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Here is some basic contract advice for physicians receiving an offer and practices making an offer.
It’s that time of year when young physicians coming out of residency and fellowship are receiving job offers. Although I have written on this topic many times before, here is a reminder of some basic contract advice:
FOR THE PHYSICIAN RECEIVING AN OFFER
1. Have your agreement reviewed by counsel familiar with physician employment contracts. You don’t know what you don’t know!
2. Make sure specific deal terms have been included in the agreement. Oral promises, emails, etc. are not going to be binding on the employer, so important items should be added to the contract when possible. I like to focus my doctors on capturing the details of call, schedule and location in the contract, which are all lifestyle issues and will usually cause a physician to be happy/unhappy in their job. Compensation is, of course, also key.
3. Your agreement will likely have a non-compete provision if state law allows for it. These provisions are fairly standard and can often be enforced when reasonable in terms of duration, geography, and scope. I try to carve out some reasons when it will not apply (i.e. physician let go without cause). Young physician often inform me that their colleagues or mentors have told them non-competes are unenforceable. This is simply untrue. Don’t sign a contract if you do not plan to abide by the non-compete.
4. Understand the grounds for termination and determine your exit strategy. How much notice is required? Will you have to acquire a tail policy? Will you have a non-compete? Will you have to pay back a signing bonus or other amounts? Although it feels negative to focus on leaving before you start a job, these are some of the most significant provisions of the contract on which to focus negotiation efforts.
5. Make sure to ask for copies of the policies, rules and regulations of the employer. These are not just extra documents, but require review and understanding. Breach of these documents can result in a breach of the employment agreement itself.
Physicians should also be careful when signing a Letter of Intent. Even if it states it is not binding, once signed it can create an expectation on the part of the employer that the terms of the letter will not be negotiated.
FOR THE PRACTICE MAKING AN OFFER
1. Your practice may use a standard form of agreement for all physicians, however make sure the form contains the terms offered to a new physician and does not contradict what has been offered. This can be done through an addendum if the practice does not wish to amend the form of agreement. Additionally, a practice should review its documents regularly to be sure it reflects its operations/formulas and counsel should periodically review it as well to be sure provisions are legally compliant and protective of the practice.
2. Physicians sometimes have a lot of questions. I recommend my clients take the time to talk through a physician’s questions and set the stage for a cooperative relationship based on open communication. Don’t be annoyed by a physician who has sought legal advice. Reading a contract for the first time can be a scary experience! Good questions and thoughtful discussion and comments should be welcomed by the practice.
3. Be reasonable in the contract terms offered new physicians. I see many contracts with egregious provisions inserted by lawyers to which the physician-owners themselves would never agree. Treating physicians fairly can lead to a long-term relationship and trust between the parties.
Remember that the negotiation process is only the first step in the (hopefully) long term relationship between the parties, and can reveal a lot about both the practice and physician. Be sure that how you (or your counsel) handles the contract negotiation reflects the image you wish to portray.