Signing a Physician Employment Contract
Reviewing and evaluating a physician employment contract can be confusing and tedious even for a physician who has previously been through the process. For a medical resident looking to sign a first contract, there are multiple issues and hazards to be aware of.
Many articles and websites offer advice about physician employment contracts. The American Medical Association has an extremely detailed and informative publication specifically for young physicians. The New England Journal of Medicine has a recent two-part series that discusses the anatomy of a contract and avoiding contract pitfalls. Additionally, Physician’s News Digest has an article that outlines various contract topics, the Minnesota Medical Association offers an FAQ and sample contract, and a physician employment contract checklist is available courtesy of Algos Research. Because it would take a considerable amount of time to mine through this vast amount of information, I will briefly highlight just a few of the most common themes in these articles.
• Restrictive Covenant/Non-Compete Clause – This agreement limits a departing physician from practicing within a certain radius of the employer for a specified time. What constitutes a fair non-compete clause will vary depending on specialty. The legality and enforceability of non-compete clauses also differs by state. Be sure that you are knowledgeable about this section of your contract and do not disregard it!
• Termination – This section typically mentions whether a physician can be terminated “with cause” or “without cause.” With cause allows an employer to terminate a physician for reasons specified in the contract. Without cause means either party can initiate early termination without justification, although there is usually a period of notice that must be given. Beware of vague and ambiguous wording in this section that could give an employer the right to terminate a physician for frivolous reasons.
• Compensation – The combination of various formulae, benefits, salary, and bonuses can make the overall value of a contract confusing. The contract should stipulate a concrete calculation of your compensation, show annual pay increases, and possibly have a partnership option. Do not underestimate the value of the benefits package, which can include medical, life, and disability insurance, vacation and CME pay, and retirement and stock options, among other things.
The aforementioned articles go into much greater detail about each of these issues as well as many others. Before signing your first contract, you might want to speak with an attorney or a physician who has experience signing contracts. Do your homework and do not rush into anything you are unsure of.
Many articles and websites offer advice about physician employment contracts. The American Medical Association has an extremely detailed and informative publication specifically for young physicians. The New England Journal of Medicine has a recent two-part series that discusses the anatomy of a contract and avoiding contract pitfalls. Additionally, Physician’s News Digest has an article that outlines various contract topics, the Minnesota Medical Association offers an FAQ and sample contract, and a physician employment contract checklist is available courtesy of Algos Research. Because it would take a considerable amount of time to mine through this vast amount of information, I will briefly highlight just a few of the most common themes in these articles.
• Restrictive Covenant/Non-Compete Clause – This agreement limits a departing physician from practicing within a certain radius of the employer for a specified time. What constitutes a fair non-compete clause will vary depending on specialty. The legality and enforceability of non-compete clauses also differs by state. Be sure that you are knowledgeable about this section of your contract and do not disregard it!
• Termination – This section typically mentions whether a physician can be terminated “with cause” or “without cause.” With cause allows an employer to terminate a physician for reasons specified in the contract. Without cause means either party can initiate early termination without justification, although there is usually a period of notice that must be given. Beware of vague and ambiguous wording in this section that could give an employer the right to terminate a physician for frivolous reasons.
• Compensation – The combination of various formulae, benefits, salary, and bonuses can make the overall value of a contract confusing. The contract should stipulate a concrete calculation of your compensation, show annual pay increases, and possibly have a partnership option. Do not underestimate the value of the benefits package, which can include medical, life, and disability insurance, vacation and CME pay, and retirement and stock options, among other things.
The aforementioned articles go into much greater detail about each of these issues as well as many others. Before signing your first contract, you might want to speak with an attorney or a physician who has experience signing contracts. Do your homework and do not rush into anything you are unsure of.
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