As many as seventy percent (70%) of all physicians change jobs within their first two years.[i] New job opportunities arise which may cause a physician to early terminate his or her employment contract. For this reason, it makes sense for a physician to review his or her contract to formulate their exit strategy before they sign it. There are several provisions in a contract that are applicable:
- Notice of Termination. Often, contracts require a physician to provide prior written notice to their employer of their desire to terminate their contract. Such notice must usually be provided a specific number of days before termination can become effective. Failure to follow the notice requirements can result in an inadequate termination.
- Malpractice Insurance. Some contracts require a physician to purchase their own “tail insurance”[ii] upon departure, especially for physicians who terminate the contract unilaterally. Such insurance policies typically cost 1.5 times to 3.5 times the annual malpractice premiums.
- Non-Compete. Non-compete provisions are generally enforceable in almost all states. Physicians should review this provision to determine its geographical reach and duration. A new employer may want to confirm that a physician’s non-compete will not affect his or her ability to work with the employer.
- Non-Solicit. Non-solicit provisions are also generally enforceable in almost all states. Physicians should review this provision to determine his or her prohibited conduct. For example, a physician may not be able to solicit former patients, employees and/or referral sources.
- Confidentiality. During a physician’s employment, he or she may have learned the “secret sauce” that makes the medical practice successful. A confidentiality clause would require a physician to not disclose, among other things, the secret sauce to third parties or use that secret sauce in the physician’s next employment opportunity. A confidentiality clause may also prevent a physician in some jurisdictions from obtaining a patient list from the employer.
- Liquidated Damages. Some contracts contain a provision that require a physician to pay the employer a certain dollar amount for a physician’s breach of the contract. A breach would be deemed to have occurred if, for example, the physician did not complete the mandatory term of his or her contract, violated the non-compete/non-solicit, violated the confidentiality clause or failed to provide sufficient advance notice of termination.
The Physician Contract Lawyer will review your current contract and then propose suggested revisions to the above provisions to make them more physician-friendly. The Physician Contract Lawyer can then negotiate these provisions with your employer to a form that is agreeable to both parties. You will then be able to sign the contract and have more confidence to explore job opportunities when and if they arise.
If you have already signed your contract and are looking to exit, the Physician Contract Lawyer can review the pertinent provisions and discuss their consequences to you. The Physician Contract Lawyer can suggest ways for you to accomplish your employment objectives but yet abide by these provisions. The Physician Contract Lawyer has experience in helping physicians navigate through both congenial and unpleasant employment situations. It is never too late to seek professional help.
[i] Gesensway, Deborah (October 2011). The impact of the “starter job” syndrome. Today’s Hospitalist.
[ii] This type of policy is offered by the employer’s current malpractice insurance carrier or a new insurance carrier which allows a departing physician to ensure against claims or incidents alleging medical negligence that occurred while a claims-made coverage was in effect—when such claims are asserted after the expiration or cancellation of that policy.