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  • Writer's picturePhysicians Financial Design

A Physician's Contract Starter Kit

Updated: Oct 10, 2022

First let me say that I am not an attorney, nor do I play one on TV. When scouring through the technical and legal implications of any contractual agreement, my official recommendation is to seek the advice of an expert who is well-versed in this area. There are many legal firms that specialize in contract review and some that are even geared specifically towards physicians. And for those who cringe at the thought of playing hardball with a potential future employer, many even offer negotiating services to act as the intermediary during contract discussions. To find such an attorney, you could start by contacting your state medical association to see what options exist through their resources. Otherwise, a quick Google search for “Physician Contract Review” could be an effective next step. With that said, the following article should get you pointed in the right direction when making considerations regarding your future employment agreement.


We’ll dive into the meat and potatoes of what’s included in most contracts in a minute, but first I’d like to recommend a quick exercise before you even schedule your first interview: PRIORITIZE. Prioritize the things that are most important to you in life and consider how that should affect the language of your ideal contract. For example, if spending time with your kids in the evenings and weekends is a top priority, then you should prioritize this in your negotiations. That way when the opportunities start coming in, you can stay grounded in what matters most instead of getting swept up into a flurry of flattering recruitment presentations.

With those priorities as the driving force of your new contract, let’s jump in to see what types of things could be included in an attending physician contract.


THE BOILERPLATE

This is often a standard agreement with very little wiggle room for negotiation. Somewhere in the contract you sign, there will be a clause that states that you agree with all the stuff listed in this agreement. This document will probably be much longer than the actual agreement that lists your pay, PTO days, and other negotiable items. The boilerplate agreement is designed to knock out all the “legalese” in one fell swoop to leave the negotiable aspects of your contract for a more concise document. The boilerplate will probably include definitions (like what constitutes a PTO day and how wRVUs are calculated). You may also see things listed in this agreement regarding your group insurance benefits (such as health, life, short-term disability, and long-term disability). Other benefits like your 401(k) policies could be described here as well because most employers don’t have the legal flexibility (due to ERISA and IRS tax codes) to offer different employees different benefits. Basically, the boilerplate agreement is all the “one size fits all” information that is mostly non-negotiable. Fortunately, most of the important stuff is negotiable, and that conversation usually starts with how and how much you’ll get paid.


YOUR PAY

Obviously, the first item of business is usually finding an employer who is willing to pay you what you feel you are worth. This can come through a variety of avenues, starting with what is guaranteed and what isn’t.


Guaranteed Salary

For new physicians (depending on specialty), there is often a guaranteed salary in the beginning to help get you off and running as you build your practice. Over time, that guarantee usually falls away and then you begin to work off a performance-based model based on wRVUs. To oversimplify the concept, the more profitable you are to your employer, the more money you’ll make in the wRVU system. This is designed to incentivize you to work harder if you want to make more money. Once you understand the system, you can layer that into your contract. If you feel you will be able to build your practice quickly, then having a longer period of guaranteed salary shouldn’t hold as much weight. You can save your negotiating chips for something that is of a higher priority to you.


Signing Bonus/Retention Bonus

In addition to your salary or wRVU compensation, many employers will offer an upfront bonus just for signing the contract. This is a great recruitment tool that you’ll often see listed in presentations. Keep in mind, if you leave this employer before your contract expires, you’ll most likely have to pay a prorated amount back. So, although the big one-time paycheck is nice, it’s best to think of it as part of your salary to help you compare offers. For example, if you get offered a 5-year contract with a $250,000 starting salary and $50,000 signing bonus, think of the signing bonus as $10,000/year of income for a total annual salary of $260,000. This may also be structured as a forgivable loan or training compensation while you finish your residency or fellowship.


Extra Shift Compensation

If the nature of your specialty is shift-oriented or if you have call shifts, you’ll want to make sure you get compensated above your normal salary structure for any extra shifts you work. Typically, an employer would prefer to fill all these shifts within the contractual obligation of the physicians on staff, but if there isn’t enough staff to cover all the shifts, they will likely turn to their staff to cover the gaps. Since you aren’t obligated to work more than your contract states, they may have to turn to locums to fill the shifts. And because locums can be an expensive solution for staffing shortages, it can work in your favor by cashing in on some extra hours and by looking like a team player for stepping in to cover!



YOUR HOURS

Shiftwork

If call shifts or regular shifts are something that you can expect within the realm of your specialty, make sure you know how many days per month you’ll be expected to take call, but also be sure to ask how those shifts are distributed (weeks at a time, weekends, holidays, etc). Additionally, knowing how far in advance the schedule is established and how much input you’re able to have are good things to know as well. But just remember, unless it’s in writing, it’s just their word. If these details would be a deal breaker, make sure it’s written in your contract.


Flexibility of Hours

One benefit that many specialties may encounter is the ability to create their own office hour schedule within the parameters of the contract. Many contracts will outline how many hours are to be spent on direct patient care and how many hours should be dedicated to administrative tasks. However, your employer may be willing to allow for a less traditional schedule than the normal 9 to 5. For example, my wife negotiated a 4-day work week as an option if she chose to maintain her schedule as such. For now, her patient care hours run from 7:30am to 5pm Monday through Thursday, but we also made sure her contract language allowed for the flexibility to change those hours if she decided she would rather work shorter days and see patients on Fridays.


Flexibility to Moonlight

Many contracts can be restrictive in what they’ll allow for a second job. If moonlighting is something you’d ever consider, I’d recommend you spend some time reviewing this portion of your contract. Some physicians choose to work extra shifts with another employer, but some primary employers would like to have the power to keep you from working with their competition.


OTHER LEGALESE

Non‐Competition

The non-competition clause or “Non-Compete” that you will find in most contracts limits your ability to go work for a competitor (or even start your own practice) after the contract is terminated by either you or your employer or it expires. Basically, make sure you know what restrictions will be placed on you if you decide to leave the employer for any reason. Most clauses include a timeframe restriction as well as a geographical restriction – meaning the employer can seek damages (AKA…sue you!) if you go to work somewhere within a specified radius within a specified timeframe after your employment was terminated. For my wife, she has a Non-Compete that states that she cannot work anywhere within 30 miles of her current office location for 18 months after she leaves her current employer. There is also a 10-year expiration on that clause, so if she puts in 10 years, the Non-Compete will go away and she’ll be free to work anywhere.


Non‐Solicitation

Like the Non-Compete, the Non-Solicitation Clause restricts your ability to directly pursue your patients and co-workers if you were to leave your employer. For example, if your Non-Compete allows you to change employers and still be located in the area where your patients could still seek your care through your new employer, you would not be able to directly market to these patients or try to induce them away from your former employer. Likewise, you would also not be able to try to hire away any of the employees of your former employer. Both should specify a timeframe where Non-Solicitation Clause would end and you will be able to begin soliciting your former patients and co-workers. If their standard policy sounds too restricting, you could try negotiating a reduction of distance or time for either.


Legal Resources

It is good know and see in writing that you’ll have legal resources to help you navigate through any cases or subpoenas that might get thrown at you. A great legal team is one of those things you don’t think about too much until you need them!


Malpractice Insurance

Speaking of legal issues, make sure you know who is paying for Malpractice Insurance. In almost all cases, the employer pays for this, but it might be a deal-breaker if that is not the case!


OTHER CONSIDERATIONS

Contract Term

Make sure you understand what the length of the contract is. Some contracts can be set up on a yearly renewal basis (basically either side can opt out after any given year), but some can be as long as 10 years or more. No matter what the length, make sure you know what will happen if you wish to leave that employer before your contract is up.


Moving Expenses

Often as an added perk, the employer will offer to reimburse you for your moving expenses up to a certain dollar amount. This is mostly self-explanatory, but make sure you understand what is reimbursable and how that process will work.


Additional Responsibilities

Read the contract to see if there is any vague reference to additional responsibilities “as assigned by employer.” This can give a lot of power to the employer to require you to attend committee meetings, fundraiser events, partake in mentorship programs, etc. While this probably won’t have a ton of room for negotiation, it could be a turn off for someone considering multiple offers.


Marketing

For you to be successful, you will most likely benefit from the use of marketing to get your name out there as a local provider. If this is something you think will be necessary for your success, make sure there is a statement in writing that your employer will provide marketing opportunities at their expense to support your practice.


FINAL TIPS

  1. Remember that you are interviewing them as much as (or more than) they are interviewing you! Physicians are generally in short supply, and you probably have the upper hand if you are willing to consider other locations or job opportunities.

  2. Seek the advice of another physician in the group you are considering hiring into. Take them out for dinner and pick their brain about workplace culture or any other info that wouldn’t necessarily be gathered from a contract or interview.

  3. Finally, keep in mind that this should not be considered an exhaustive list. Even though I’ve tried to cover the main bullet points, it’s important to remember that contracts can be extensive and complicated. If you have any reservations at all about a contract, pay an attorney to review it for you before you sign it.

If you’d like more tips on managing the transition into a role as an Attending Physician, check out my article “From Resident to Attending: 5 Financial Tips for the Transition”



Thanks for reading! For more articles geared toward young physicians and their money, click here or check out The Money Malpractice Podcast on any of the major platforms.


Until next time…KEEP SAVING LIVES AND KEEP SAVING MONEY!


Disclosures

• RichMark Private Wealth Management. LLC is registered as an investment adviser with the State of Michigan, and only transacts business in states where it is properly registered, or is excluded or exempted from such requirements.

• Content should not be viewed at personalized investment advice. Market events and other factors may affect the reliability of the potential outcomes. Simulated growth is purely hypothetical and does not represent actual performance.

• Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio.

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