Signing your first employment agreement is arguably one of the most important parts about landing your first permanent position.
Take the time to do the homework and speak with professionals so you can be certain that you’re signing a great deal!
Employment Agreements
Read the entire document yourself – The average contract is over 1,500 pages (double spaced), but don’t be hasty.
- Verify that what is written matches any verbal agreements.
- All employment contracts should have a beginning and end date.
- Make sure the contract is comprehensive and addresses all potential conflict points in the future.
Make sure the contract is comprehensive and addresses all potential conflict points in the future.
- Does the contract limit your capacity to be involved in your own independent medical projects and jobs?
- Does the contract give the employer the right to dictate how, where and when you practice?
- Does the contract stipulate that you must pay the practice or hospital back if you leave before a certain date or do not generate enough profit?
Be aware of the average income offered for a new physician in the area where you plan to practice.
- It is not uncommon for the salary structure to shift each year – salary, to salary plus productivity, to only productivity.
- If you receive an offer with a first-year income much higher than the average, be sure to ask the group what your second year’s income will be based on. If the first year salary is higher, it may be because the second year income will be on productivity alone. If this is the case, be sure there is a good opportunity to build your practice quickly!
- Review compensation data here.
Productivity or profit-sharing arrangements hold the greatest potential for friction
- These arrangements link your income to factors including the patient income you generate, the total net or gross income the group generates, the number of hours you work, the number of patients you see, etc…
- If a productivity arrangement is part of your agreement, you should know exactly what your productivity will be based on.
Day to Duties
- Before receiving the contract, you will have discussed practice life, call rotation, the patient population, the volume of work, etc… Make sure the verbal information matches the written contract.
- Non-patient care duties – These are common for hospital-based physicians and may include teaching, administrative chores, utilization management, quality assurance meetings, peer review and more.
Termination – Most contracts contain termination provisions and these should be analyzed closely.
- Review provisions for termination with and without cause.
- Other aspects that should be viewed carefully –
- Compensation upon termination – bonus provisions due at the end of the year may be prorated and distributed.
- Malpractice insurance – does your policy include tail provisions in the event of separation? Will you have to reimburse your employer for insurance premiums?
- Your stake in the organization – If you have agreed to any form of deferred income, the contract should stipulate the awarding of that income to you at the time of termination.
- Buy-in/buy-out provisions – if you are buying into the practice or have bought into the group, the contract agreement should spell out the basis of buy-out provisions in termination.
- Non-compete clause or restrictive covenant – these are legal in most states but should be reviewed closely, as they will differ based on state law.
Attorney Review
Don’t sign anything until an attorney that you know and trust reviews the contract – the institution you’re signing with wrote the contract to protect themselves, so this is the best way to also protect yourself.
- Always! Always have an attorney that specializes in health care contracts and state/local employment laws review the agreement document.
- To find an attorney, ask for a referral from established physicians in the area.
- If you are moving somewhere new, contact the American Bar Association and they can recommend someone with employment contract experience.
- Lawyers typically charge an hourly rate, though the cost can vary greatly depending on the area. (You can also ask your lawyer if they have a flat rate available for contract review.)
Negotiations
The type of employer you are signing with will largely dictate how much you can negotiate – established practices that recruit regularly may have a deal that works well. Newer practices or those that have never hired from the outside ma be more willing to work with you. HMO’s seldom (if ever) waiver from their standard contracts.
- Verbally discuss what you want up front. Don’t be afraid to ask – you get nothing if you don’t ask!
- Be professional - They will be observing you throughout negotiations, and you should observe them as well.
- Remember that the goal of negotiation is to create a win-win solution, not to win at the expense of the other party. Be prepared with your priorities and negotiate whatever terms you feel are truly essential to job satisfaction.
- Return to unresolved issues after most of the bargaining is done. At that point, added pressure to find common ground creates a greater bargaining base for both parties, because the success of everything you’ve done so far hinges on resolving these few remaining issues.
