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When physicians sign an employment agreement, they often focus on patient care rather than the fine print. However, poor physician contract negotiation can lead to lower pay, excessive work hours, and costly liabilities. Here’s how to negotiate better terms and protect your career.
At Gardner Employment Law, we understand that a physician prefers to spend his or her time helping patients rather than reading contracts. If you have a contract you’re unsure about, or if you need a new contract drafted, we’re your go-to source to get it right.
Why Physician Contract Negotiation Pays Off
Every employment agreement is negotiable—until it isn’t. If you sign without reviewing key terms, you might miss out on higher compensation, better benefits, and crucial protections. Hospitals and clinics expect negotiations, so don’t leave money or job security on the table.
A 2022 CHG Healthcare survey, cited by the AAMC (Association of American Medical Colleges), reported that physician turnover rates are at an all-time high. This gives negotiating leverage to qualified doctors. Additionally, corporate giants like CVS and Walgreens are entering the healthcare space, making contracts increasingly complex.
Key Strategies for Physician Contract Negotiation
Understand Your Salary Structure
Physician contracts often include multiple pay components, such as:
- Guaranteed salary – A set annual amount (e.g., $200,000 per year)
- Base salary + productivity bonuses – A stable salary with incentives based on performance
- Pure productivity model – Compensation solely based on revenue generated (“eat what you kill” model)
Be cautious of vague terms like “net receipts,” which may reduce your earnings due to employer deductions. Always ask for clear payment formulas before signing.
Watch Out for Insurance and Indemnification Clauses
Two critical clauses to review:
- Malpractice Insurance: Does your employer provide tail coverage if you leave?
- Indemnification: Could you be held financially responsible for a malpractice lawsuit beyond your coverage limits?
These provisions can leave you on the hook for significant expenses, making contract review essential.
Limit Non-Compete Restrictions
Texas law allows non-compete clauses in physician contracts, but they must include a reasonable buyout option. A poorly negotiated clause could:
- Prevent you from practicing within a 10-mile radius of your former employer
- Force you to relocate to continue working
- Create costly legal battles to challenge the restrictions
If your contract contains a non-compete, negotiate for reasonable terms or legal review before signing.
Examine Termination Provisions
Termination clauses dictate how and when your employer can fire you or how you can resign. Key points to check:
- Notice requirements – How much advance notice must you provide?
- Severance pay – Will you receive any compensation upon termination?
- Extended separation periods – Will you be forced to continue working after resigning?
- Effect on bonuses & benefits – Will you forfeit unpaid bonuses if you leave?
Your contract should include protections against unjust termination to ensure job security.
Protect Yourself from Texas Medical Board Issues
Contract terms can impact your standing with the Texas Medical Board (TMB). If you’re terminated without cause, restrictive contract language could:
- Trigger TMB investigations
- Limit your ability to transition smoothly to a new practice
- Affect your professional reputation
A well-negotiated contract can help prevent unnecessary board troubles and protect your license.
How We Helped Dr. Lee
Dr. Lee, a young physician specializing in internal medicine, was excited to accept a promising job offer in Texas. However, buried in the contract was a strict non-compete clause that would have forced her to relocate out of state if she decided to change employers. She was also unaware that the contract contained ambiguous bonus structures and unclear termination terms that could jeopardize her financial stability.
Our legal team carefully reviewed her contract and negotiated significant improvements:
- Non-Compete Buyout Reduction: We secured a reasonable buyout clause that allowed her to remain in Texas if she left the job.
- Clear Compensation Terms: We ensured transparency in bonus calculations and productivity incentives, guaranteeing she received fair pay.
- Fair Termination Protections: We adjusted the termination clause to provide her with adequate notice and severance options.
Thanks to these negotiations, Dr. Lee was able to confidently sign her contract, knowing her career and financial interests were protected.
Why Should a Physician Consult a Lawyer?
Physicians are some of the smartest and best-trained professionals in the workforce, but employers and their legal staff know how to slip terms and complex provisions into long, boring contracts. A physician’s job is to save lives and provide the best care possible for their patients, but an employer’s job is to run a business. Hospitals, healthcare providers, and large conglomerates have teams of crafty attorneys who are paid handsomely to draft the best possible contracts for them. If a physician doesn’t have an attorney in their corner to fight for them, they may find themselves at the whim of an unfair and unprotected employment contract.
If you want to know more about how to negotiate a contract with your new hospital, clinic, or physician association, feel free to reach out to us.