It’s that time of year again when residents/fellows across the country receive their first job offers. As always, I encourage young physicians to obtain an expert legal review in order to be able to fully understand the terms of their contract. Although young physicians often complain about legal fees, many healthcare lawyers, including myself, work with young physicians on both fees and payment to make a contract review reasonable and accessible. In fact, I can say from experience that the cost of not having a contract reviewed can be much higher than paying those fees.
For those taking on the challenge of their own contract review, here are some important things to keep in mind:
• Try to focus primarily on those points which are significant to you and/or deal-breakers. There is no point in fighting over every part of the contract. Remember to handle yourself appropriately and professionally in all contract discussions (see related blog).
• The malpractice tail is extremely important to negotiate in every contract. Make sure that you understand which party is responsible for tail and under what circumstances. I strive to have the employer take responsibility for tail if the physician is terminated without cause, the contract is non-renewed or the physician terminates due to the employer’s breach. There may be circumstances where tail cost should be shared, such as a mutual agreement to terminate.
• Although many physicians believe non-competes are not enforceable, the truth is that a reasonable non-compete is legally binding in most states. The non-compete should clearly state the length of time it will apply and the specific geography covered by the provision. I like to limit non-competes to specific locations where a physician renders services and to the physician’s specialty and/or those activities directly in competition with the employer. Like malpractice tail, non-competes can be limited so they only apply under certain circumstances.
• When reviewing compensation language, take the time to compare the offer with available data to make sure it’s competitive for the specialty and do not be afraid to ask for examples that help explain how a formula will work. Physicians must also pay close attention to the impact of termination on payment of productivity compensation and bonuses. An additional concern is contract language giving an employer the right to terminate a physician once proper notice of termination without cause is provided. It is appropriate for an employer to pay compensation and benefits through the full notice period and physicians should be careful to clarify what this means if a physician’s compensation is productivity based.
• Physicians should be comfortable with the amount of notice to be provided by both parties when termination is without cause, taking into account the time it takes to find a new job and become credentialed or licensed for a new position. For cause termination provisions should be scrutinized for subjective language and reasonableness. Physicians should fight for the right to cure breaches when possible.
• Physicians are always responsible for billing and coding their own services. However, be wary of indemnification provisions where a physician is forced to take on liability for recoupments or paybacks that are demanded of the employer. An employer with proper auditing and education in place should not need to use such a provision and/or should be fair in its approach.
The best advice I can probably offer physicians is to make sure everything discussed with an employer is written in the contract — whether it’s locations you will work, the call you will take or the nurse being hired to work with you. Oral promises generally cannot be relied upon, and a physician needs to be careful that essential elements of the position, which will affect his or her satisfaction, are fully and properly addressed. Although employers will encourage young physicians to rely on good faith, be aware that the individuals you negotiate with today may be gone tomorrow.
It’s exciting to think about (finally) starting your medical career as a physician, but it’s also important to start it off on the right foot. Make sure you understand the terms of your contract before signing and be sure to get the help that you need.