Signing a contract is a significant moment in any physician’s career, especially for those entering their first professional role after training. Physician employment contracts can be complex, packed with legal terms, compensation structures, non-compete clauses, and benefits that impact your daily life and long-term goals. Here’s a guide to help you navigate the key elements to consider when reviewing your contract and ensure you make the best decision for your career.
1. Compensation and Bonus Structures
Understanding your pay structure is essential, as physician compensation can be complex and vary by organization. Be sure to review:
- Base Salary: Is your base salary competitive with market rates? Compare it with other opportunities in your specialty and location to ensure it’s fair.
- Bonuses and Incentives: Look closely at how performance bonuses are structured. Are they based on RVUs (Relative Value Units), patient volumes, or quality metrics? Make sure you’re comfortable with the expectations required to achieve these bonuses.
- Other Compensation: Check if there are additional payments for on-call duties, weekend shifts, or procedures. Understanding the compensation breakdown can help you avoid surprises later.
2. Non-Compete and Restrictive Covenants
Non-compete clauses restrict where and how soon you can work in the same geographic area if you leave your employer. These terms can significantly impact your future career opportunities, especially if you’re tied to a specific location due to family or other commitments.
- Non-Compete Clause: Evaluate the geographic scope and duration of the non-compete clause. A two-year restriction within a 10-mile radius may be more acceptable than a five-year, 50-mile restriction.
- Non-Solicitation Clauses: These clauses may prevent you from soliciting patients, employees, or referral sources after you leave. Make sure these are reasonable and do not overly limit your career mobility.
Consider having a legal professional review these clauses to determine their enforceability under local laws. A non-compete may seem acceptable initially, but it can have substantial implications if you decide to leave or start your own practice.
3. Work Schedule and On-Call Requirements
A significant part of your quality of life as a physician hinges on your work schedule, including on-call duties. Confirm the specifics:
- Weekly Work Hours: Make sure the required hours align with your work-life balance goals. Some contracts define a specific number of hours or shifts, while others may have general “full-time” expectations.
- On-Call Responsibilities: Understand how often you’ll be on-call, the length of on-call shifts, and any additional compensation for taking calls. If the on-call requirements are demanding, check whether there is flexibility or additional pay.
- Flexibility: Does the contract specify fixed days, or are you able to negotiate your schedule? If flexibility is important to you, ensure it is clearly outlined in the contract.
4. Benefits and Perks
Physician contracts often include a benefits package, which can add substantial value. Pay attention to:
- Health Insurance: Confirm what type of health, dental, and vision insurance is offered, and review the coverage levels, premium costs, and any deductibles.
- Retirement Plans: Review the retirement options available, such as a 401(k), 403(b), or a defined benefit plan. Check for employer matching or contributions, as these can significantly boost your retirement savings.
- Paid Time Off (PTO): Make sure you understand your vacation, sick leave, and CME (continuing medical education) days. Some contracts offer additional PTO for parental leave or family medical emergencies.
- Malpractice Insurance: Ensure your employer covers malpractice insurance, including any tail coverage (insurance that extends after you leave a position). Malpractice insurance costs can be substantial, so this is a critical component to understand.
5. Termination Clauses
Termination clauses outline how and under what circumstances the contract can be ended. Understanding these terms can prevent unwelcome surprises:
- Without Cause Termination: Some contracts allow either party to terminate the agreement “without cause” by providing notice. Check the notice period, which can vary from 30 to 180 days. Ensure this time frame is feasible for transitioning to a new role or giving notice at another facility.
- For Cause Termination: Review the conditions under which you or your employer can end the contract “for cause,” such as misconduct or license suspension. Ensure that these terms are fair and clearly defined.
Understanding these clauses is crucial because they dictate how much time you’ll have to prepare for a transition if the employment ends unexpectedly.
6. Tail Coverage and Malpractice Insurance
Malpractice insurance, including tail coverage, is an important part of any physician’s contract. While some employers cover all or part of malpractice insurance, others may require you to purchase it. Tail coverage, which extends malpractice protection after you leave a position, can be a significant cost.
- Tail Coverage: Ensure the contract specifies who will pay for tail coverage if you leave, as this coverage is often necessary for specialties with higher liability.
- Claims-Made vs. Occurrence-Based Policies: Claims-made policies only cover incidents while you’re employed, whereas occurrence-based policies cover any incidents that happened during employment, even if a claim is made later.
7. Continuing Medical Education (CME) and Professional Development
Professional development support is essential for career growth and maintaining licensure. Review whether your contract includes:
- CME Allowance: Confirm whether you have a CME allowance for courses, conferences, or materials, and how much time you’re given annually for CME.
- Licensing and Certification Fees: Some employers cover the cost of medical licensing, DEA registration, and board certification. These costs add up, so a supportive employer is a benefit.
8. Dispute Resolution
Contracts sometimes include clauses specifying how disputes will be resolved. If an issue arises, the contract may require arbitration or mediation before legal action.
- Arbitration or Mediation Clauses: These may specify the process for dispute resolution, which can often be faster and less costly than litigation. However, make sure these terms are fair, as they might impact your legal recourse if a significant issue arises.
Final Thoughts
A thorough contract review is essential for physicians entering new roles. While it can be tempting to focus on salary and start date, taking the time to understand the entire contract—from benefits and bonuses to non-compete clauses and malpractice coverage—will set you up for a smoother and more satisfying experience in your new position. Consulting with a lawyer who specializes in physician contracts is often a worthwhile investment, ensuring that you fully understand the terms and negotiate favorable conditions.
Written by Pat Brown, MBA