Physician Contracts Should Contain Specifics

Hospitals and doctors associations will draft physician contracts in vague and complex terms. To protect your career and financial interests, you should make sure that you understand language that outlines your duties, compensation, and other key provisions.

At Gardner Employment Law, we know what to look for in an physician employment contract. Read on to learn more.

Why Is Specificity in A Physician Contract Important?

For many physicians, signing an employment contract is a significant milestone that sets the foundation for their professional journey. However, hospitals and associations use language skewed in their favor. These entities want to maintain broad, flexible language that provides them with maximum control and wiggle room. In contrast, you need to prioritize specificity to safeguard your interests, especially to protect yourself from being overextended or undercompensated.

The American Medical Association (AMA) and the Texas Medical Association (TMA) have long cautioned physicians to approach their contracts with a critical eye. The AMA, in particular, provides guidance and resources to help doctors navigate the complexities of employment agreements. The key takeaway from these resources is clear: if it isn’t written in the contract, it’s not guaranteed.  Verbal promises and informal assurances will not hold up in court if disputes arise.  This is why you must ensure that every aspect of your job duties and other key components are clearly spelled out in the contract.

Vague contract terms can lead to disputes over workload, compensation, and even job security. For instance, a contract that simply states a physician’s duties as “as assigned” can be interpreted to mean any number of things.  This might include covering shifts at multiple locations or handling administrative tasks that were not part of the initial agreement.   Even if your chair or supervisor tells you not to be concerned, yes, be concerned.  You may find yourself stretched thin, leading to burnout and job dissatisfaction.

A well-drafted contract benefits both parties by setting clear expectations.  As the physician, you can avoid misunderstandings, protect your work-life balance, and ensure you are compensated fairly for your services. For healthcare organizations, clear contracts help attract and retain top talent, reduce turnover, and foster a positive work environment. Therefore, it’s in the best interest of both parties to negotiate contracts that are specific, transparent, and mutually beneficial.

Key Contract Sections Physicians Should Scrutinize

Physicians need to pay close attention to several critical sections within their contracts to avoid potential pitfalls. Below summarizes these key areas, the associated risks, and recommendations for protecting your interests:

• Duties and Responsibilities
  Hospitals often draft contracts with vague job descriptions, leading to confusion and burnout. You might be hired for a specific role but end up covering shifts in other departments or locations. To prevent being overextended, ensure your contract clearly defines your duties, patient volume, and any additional responsibilities.
• Compensation Structure
  You must understand how you will be compensated for your services. Hospitals may use complex formulas, like RVU models or performance-based bonuses. Clarify how your pay is calculated, including any incentives, to avoid discrepancies and financial surprises.  Know the elements of any formula used to calculate your pay.  Transparency in the compensation formula is key.
• On-Call Duties
  Vague on-call obligations can disrupt your work-life balance, requiring you to cover shifts unexpectedly. This can lead to burnout which can lead to costly mistakes and poor quality of life.  Negotiate clear terms for on-call frequency, locations, and any associated pay.
• Professional Liability Insurance
  Liability insurance coverage varies widely. Confirm that your contract specifies coverage details, including tail coverage, to protect against lawsuits after you leave. Know the extent of the coverage stated within the policy.  Ideally, negotiate for the employer to cover these premiums.
• Overhead Expenses
  Physicians in group practices may share overhead costs like rent, payroll for employees, benefits, and supplies. Medical equipment can be exceedingly expensive.  If you do not need that type of equipment in your specialty, you might want to ask why you are funding a percentage of the cost.  These operating expenses can add up quickly, reducing your income. Ensure your contract defines your financial obligations and consider negotiating caps on these expenses.
• Indemnification Clauses
  Indemnification clauses can transfer financial liability for legal issues to the physician, even if the hospital shares fault.  Aim to eliminate or restrict these clauses to avoid unfair financial burdens.
• Non-Compete Clauses
  Non-compete provisions are designed to limit where you can work and what you can do after leaving.  The law requires that your non-compete contain a buy-out provision.  You should make sure that the amount of the required buy-out is not exorbitant.  Negotiate reasonable geographic and time limits, and aim for a manageable buy-out amount to preserve your future career flexibility.

Proactive Steps for Physicians Reviewing Contracts

Given the complexities and potential pitfalls of physician contracts, you must review the process with diligence and caution. Here are some proactive steps to take to secure your professional future:

1. Consult Professional Resources: Utilize resources provided by the AMA, TMA, and other medical associations. These organizations offer valuable guidelines and checklists to help you understand what to look for in a contract. They can also provide updates on state and federal laws that might impact your agreement.
2. Engage Legal Counsel: Hiring a healthcare attorney can be a wise investment. A legal expert can review your contract, identify ambiguous language, and negotiate terms on your behalf. This step is particularly important if you are new to the field entering your first employment agreement.  Even if you are a veteran transitioning to a new practice, your should consult an expert.
3. Negotiate Terms Assertively: Don’t shy away from negotiating the terms of your contract. While it may be uncomfortable, especially for those new to this, remember that most contract terms are negotiable.  And if you don’t ask, you definitely will not obtain any relief.  Address any concerns regarding duties, compensation, on-call schedules, and restrictive covenants before signing.
4. Request Written Clarifications: Any verbal promises or assurances made during the hiring process should be documented in the contract.  Do not take someone’s verbal assurance.  If a recruiter or employer makes a commitment, such as a specific patient load or guaranteed time off, insist on having these details added to the agreement to avoid misunderstandings later.
5. Review Regularly: Employment terms can change over time, especially if you receive a promotion, change departments, or take on additional responsibilities. Periodically review your contract to ensure that it meets your current needs and still aligns with your role and expectations. You may want to request an amendment to update any outdated terms.

Contact Us Today.

Physician contracts are more than just paperwork—they are the blueprint for your professional life. These contract literally control everything you do, the compensation you’re paid, and the risks that you take.  You need to understand and negotiate your contract to save you from future headaches, protect your well-being, and ensure you are treated fairly.  We’re here for you if you have questions regarding your physician contract.