It is that time of the year when residents and fellows start receiving their job offers. After years of schooling and residency practice, the excitement of receiving that first job offer and entering the work force often overshadows the importance of having a Physician Contract Lawyer[i] review their employment contract. Although the expense of hiring a lawyer may be challenging for a resident or fellow, the Physician Contract Lawyer works with these professionals on both fees and payment to make legal services more accessible. For those physicians who seek to tackle the review themselves, there are a few provisions to consider when evaluating a job offer.
Some physicians focus solely on the compensation offered by an employer, but physicians should look at the job offer as a complete package. In other words, physicians should be wary of other important provisions which may temper the compensation offered.
- Term. Will the Physician be guaranteed employment for a certain period of time, known as the “term”? A longer term is generally more beneficial for a physician because it guarantees employment over a greater period of time.
- Termination. New physicians should expect a shorter term offered by their employer, but they should also not be surprised if they are offered a job “at will”. At will employment means that a physician may be terminated at any time and for any or no reason[ii]. A shorter term should be expected because an employer wants to confirm that a physician is a good fit for the practice. If a physician is not an at will employee, then the employer may still be able to terminate the physician before the expiration of the term if the employer has such a right in the contract and the employer provides the physician with advance written notice of termination. Physicians should expect employers to give 30-90 days advance notice for a term of one to two years (the longer the better).
- Physician Duties. Physicians should make certain that their contract is clear on their obligations and responsibilities. A good contract should spell out the locations of medical practice; hours of operation; “on call,” holiday and weekend coverage; and participation in networking and marketing activities. New physicians should expect that they will be responsible for the majority of “on call” coverage, if applicable.
- Restrictive Covenants. Many employers are concerned that after years of training a new physician, that the physician will use that goodwill to establish a competing practice in a location near the employer’s practice. For this reason, employers sometimes require physicians not to compete within a certain distance from the employer’s facilities and for a certain period of time. Additionally, employers sometimes require physicians not to solicit former patients. These restrictive covenants are generally enforceable. A physician should pay careful attention to a covenant that would hinder his or her ability to accept another job opportunity.
- Malpractice Tail Policy. More than likely an employer will pay for a physician’s medical malpractice premiums. But who pays it when a physician’s employment is terminated? Often, an employer will not only require a departing physician to obtain a “tail” policy[iii], but it will further require him or her to purchase it with the physician’s own money. Physicians will benefit if the employer pays this cost if the employer terminates the physician through no fault of the physician.
- Compensation. A salary is very beneficial for physicians because it guarantees payment. However, many employers are now moving towards a productivity-based compensation model—the “eat what you kill” model. This model shifts the risks and burden of compensation to the physician and incentivizes a physician to be more productive with his or her time. Young physicians should be wary of this model if they do not have an established patient base. Employers sometimes offer a hybrid model—a combination of salary and productivity bonuses—to ease concerns of physicians without an established patient base. Physicians should request from their potential employer precise examples of how their compensation would be computed under their employment contract.
- Benefits. Simply stated, the more benefits offered the better. A relatively low salary can be offset with a rich benefits package including signing bonus, moving allowance, paid vacation and sick leave, 401(k) plan contributions, paid CME and license/board fees.
It is exciting to begin a medical career as a physician, but it is important to start it on the right foot. Make sure you understand the contours of your contract before signing and do not be afraid to walk away from a job offer that touts relatively good compensation if the remainder of the package is poor. If you need expert advice and help, the Physician Contract Lawyer is available to lend a hand in the process. The Physician Contract Lawyer has experience in evaluating a job offer and providing advice on making the offer more attractive, with physicians often recouping their legal expenditures in the form of a better employment package.
[i] Physicians should know that attorneys, like physicians, specialize in certain fields of practice.
[ii] There are some exceptions to the “at will” rule such as termination based on discrimination or retaliation against employees who have engaged in certain legally protected activities.
[iii] 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.