Are you a doctor just coming out of your residency and getting an offer for a job with medical group? What are some of the key provisions for the physician employment agreement? And what type of issues should you be willing (or not willing) to negotiate? Compensation. Well, let’s start with the big one—compensation. Compensation paid includes not only salary but all the perks and fringe benefits that an employed physician might want or ask for. It is typical that base compensation is a set amount, say $x per year. With a bit of digging, you should be able to get a fairly good idea as to the range of salaries payable for your particular medical specialty in your particular geographic area. Sometimes, compensation is based on a formula, such as a percentage of net collections in the practice. Since you will be new to the area and reliant on your employer to provide you with your initial patient load, you might reasonably be wary of a strict formula compensation model. The bottom line with respect to the compensation provision in your contract is to make sure you understand it completely and can reach a level of complete comfort that it will work fairly for you under all the circumstances of your particular position. Ask questions until you are satisfied with the answers. And, of course, talk to your attorney about the compensation methodology in the contract early on in the process. Termination. You should pay very, very close attention to the provision in your contract dealing with termination. If you get a 2 or 3 year agreement, but your employer can terminate your contract without cause on 90 days notice, then what you have is really a 90-day agreement. Can you live with this? What if the worst happens, and your employer decides to let you go and gives you just 90 days notice? Can you find another position within that time frame? And, what if you’re already settled and happy where you’re living–are you going to be subject to a non-compete provision on a termination without cause that will force you to practice medicine somewhere else from your new home base? And your contract will almost certainly have a provision allowing your employer to terminate your contract with cause on very little notice. Make sure that the “for cause” provision limits what constitutes “for cause” to objective reasons, such as loss of your medical license or conviction of a felony. If the “for cause” provision gives your employer the ability to make a subjective determination that your employment should be terminated because you’re bringing disrepute on the practice or your conduct is unacceptable to the employer. It also might be in your best interest to include in the termination provision an ability on your part to cure any possible default, say during a 30 period after you are notified of the default. Tail Coverage. It is often the case that an employer will provide in its “standard” contract that the employed physician pay for tail coverage if the contract is terminated. However, what if your contract is terminated by your employer without cause? You have no control over that, and didn’t do anything wrong–the employer just decided to terminate the contract. Why should you be responsible for paying for tail coverage in that event? Consider negotiating with your employer to only require you to pay for tail coverage if the contract is terminated for cause. Also, you may want to see if the employer will agree to bear the cost of tail coverage regardless of the reason for your leaving the group if you’ve been an employed physician for a good number of years, say 4 or 5. Covenant Not to Compete. It’s likely that your contract will include a covenant not to compete. Make sure that it is not too broad in geographic area or too long. In Tennessee, the maximum length of a covenant not to compete in a physician employment agreement is 2 years and the geographic area can be no greater than the county in which the physician practices or 10 miles, whichever is greater. Other Key Provisions. Other important provisions of a physician employment agreement include the provisions related to call coverage, buy-in to other ancillary medical providers, such as ambulatory surgery centers, and the buy-in to equity status in the medical group itself. It is crucial that you understand and are comfortable with all the terms and provisions of your employment agreement. The sooner you speak with an attorney who is knowledgeable about physician employment agreements and can advise you on your negotiation with your prospective employer, the better. Once you get an indication of interest from a medical group or hospital about hiring you, it is time to find a lawyer to work with you. In that way, once you get to the point of signing on the dotted line, you’ll be sure you know what your deal is and that you’ve been proactive in trying to get the best deal possible under the circumstances.
