Negotiating Post-Residency Contract

negotiate your post-residency employment contract 1

Negotiate Your Post-Residency Employment Contract

One of the most important parts of any physician job search comes right at the end of residency – when its time to negotiate the physician contract. However, this is the part many physicians are most uncomfortable with. Once you receive an attractive offer, you may be tempted to just accept it, sign the contract and get to work. This mistake can lead to lost compensation, unsatisfactory working conditions, and missed opportunity that may have you looking for a new job in a few years. On the other hand, a good negotiation and careful review of the contract can make all the difference.

 

The contract should contain everything discussed in the interview and more. Do not assume verbal statements alone will be remembered or honored. If a specific issue is important to you, make sure it is in writing. It is important to take time to thoroughly review the proposed contract, making sure that all issues that are important to you are covered by the written contract.

Checklist for Evaluating and Negotiating an Employment Contract

Duties and Obligations

  • Hours expected to work, including call schedules and overtime
  • Number of patients you are expected to see each day
  • What procedures you are expected to perform
  • Non-medical responsibilities (i.e., administration, meetings, community involvement, speeches, etc.)
  • Restrictions to moonlighting

 

Performance Issues

  • Patient volumes
  • Revenues generated
  • Quality of care
  • Clinical outcomes
  • Patient satisfaction
  • Utilization (cost savings)

 

Compensation

  • Flat salary vs. hourly
  • Based on fees billed vs. fees collected
  • Based on profits of the practice
  • Performance incentives
    • Bonuses
    • Revenue sharing
    • Profit sharing
    • Managed care risk sharing

 

Other Compensation

  • Signing bonus
  • Moving costs
  • Income guarantees
  • Educational stipend

 

Benefits

  • Malpractice insurance
    • Claims made vs. occurrence coverage
    • Tail coverage
    • Coverage amounts
  • Health/life/disability insurance
  • Time off
  • Pension and profit sharing
  • Continuing medical education
  • Professional dues and fees
  • Travel and entertainment expenses
  • Automobile allowance

 

Location of Facilities

  • Requirements to practice in multiple locations

 

Contract Terms and Termination

  • Length of contract
  • Provision for termination with cause
  • Are causes for termination clearly defined?
  • Provision for termination without cause
  • Restrictive covenants and non-compete provision
    • After termination, what restrictions are placed on you?
    • Geographic area, area of medicine, and time period

Checklist for Evaluating and Negotiating an Employment Contract

Graduating medical residents should find out everything they can about what the practice is truly like. How much physician and support staff turnover has there been? How profitable is the practice? Does the practice have or will it soon have heavy buy-out or deferred compensation obligations to retired partners? What is the practice’s medical malpractice history? Are there any lawsuits pending against the practice? Are the practice’s physicians trained in proper documentation and billing? Does the practice have a commitment to regulatory compliance? Do internet research.

 

In meeting existing physicians in the practice, a graduating medical resident should find out how long the other physicians have been there, what the patients are like, how physician extenders are used, how often the physicians are on call, what the volume of work is, and anything else he or she can think of that will affect day-to-day life in the practice. They should be sensitive to the “feel” of the place. Do the physicians and staff seem happy or tense? What is the reputation in the community of the physicians in the practice?

 

A graduating medical resident may be offered a generally favorable employment contract  containing most if not all of the provisions requested by the graduating medical resident, but if his or her employer can terminate it “at will,” it is not worth much. The time to make sure the agreement is worth the paper it’s written on is before a graduating medical resident packs up and moves to a new city.

 

Graduating medical residents often get into trouble by paying insufficient attention to the term of the employment agreement (i.e., the number of years it will run), the conditions for its renewal, and how and when it can be terminated. They do not want to be locked into a long-term employment contract with no provision for salary increases and/or promotion, and no way to get out of the agreement. Nor does a graduating medical resident want to be fired under a clause that allows the practice to terminate without cause on 30 days notice, when the physician thought he/she had a two-year commitment and were expecting to be at that job for the full two years.

Non-compete Provisions

Without a doubt, one of the most contentious issues that can arise out of a physician employment agreement is the enforceability of a non-competition provision. Such provisions are routinely included in employment contracts offered to prospective hires, but they are seldom the focus of pre-employment negotiations. After all, when newly minted physicians are entering into private practice, their focus is on the geographic location of the practice, the starting salary, and other working conditions; little attention is given to the restrictions that could be imposed on the physician in the future if he or she chooses (or is forced) to leave the practice. Contractual restrictions on the physicians future conduct can include such things as a prohibition against soliciting the practices patients, referral sources, or employees; a confidentiality requirement protecting the practices trade secrets or other confidential information; or a non-competition provision that limits where the physician can practice medicine after he or she leaves the practice. These types of provisions are typically called “restrictive covenants.”

 

Restrictive covenants are strictly construed so as not to violate the public policy in favor of allowing patients an independent right to see physicians of their choice. Non-competition provisions will not be imposed if the employer’s interest in enforcement is outweighed by the hardship to the employee or the likely injury to the public.

 

The reasonableness of a non-competition provision is based upon three factors: its duration, its geographic scope, and the specific activities (i.e., medical specialty, types of procedures) that are prohibited. If any one of these factors is deemed over-broad and unreasonable, the entire provision will be unenforceable.

 

A graduating medical resident needs to be wary of these non-competition clauses, since they can prevent the physician from making a living in the community if his or her employment ends for any reason. These physicians would be much better off negotiating, before the employment agreement is signed, a reasonable non-competition clause they can live with.

 

The time for graduating medical residents to consult an attorney is before they have agreed to anything in writing. This includes the letter of intent (i.e., LOI) that they are asked to sign. When the physician has decided to accept a job and has received a proposed employment agreement, the graduating medical resident should send a copy of that agreement to his or her attorney without delay.

 

Because the healthcare field is highly regulated, physician employment contracts frequently have to comply with highly specific legal requirements that don’t apply to employment contracts outside the healthcare realm.  Consequently, a general business lawyer, such as an attorney who handles real estate transactions for your family, may not be the right attorney to review your physician employment contracts or LOI. Just as there are physicians who specialize in different aspects of the practice of medicine, there are attorneys who specialize in healthcare law and more particularly in reviewing physician employment contracts.

 

Concierge Healthcare Attorneys, LLC offers flat fee (no hourly billing) letter of intent and contract review and negotiation services for graduating medical residents in all 50 U.S. States. This service includes unlimited text, email and telephone communications with my clients. I am the ultimate healthcare law insider, having held general counsel positions with two academic healthcare systems, and a senior counsel position with the American Medical Association, before opening my concierge healthcare law practice. Having held these insider positions, I am well versed in negotiating post residency physician employment contracts on behalf of both hospitals and physicians.

 

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