Introduction
An employment contract is a legally binding agreement between an employer and employee that outlines the terms and conditions of employment. For doctors, having a strong understanding of employment contracts is crucial when joining a new practice or healthcare organization. These contracts define important aspects of the doctor-employer relationship, such as job responsibilities, compensation, benefits, and reasons for termination. Given the complex nature of employment contracts, doctors should carefully review all sections and negotiate desired changes before signing. Rushing through the process or glossing over key details can lead to unpleasant surprises down the road. Overall, taking the time to fully understand your employment contract is an essential step to protect your interests, define expectations, and set the foundation for a positive working arrangement.
Definition of an Employment Contract
An employment contract is a legally binding agreement between an employer and employee that outlines the terms and conditions of employment. For doctors, these contracts govern important aspects of the doctor-employer relationship like compensation, benefits, job duties and responsibilities, termination policies, and more.
At its core, an employment contract protects both the employer's and employee's interests by establishing a clear set of mutual expectations and commitments. This reduces the chances of misunderstandings down the line. Employment contracts may be referred to by other names like an offer letter, letter of employment, or appointment letter. But these documents serve the same essential purpose.
For doctors, carefully reviewing and negotiating an employment contract is crucial. The contract sets the foundation for the doctor's entire relationship with the employer. It's important for doctors to understand what these agreements entail and the key components involved before signing on the dotted line.
Key Components
An employment contract for a doctor will cover several key components that are important to understand before signing. These include:
Salary and Compensation
The contract should clearly specify your base salary, as well as eligibility for raises, bonuses, and incentive pay. Make sure you understand how your compensation is structured and what criteria must be met for potential bonuses. Some contracts include productivity-based compensation, so understand how this is calculated.
Benefits
Pay close attention to the benefits section, including health insurance, retirement contributions, paid time off, parental leave, and other perks. Understand how much you will pay versus how much the employer covers. Also look for benefits that vest over time, such as retirement contributions.
Duties and Responsibilities
This section outlines your clinical and administrative duties as a doctor. Carefully review the job description to ensure it matches what was discussed during the interview process. Also understand on-call expectations and any practice restrictions.
Non-Compete Clause
Many physician employment contracts contain non-compete clauses that restrict your ability to work in the same geographic area if you leave that practice. Make sure you understand the scope and duration of any non-compete clause before signing. Try to negotiate more favorable terms if necessary.
Understanding Your Responsibilities
As a doctor signing an employment contract, you need to fully understand your responsibilities and what will be expected of you. This is crucial to avoid any surprises or sources of conflict down the line. Here are some key responsibilities to pay close attention to:
Hours and Scheduling
What is your expected work schedule and the number of hours per week? Make sure you can comply with the expected hours.
How are schedules and call determined? Is there flexibility or are schedules set?
How far in advance are schedules provided? Having ample notice of your shifts is ideal.
What are the policies around schedule changes and shift trades? Know the process.
Are you expected to work evenings, weekends, holidays? If so, ensure this fits with your preferences.
On-Call Expectations
What are the on-call requirements? How frequent is being on-call?
What are the policies around who covers a call shift if you are unable to?
Is there compensation for being on-call? Know the pay structure.
Patient Care
What types of procedures are you expected to perform? Be sure your skills match expectations.
Is there flexibility regarding types of patients and procedures? More flexibility is preferable.
How many patients must you see per day or week? Ensure the workload is manageable.
Understanding scheduling, on-call expectations, and patient care responsibilities is crucial when evaluating an employment contract. Be sure you can comply with these requirements, that they align with your preferences, and that pay and policies around schedule changes are satisfactory.
Termination Clauses
Termination clauses in an employment contract outline the conditions under which the contract can be terminated by either party. As a doctor, it's important to understand these clauses to know your rights if you or the employer wish to end the working relationship.
Termination by the Employer
The employer may include clauses that allow them to terminate the contract under certain conditions, such as:
For cause - The employer can fire the doctor for poor performance, misconduct, failing to follow policies, etc. The specifics of what constitutes "cause" should be clearly defined.
Without cause - The employer can terminate without having to prove cause. This provides more flexibility for the employer, but doctors should negotiate severance pay if included.
Immediate termination - The employer can terminate immediately for serious violations like negligence, criminal acts, etc.
Program closure - The employer can terminate if the doctor's program or department is closed down.
Termination by the Doctor
Doctors should have the right to terminate their contracts by providing reasonable notice. Typical notice periods are 30-90 days. Ensure the contract does not restrict your ability to terminate the contract.
Clauses may allow termination without notice under certain conditions like serious contract breaches, non-payment of wages, or material changes to the contract terms by the employer.
Having input on termination clauses is crucial for doctors to avoid being bound to an unhappy or unsafe work situation. Carefully review and negotiate these clauses before signing the employment contract.
Restrictive Covenants
Restrictive covenants are clauses in an employment contract that restrict a physician's ability to work in certain ways after leaving a job. The two main types of restrictive covenants are non-competes and non-solicits.
Non-Competes
A non-compete clause prohibits a physician from working for a competing organization or starting a competing practice within a certain geographic radius for a specified period of time after leaving their current job. The typical non-compete period is 1-2 years.
Non-competes aim to prevent physicians from taking patients and competitive advantages to rival organizations. However, they can be controversial and are unenforceable in some states.
When reviewing a non-compete, consider:
The geographic scope - is it reasonable or overly broad?
The restricted time period - is it proportional to legitimate business needs?
Does it create an undue hardship for your ability to work?
Seek to negotiate narrower terms or get the clause removed entirely if you can.
Non-Solicits
A non-solicit clause prevents a departing physician from soliciting patients or employees from their current practice for a certain time period, usually 1-2 years.
Non-solicits are more common and generally more enforceable than non-competes. However, broad restrictions that prevent organic relationships from continuing may still be scrutinized.
Carefully review non-solicit terms related to patients, referral sources, and staff. Seek tailored terms that serve both parties' interests.
Getting legal advice can help fully understand these clauses and negotiate favorable terms. Restrictive covenants aim to protect organizations, but can significantly impact physicians, so review them closely before signing any employment contract.
Compensation and Benefits
A doctor's compensation package is a critical component of any employment contract. When reviewing this section, pay close attention to the details around salary, bonuses, health insurance, retirement contributions, and paid time off.
Salary - Most physician employment contracts will specify a base salary. Make sure you understand how this was calculated and that it aligns with industry standards for your specialty and region. Also look for details on whether your salary will increase year-over-year and what metrics determine raises.
Bonuses - Many physician contracts include opportunities to earn bonuses based on productivity, quality metrics, patient satisfaction scores, or other incentives. Understand specifically how any bonuses are calculated and what you need to do to earn them. Get clarity around timing of bonus payouts.
Health Insurance - At minimum, you want health insurance for yourself fully covered by your employer. But also look at coverage details for adding a spouse, children or family coverage. Pay attention to copays, deductibles, and maximum out-of-pocket costs.
Retirement Plan - Most physician employment contracts will offer access to a 401k or similar retirement plan. Know what the employer match is, when you are eligible, and vesting schedules. See if there are profit-sharing contributions.
Time Off - Look for details on paid vacation days, sick days, holidays, and parental leave. Understand schedules for accruing and using these days. Also see if there are allowances for conferences, CME, and professional development days.
Carefully evaluating the compensation and benefits section of an employment contract allows you to maximize your earnings potential and protect your financial future. Consult with legal counsel to ensure you receive competitive compensation.
Malpractice Insurance
Malpractice insurance, also known as medical professional liability insurance, is essential coverage for physicians to protect against liability associated with medical errors and omissions. This type of insurance is usually provided by your employer if you work at a hospital, health system, or large group practice. However, if you are in private practice, you will need to secure your own medical malpractice policy.
It's critical to understand the details of your malpractice coverage, including the policy limits. This refers to the maximum amount the insurer will pay out for judgements or settlements. Many doctors opt for $1 million per occurrence and $3 million aggregate limits. However, some specialties like surgery may require higher limits.
You'll also want to ask about tail coverage, which protects you against claims that arise after you leave a job or retire. Tail coverage can be purchased from your current malpractice insurer and lasts for an extended period, often the statute of limitations. This ensures you'll have continuous coverage even after no longer actively practicing medicine.
Shopping around for the right malpractice policy and negotiating the terms is important to gain robust protection. Be sure to work with an insurance broker who specializes in coverage for physicians. They can help you understand policy provisions and ensure adequate limits for your specialty.
How to Start the Physician Contract Negotiation
When negotiating an employment contract as a doctor, there are a few key steps to take:
Consider hiring a lawyer to review the contract. Employment contracts contain legal terminology and have long-term implications on your career. Having an experienced lawyer can help ensure your best interests are protected. They may identify areas that need clarification or negotiation.
Understand your priorities. Think through what matters most to you - compensation, schedule flexibility, malpractice coverage, etc. This will help guide negotiations.
Negotiate compensation and benefits. Try to increase base salary, signing bonus, or annual raises. Negotiate healthcare, retirement contributions, paid time off, CME allowance, etc. Compare to industry standards.
Clarify the non-compete clause. Many contracts bar you from working for a competitor within a certain mileage for 1-2 years. Try to reduce the distance and time period.
Discuss termination policies. Make sure you understand clearly defined reasons for termination and have appropriate notice periods. Negotiate severance pay eligibility if terminated without cause.
Request changes in writing. Any negotiated changes to the contract should be documented in writing, not just verbal agreements. Review the final contract before signing.
Being well-prepared and reasonable when negotiating contract terms can help doctors reach agreements that provide satisfaction on both sides. Knowing what to negotiate and when to compromise is key.
Final Considerations
When reviewing an employment contract as a doctor, it's important to carefully consider all aspects before signing. Here are some final tips:
Get legal review - Have an attorney experienced in physician contracts review the full agreement. They can help explain confusing or concerning clauses, negotiate better terms if needed, and ensure you fully understand the rights and obligations. Don't rely solely on the employer's summary.
Understand all provisions - Take time to read the entire contract yourself as well. Make sure you agree with and understand the terms around schedule, duties, compensation, benefits, malpractice insurance, non-competes, termination, and all other sections.
Know your rights - Be aware that some provisions may be negotiable or unenforceable. You may be able to negotiate better terms, have certain clauses removed, or modify restrictive covenants. Know that you have a choice to accept, decline, or attempt to negotiate an employment agreement.
Signing a physician employment contract is a big decision. Following these tips will help ensure you make an informed choice that protects your interests as a doctor. Don't rush into signing without fully understanding all the implications for your career. With this guide to physician contract negotiation you should be able to successfully negotiate your way into a fair contract
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