections of a contract, without having to alter the underlying structure and integrity of the overall agreement.
Specific hours or weeks to define full-time or part-time status should be noted. Obligations for weekend shifts, weekend rounding, and holiday rotations should also be noted.
If multiple hospitals need to be covered, it should be detailed along with the coverage responsibilities for each and scheduling commitments you must fulfill.
If you are expecting a specific or unique schedule of any kind, or part-time employment, be sure to get the details in writing within this section. Likewise, if you are expecting a certain amount of vacation time or off-duty time on any regular basis, it should be outlined.
This is the section that will obligate you to a particular work schedule, so make sure you understand what the expectations you are agreeing to and that the details are appropriately outlined.
There may be restrictions on your ability to provide other services, such as moonlighting, consultative services, legal testimony, teaching functions, or outside activities for other entities.
There may be language requiring permission to be granted or language requiring you to obtain approval prior to engaging in these outside activities.
Be mindful of these restrictions and understand any approval requirements in case there are opportunities for earning additional income in your future. Occasionally neonatologists moving to a lower acuity facility will wish to keep several weeks of service time per year at a higher acuity tertiary or quaternary center to keep their skills sharp. This can be a great model for covering positions that may otherwise be hard to fill due to concerns of early-career providers who are worried about not getting enough clinical exposure, so if you are in that situation be sure to explore this option. And definitely get any agreements in writing.
It will also be important to understand any stipulations around compensation earned from outside activities, especially with private practice positions where income generated from physicians is brought into the practice as a group for equal distribution.
Some contracts will be very detailed. Others may be extremely vague. There may be statements around duties, locations, schedules, call coverage etc. “as reasonably required” or “as appropriate” or “on a fair basis” which leaves requirements open, flexible, and undefined.
As noted above, seeking counsel with an attorney well-versed in physician contracts and appropriate state laws is advisable to provide reassurance and understanding before you sign.
- Is the relationship or work status appropriately defined?
- Do I understand the nature of the relationship and associated practice type?
- Do I understand the tax implications associated with this work status?
- Do I understand all the duties expected of me?
- Is board certification required? If so, by when? Can I meet this timeline? What if I don’t pass?
- Are there any duties or responsibilities that need to be clarified?
- Are the details clear regarding the amount of the non-clinical or administrative duties outlined?
- Do the schedule requirements align with the details in the contract?
- Are schedule and call coverage acceptable for clinical work?
- Are there any new expectations or requirements in the contract that have not been discussed?
- Are there limitations for outside activities or other forms of earned income?
- Is anything unclear, ambiguous, or not what was expected?
- If renegotiation is attempted, what is an acceptable exchange or counter to this offer?
Compensation and Benefits
The specific type and aspects of the physician compensation model, as well as all included benefits, should be clearly outlined in the agreement. Since comp plans may change and should be subject to regular review, they are often included as an addendum to a contract and may be referred to as a Compensation Plan Description.
This section will state how much and how often you will be paid for your services. The type of compensation model will be outlined, including any hybrid structures that may be included.
It is very important that you have a full understanding of the compensation formula and any incentive bonus structures offered. If you do not understand something, do not sign your contract. Seek clarification and outside counsel to ensure you know what your compensation is and what performance obligations you have to fulfill or any inherent limitations to expect.
Make sure you know what is predictable income what may be variable or subject to change depending on factors such as volume or reimbursement. These factors are often largely beyond your control, so if your comp model relies heavily on an end of year productivity bonus, it can be incredibly challenging to budget. You don’t want to be surprised at the end of the year when annual volumes drop and you suddenly can’t meet your financial obligations.
For the variable compensation components, you should also clearly understand the percentage of your total cash compensation and what controls you have in hitting the target or benchmark required for pay out.
Any financial incentives and bonuses should be included in the contract with complete details – amounts, eligibility, installments, work commitments, milestones, stipulations or penalties – clearly outlined.
Some comp models have separate compensation levels or structures for call, whether in-house or home call. This may be more common in a productivity, RVU-driven model, where most of the RVUs are generated during the daily rounds. Night call RVU generation can be comparatively quite low if there aren’t many admissions or procedures. Therefore some structures may provide a set monetary value for a night of call to ensure fair payment.
In some cases, regional or non-flagship hospitals or facilities will offer a different compensation schedule when you cover them. Your compensation for atypical, ad-hoc coverage should be noted.
Since this coverage may be variable, be sure it is clear how these shifts will be documented and how frequently they will be paid out.
If you will be compensated for non-clinical work, it should be documented.
This may be community outreach such as STABLE or NRP courses to outlying facilities and providers, teaching in the hospital or medical school, committee work, or other activities that benefit the group, practice, or health system.
These may also be outlined in the Obligations of the Physician section and have no extra compensation offered, with the justification that these duties are “built in” to the base comp. It is important for you to understand what is paid additionally and what is included in your base.
Non-salary benefits should be included somewhere in the contract or in an addendum such as the Compensation Plan Description. These may include insurance coverage, employer-sponsored savings plans, time-off, and other benefits such as professional fees, stipends, and leaves of absence.
Compensation language in a contract is often the most heavily scrutinized portion of the document, and for good reason. You’ve worked hard to get here, so be sure you are fairly valued for the services you provide to your patients and community. Understand exactly what your contract says and what it intends. If you have questions, always clarify.
Benefits can vary widely between positions, however they may be some of the most negotiable aspects of a contract. Again, get it in writing. And remember that benefits and perqs can add up quickly. Not even counting cash bonuses, benefits packages can easily account for 25-30% of the overall comp package.
- Does my compensation align with the duties and responsibilities section?
- Is there clarity on the compensation components, calculation, and performance requirements?
- Do I agree with the compensation terms and conditions?
- Do I clearly understand how I will be compensated for any non-clinical duties, if expected?
- How much of my compensation is fixed? How much is variable?
- For the variable compensation, is it clear what is in my control to meet certain benchmarks?
- Am I comfortable with the metrics, tracking, and performance accountability?
- Do I have any concerns with the ability to receive an adequate or expected compensation amount?
- Are there any variables I would like to change or renegotiate?
- What am I willing to give up or offer in exchange?
Protections for the Employer
Employers invest significant amounts of capital and human resources into building and maintaining a skilled workforce, facilities, and brand. They should, and do, take steps to protect their interests. You should always remember, however, that in many cases these contract inclusions are solely intended to provide benefit to them, not to you. Read them carefully and understand how they may restrict you in your career.
You may have little ability to influence or negotiate these out of your contract as a new employee or practice partner. However when an entire practice is renegotiating, there may be enough leverage to stand your ground in order for some of these restrictions to be lightened or removed from your contract language. You may also be able to negotiate a “sunset” clause, whereby certain restrictions expire after a period of employment. Most employers and practice managers know that the longer you are with a practice, the greater the likelihood that you stay, therefore less need to have barriers to departure.
A restrictive covenant, or “non-compete clause” as it is more commonly known, is written into the contract to protect the interests of the employer or practice from market competition and financial loss if and when you decide to leave.
It will prevent you from practicing medicine within a specific geographic area and for a certain period of time after the termination of the contract.
A non-solicitation clause prevents you from soliciting patients of the employer or practice and hiring any their employees or negotiating any contracts with health insurances for a certain period of time after the termination of the contract.
With this covenant, the employer or practice is protected by preventing you from soliciting their patients, employees, and referral sources and starting your own practice.
This section states that you cannot disclose confidential information related to the business and operational aspects of the employer or practice. This is also where patient confidentiality requirements and HIPAA regulations will be noted.
This may state that your employer or practice retains the rights to any intellectual property generated while upholding the obligations outlined within this agreement or while using facilities or property belonging to the employer or practice. Some contracts will state that any publications, articles, research, patents, etc., will be owned by the employer or there may be some process to obtain ownership rights outlined for this type of work.
This is very common for academic institutions, as it is typically at the heart of their mission to further knowledge and technical advancements. Not all employers require this, however, so if you are an entrepreneur or inventor and wish to generate and own your intellectual property, be sure to examine your contract closely to ensure it is allowable.
You may be required to comply with specific laws, standards of practice, medical staff bylaws, or professional standards. If so, they will be outlined in this section.
There may be expectations required for the timely completion of documentation and signatures for orders, notes, and other medical record documentation and signoff. Lack of documentation compliance can put organizations at risk for citations from the Joint Commission, CMS, or other regulatory bodies, so they are becoming more rigid in their enforcement of timely completion. More importantly, documentation delays can jeopardize patient care, and it is quite simply just good practice to keep your charts up to date.
This requires you to disclose prior claims or credentialing issues you have encountered prior to signing the contract, and may also stipulate requirements for disclosure should you have litigation claims arise, criminal charges brought against you, loss of licensure or privileges, or expiration of Board certification.
Typically, employed physicians will participate in Medicaid and other payer contracts for reimbursement of services. This section will allow you to assign your reimbursement rights for your professional fees to the hospital. Essentially, this gives the hospital or practice your revenue from insurances for your services and procedures billed.
It is common for the hospital to manage all billing, collections, and financial management of physician generated revenue, especially for employed physicians receiving a paid salary.
If included, this refers to the transfer process of your contract to another entity. In the event of a merger or acquisition, this section will outline stipulations associated with change of ownership. If the contract is assignable, it means your contractual obligations will continue under new ownership. If it is unassignable, your contract will not be protected under a new owner and a new contract will be required.
Most of these sections of a contract provide common-sense assurances to the employer and are quite benign in nature to the employed provider. Two, however, warrant some additional consideration:
While non-compete clauses may have more understandable benefit in practices in which your patient panel could follow you to a new practice location when you leave, they have far less applicability in neonatology. Nonetheless, they are common. Non-competes can be challenged legally, however it is often exceedingly expensive to do so, and employers who use them know this. You should seriously consider the ramifications of signing a contract with a non-compete, as it will almost certainly require you to uproot your family and move long distances should you not be satisfied with the practice.
As mentioned above, you should consider whether you may wish to generate intellectual property for which you want control and ownership, and seek to have the rules regarding this laid out very clearly. In some cases, if an organization is supporting the overhead and personnel resources that allow your IP initiative to be successful, it may be very appropriate for them to share in a percentage of any benefits that may come from this. Just be sure to establish this upfront.
- If there is a non-compete clause, am I comfortable with the ramifications if my position doesn’t work out?
- Do I anticipate having research, patents, or inventions? If so am I comfortable with the designation of IP ownership?
- Are the timeframes and rules for medical record documentation reasonable?
- Does the EMR provide remote access to complete charting and signatures if I am out of town?
- Do I have credentialing, certification, or legal issues that I need to disclose?
