Important Aspects of Physician Contracts

Written by: Dr. Nisha Cooch
Published on: Mar 26, 2020

Physician Contracts

By the time you’ve finished medical school, residency, and potentially a fellowship on top of that, you are enough of a medical expert to start practicing your trade. You know much more about your specialty than most people in the world – at least in a clinical sense. What you may not know, however, are the logistical and legal details of working in healthcare. Most physicians have not attended law school or business school and are not particularly well-versed in how to negotiate contracts because – why would they be?

Luckily, information from more seasoned physicians, as well as from attorneys, can help you navigate contracts as you enter the next phase of your life. Even for those who have been practicing, understanding the important aspects of physician contracts can help them avoid frustrating situations in the future if and when they pursue a new job opportunity.

Here are 3 major things to consider as you negotiate your contract:

  1. The non-compete. In some states, non-competes are illegal for physicians. However, in many places, a non-compete clause is likely to show up in your contract. The idea behind a non-compete is to increase the likelihood that you commit to the job and stay for a long period of time and to prevent you from leaving and becoming competition for your former employer. In medical sub-specialties, there are often simply not enough trained physicians for multiple practices to thrive in the same town, so a practice looking to hire a physician needs to ensure that if the new physician leaves, that doctor will have to go a certain distance before they are free to continue practicing.

It’s important to think about what a non-compete means to you and how it may or may not limit your ability to do what you want in the future. If you feel limited by the details of a non-compete clause, you can try to negotiate. If you’re in a position where the practice is having trouble recruiting people, you may have more luck changing a non-compete than if there are a lot of viable candidates. It is also worth noting that non-competes will not always be enforced because it takes time, energy, and money to enforce them.

  1. Malpractice insurance. Malpractice insurance is something you’ve probably thought about before you get to the point of negotiating employment terms, as there are several things about malpractice insurance that doctors notoriously dislike. You should first be aware of if your specialty has high malpractice risk. If the risk is low, then this issue may not be highly relevant.

If the risk is high, however, you want to make sure that you negotiate what is called tail coverage or the occurrence claims insurance coverage. The most important thing to keep in mind is that no matter how attractive the job may seem up front, you don’t want to get yourself in a situation where you feel trapped in a job you don’t want to be in because you’ll have to pay an astronomical fee to leave.

Doctor Negotiating Contract

  1. Compensation. Compensation in healthcare can be confusing, and adding insult to injury, compensation models are changing in many practices due to the shift away from fee-based services and towards value-based care. What you want to avoid is being unpleasantly surprised by an aspect of your compensation. Given how complex the compensation models can be, you should not hesitate to clarify the details with your potential employer. For example, can you expect a bonus? If so, what metrics is the bonus based on?

Takeaway: Beginning a new job in healthcare is exciting, but it is impossible to know how you will feel about the job a few months or years down the road. Putting yourself in a position to remain as flexible and protected as possible will help you feel like you can continue to develop yourself as you see fit. Ensuring that you understand the terms of your contract and know what to expect from your job are key to this type of flexibility and protection. If you cannot gain clarity from your potential employer, you can always consult an attorney to help you understand the implications of your contract or to help you figure out the terms that will best enable you to reach your goals.