Naomi Jean Batiste
Naomi Jean Batiste

The elements of a physician contract

Kate Brannen Smith

Table of Contents

Once you’ve got a job contract, it’s time to evaluate — and negotiate — the fine print.

IF THE PHYSICIAN JOB SEARCH IS A MARATHON, GETTING AN OFFICIAL offer may seem like the finish line. And it’s certainly worth celebrating! You’ve come a long way—but you’re not finished yet. Rather, you’ve made it to the last leg of the race: contract evaluation and negotiation, so it’s important to understand the elements of a physician contract.

To finish strong, you can’t just accept the offer and sign the contract hurriedly. You want to sign a contract that’s been vetted, negotiated and improved—one that sets you up for personal and professional happiness. Then, by all means, don your medal and douse yourself in Gatorade!

And before that point, don’t be discouraged if you find your contract confusing. That’s normal.

“Whether [it’s] your first out of residency or a subsequent [contract], contracts are extremely confusing,” says Naomi Jean-Baptiste, M.D., an emergency medicine physician in Orlando, Florida, and founder of Hope4med, an online community for health care professionals. “It’s legalese language, and we don’t go to law school. You really have to go through it with a fine-toothed comb.”

Thankfully, you don’t have to go through this final stretch alone. Many physicians work with contract lawyers, expert reviewers and negotiation coaches. These professionals ensure contracts are favorable and airtight. They can help you understand the terms and spot any red flags. That way, you’ll know when to walk away and when to proceed with confidence. In this article, they’re spelling out what to look for during your contract review

Why contracts matter

Before you start contract review, step back and consider why the contract is so important. Like any legal document, a contract may seem dry at first glance, but its stakes are high. Your contract — especially your first out of residency or fellowship — doesn’t just affect your next job. It can influence the trajectory of the rest of your career.

“I’ve seen many, many physicians leave medicine entirely because they had a bad contract, not because they weren’t cut out for it,” says Linda Street, M.D., who practices maternal-fetal medicine in Augusta, Georgia. After living through bad contracts herself, Street became passionate about helping other physicians avoid the same contractual fate. She founded Simply Street MD Negotiation Coaching to do just that.

Stu Schaff, founder and lead advisor of Contract Medicine, had similar concerns.

“For the last 15 years, I have worked with hospital employers, corporate employers, physician practices, individual physicians [and] looked at hundreds and hundreds of employment agreements for various purposes,” says Schaff. “Increasingly, as I’ve talked with a lot of people, [I’ve heard] about physicians growing fed up with practicing medicine. …It scares the heck out of me.” He founded Contract Medicine to stem the tide. Now, he helps physicians understand, evaluate and negotiate their contracts.

For experts like Street and Schaff, their goal is the same as yours: a contract that will keep you practicing happily for years to come.

Components of a contract

To make sense of your contract, you first need to understand the elements of a typical contract.

“I tend to group the terms of physician employment contracts into three categories,” explains Schaff. These are: work expectations, pay and legal considerations.

Work expectations: Think responsibilities, schedule, location

When it comes to work expectations, “the whole point…is to be able to very clearly answer comprehensively [the] question of what am I expected to do, when, where and with whom,” says Schaff.

Despite the need for clarity, this part isn’t always straightforward. “This work expectations category [tends] to be the least well-defined in contracts,” he says. If the what, when, where and with whom aren’t spelled out, ask to add more details in the contract itself. That way, you’ll know what you’re agreeing to—and you’ll have it in writing.

Jean-Baptiste agrees, paying critical attention to the what. “Usually, [the contract includes] a list of responsibilities that you have as a physician,” she says. She has found that the required procedures typically line up with what should be expected of an er physician. However, organizations have varying expectations about how much coverage er physicians should provide.

“At some hospitals, they will say you’re responsible for the patients in the emergency room and you’re responsible for going to rapid responses or codes throughout the entire hospital,” she explains. “In some places, that’s not the case. So those are things that you should be mindful of when you are signing these contracts. Some people may not feel comfortable with that idea of being the only doctor in house and [having] to respond to everything.”

She’s also found that scope of practice can stretch over time if it’s not clearly defined in the contract. “Sometimes they’ll have you do more than what you signed up for in the first place,” she says. “So really read that carefully and then [express], ‘No, I’m not willing to do XYZ.’ That’s all part of the negotiation piece.”

Beyond what you’re doing, your contract should also address when you’re doing it. This part isn’t always spelled out in your contract itself. It’s often answered in a separate policy document such as a scheduling guidelines document, says Schaff.

If your contract references a separate policy, get it in writing and review it as part of your contract.

“It should be saying in your contract: you’re expected to work this much,” says Schaff. For example, you may be 1.0 FTE (meaning full-time equivalent) or 0.5 FTE, if you have a half-time contract. If FTE is not defined in the contract, get the employer’s definition in writing.

You also need to know where you’re expected to be during your when. For a primary care physician, for example, the contract or policy may state that you’ll be in clinic during normal business hours five days a week. For an inpatient hospitalist, it may state how many in-hospital shifts you’re expected to complete per week or month. If you’re in a specialty with both inpatient and outpatient components, it should spell out how often you’ll work each, how the two interact and whether you’ll ever cover both at the same time.

“This is the area [of the contract] I would say that I spend the most time working with people on and encourage them to ask the most follow-up questions,” says Schaff of the work expectations category. “When people talk about work/life balance, this is where it exists. If this isn’t right, the rest of it isn’t going to be right.”

Work/life balance also entails having adequate support from your fellow providers. Make sure to look for information about the with whom. Consider how the group distributes call and other shifts, as well as whether and how you’ll be working alongside apps.

Pay: Think compensation, incentives, benefits and beyond

Your contract should also spell out how and how much you’ll get paid — both “for meeting those expectations and for exceeding them,” says Schaff. This should include details about all the components of your pay, including base compensation, incentives, benefits and more.

Base compensation will look different in different contracts. Some physician jobs are salaried, and others are hourly. Others are 100% production-based (i.e., productivity-based) with no base compensation. “Obviously, that needs to be laid out: how you’re paid, if it’s a base salary versus if it’s a production base versus if it’s some combination of both,” says Street.

Even salaried and hourly roles often offer additional incentive pay. These are usually tied to volume through RVUS or other productivity measures.

As you evaluate your contract’s compensation model, consider whether it works for your lifestyle.

“There’s pluses and minuses to everything,” says Jean-Baptiste. “Salaried positions, you have a guaranteed pay. Whether or not you’re on vacation or whatnot, you’re going to get paid. Hourly, you get paid for the time that you’re working, [and] you’re going to get a set amount regardless of how many people you’re seeing that day. But if you’re 100 percent RVU, it’s all based on productivity…so the more people you see or the more critical patients you take care of, the higher RVUS are going to be. [If] one day it’s low and one day it’s busy, that’s going to affect your compensation from one day to the next. So those are all things in terms of the compensation that you really need to think about and consider.”

RVUS or volume-based incentives are not the only type of incentive you may see in your contract. Some contracts also offer incentives tied to being a good citizen among your colleagues. This includes attending meetings and completing medical records on time. Others offer incentives tied to clinical quality. If your contract includes this, make sure it spells out how quality is measured.

Base and incentives likely won’t cover your whole compensation. Organizations may offer signing bonuses, loan forgiveness and residency stipends for physicians who commit early. They may even offer moving allowances. But don’t let tempting figures prevent you from evaluating the compensation critically.

“Oftentimes [when] you go from residency, there’s a big jump in the pay … and sometimes [organizations] give you a sign-on bonus, and then you’ll be just starry-eyed and not really, truly understand what you’re getting yourself into,” says Jean-Baptiste. “Do the math and really understand the terms. …Be careful in terms of signing contracts that are going to tie you to a particular location or place for a prolonged period of time, especially if it’s new and you’re not familiar with it.”

Your contract should also cover what benefits the organization offers its employees. Think PTO, CME allowances, insurance and 401(k). If you’ll be operating as an independent contractor rather than an employee, you likely won’t receive insurance benefits and will have to purchase your own.

As with work expectations, ask questions about anything you don’t understand. “I asked questions about the terms of payment, malpractice insurance, benefits package and any bonuses or incentives that were included,” says Kellie Middleton, M.D., MPH, an orthopedic surgeon who practices in Atlanta. “It was important to know exactly what I [was agreeing] to in order to make sure it was fair for both parties involved.”

Legal: Think termination, noncompetes, malpractice insurance

Finally, your contract should cover legal considerations such as termination conditions, non-compete and non-solicitation clauses, and malpractice insurance coverage.

Street calls these the “exit planning” components. They determine when and why you can leave, and they even affect what you can do afterward. Your goal is to land a job you love, but no job lasts forever. It’s important to know what leaving will look like.

With-cause termination agreements outline the reasons that you can resign or be let go. Without-cause termination agreements don’t require any reasons. “[These agreements] primarily mean whether they need a reason to fire you or what type of reason they would need — and reasons that you could quit or say that this isn’t working out,” explains Schaff. Termination conditions also stipulate how much notice you or the employer are required to give each other if you quit or are fired.

Schaff says termination conditions tend to be equally favorable for employers and employees. Even so, he says this is an area where it’s particularly helpful to get an attorney to weigh in. “I’ve seen contracts where an employee can’t decide to up and quit within the first two years for any reason unless the employer breaches the contract…but the employer could give them 90 days’ notice and cut them. That would be very employer-friendly terms.”

On the other hand, non-competes are always in place to protect the employer. These prevent you from practicing within a certain distance for a certain timeframe during and after your employment. “Essentially…you cannot perform these duties that you’re doing with us within X radius of our hospitals,” says Jean-Baptiste.

She points out that vague non-compete language works to the employer’s advantage. “You want them to actually give you an address of what hospital exactly you’re talking about,” she says. “Sometimes it’ll be some vague language: ‘hospitals that we currently have or will have in the future.’ That’s completely not fair.” For a health system with multiple hospitals, campuses, remote locations and clinics, such a non-compete could effectively prevent you from working anywhere else in the state. When telemedicine is factored in, non-competes can rule out entire regions of the country.

Similarly, another provision that may be included is a non-solicitation clause. This prevents you from actively soliciting your patients or fellow employees to follow you to a new employer or practice.

One of the most important legal components in your contract is malpractice coverage. There are many types of insurance coverage. The key is making sure you are fully covered—now, in the past and in the future. Occurrence-based insurance policies cover incidents that occur while a policy is in place (even if they’re reported after a policy is no longer in effect). Claims-based policies are more common. They only cover incidents that occur and are reported while a policy is in place.

It’s important to make sure your “nose” and “tail” are properly covered. If you’re leaving an employer that is not providing tail coverage for a claims-based policy, you need your new contract to provide nose coverage (or “prior acts coverage”). Otherwise, you must purchase tail coverage yourself, and it’s pricey.

Expert review and red flags

As you review your contract, trust your gut — and the experts. For a favorable contract, rely on your physician contract attorney or advisor, be willing to negotiate and don’t ignore red flags.

“These are contracts, and it is easy for a few different words to be modified and make it mean something else,” says Street. “So while I don’t need an attorney to tell me what a good job for me looks like, I do need an attorney to tell me that the contract is what I think it is. … I need somebody who has expertise in the language and the local laws about this to say there’s nothing here that’s a pitfall.”

Attorneys don’t just help you read a contract correctly. They may also notice red flags that you don’t. “I highly recommend that physicians have legal counsel…advise them of any potential red flags,” says Middleton. These red flags may take the form of excessively long or wide non-competes or contracts that tie you to the employer for a prolonged period. Another red flag to look for is pushback on your questions and requests. An employer who is unwilling to have a conversation with you may not be a benevolent employer.

“There will be things where you’ll get an instinct to say, ‘I am not comfortable with this particular aspect of this employer,’” says Schaff. “I would just advise people not to ignore those feelings. You want to be clear and realistic about those feelings. …Is this really reflective of how this organization is?”

Of course, red flags don’t necessarily mean it’s time to walk away. They may just show you which topics to focus on in your negotiations.

Preparing to negotiate

“It gives me some chest palpitations, but it is really common just to sign [a contract] as-is and to take it at face value,” says Street.

Physicians avoid negotiations for all sorts of reasons. Maybe they feel hurried to sign. Maybe they feel the terms are already favorable. Maybe they just prefer to avoid uncomfortable conversations. Whatever the reason, it’s always wise to lobby for an improved contract.

If an employer is pressuring you to sign quickly, ask for more time. Don’t sign under the gun. “I have seen physicians get so worried that if they ask questions or push back at all, they could potentially lose an opportunity,” says Schaff. “They’ll hear an implication that they can’t negotiate or…that they need to get back to [the employer] right away. And then they feel the pressure: ‘I can’t get an attorney [or] expert to review this quickly enough. So I’ll just go ahead and sign it.’”

Street says that skipping negotiations is just trading present discomfort for future discomfort. If you skip the seemingly uncomfortable conversations now, you’ll end up with a job that doesn’t look like it could or should have. “Or even worse, getting into the job and six months later, finding out that someone who started at the same time makes 100 grand more than you do,” says Street. “That is a whole lot more uncomfortable than having a conversation on the front end.”

She advises physicians to think of negotiations as seeing if the employer can modify their offer in a win-win way. You still want to provide the value they’re looking for. “Your goal with negotiation isn’t to prove somebody’s right or wrong—or isn’t to win or lose. Your goal is to modify the job contract to suit you better. And if that can suit you better in a way that they can visualize and see still working with their organization…you’re more likely to be effective,” says Street.

Signing with confidence

Your ultimate aim is a contract you can sign confidently. You want to feel good about your future in this role— and after it. How do you know if that’s the case? Schaff offers four pivotal questions to ask yourself before you put pen to paper:

“Are you as sure as you can be that you want to work for this employer, given the future, your future colleagues, the organization’s reputation, etc.?”

“Are you absolutely clear on what will be expected of you in the job?”

“Are you absolutely clear on what you’ll earn and how you can earn more?”

“Have you asked and received acceptable answers to every question you have, big or small?”

If the answer to every question is yes, sign with confidence—and then go out and celebrate. •



Kate Brannen Smith

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