• Ann Wood

A Guide to Physician’s Employment Contract Terms and Negotiations

Setting up and agreeing to an employment contract can make your work life great, or conversely, create hardship. Understanding your employment terms and learning to negotiate can be very useful skills to have.


What is important for you may be different for other people. A good place to start is to evaluate what it is you want from your job. Thank about what makes a job more valuable to you, whether it be autonomy, flexibility, salary, etc.


When reviewing a contract with an existing employer, see if there’s conflict between what you value and your existing employment terms. Asking for what you want will help improve your negotiating skills for the future. It’s a good idea to let your company’s HR manager or your boss, know ahead of time what you want to talk about. This way they can be prepared for your conversation and negotiation. If any changes occur, it is critical that you get all terms of your employment contract in writing. This reduces the potential for mistakes and misunderstandings. Check out resources, such as the AMA Model Employment Agreements manuals, to understand provisions and language commonly used in contracts.


Understanding your obligations is another key component to your employment. Expected hours of work, availability, on-call hours, outpatient care duties, administrative duties, and the type of medicine practiced.


Beware of indemnification clauses which are becoming more common among physician agreements. This clause may say that you will cover the employer’s liability, loss, damage, and expenses that could arise out of your conduct. With this comes the possibility of a pricy, unpredictable, and open-ended obligation, even if malpractice insurance is in place.


Look for noncompete clauses. While varying by state, in certain cases, a noncompete can restrict future employment and can include clauses on damages due in violation of the noncompete restriction.


Compensation arrangements can be exciting and confusing at the same time. It is important to thoroughly understand your employment terms, especially with medical groups moving towards productivity-based compensation. Be aware of attached protection terms and targets based on industry benchmarks as these can impact your compensation. Think about a production model for a contract, do the math and understand if it would benefit you.


Understanding your compensation model, and whether it is fixed or variable, is another crucial element. Have someone walk you through it, and don’t forget to have knowledge of the physician employment market beforehand. For example, know how much people are typically paid for the position you’re looking at versus how much you are or will be paid. Be aware of what factors may impact your income. Benchmarks, productivity, billing, or collections could all be tied to your performance. Similarly, you should know the value of your benefits package and how to assess them.


To ensure that you are not stuck with an extended term for time in the position, it is important that there is either non-renewal or without cause termination language. This allows for flexibility regarding your contract’s duration. Usually, employment contracts are a mutual agreement between the employer and the employee with both having to sign their consent. However, if unilateral amendment language is present, then the employer can change the terms of agreement without an employee’s consent. Due to employer advantages like these, some employees feel helpless when thinking about negotiating the contract. Think of negotiations as conversations to try to come up with a mutual agreement, something physicians do every day.


In preparation for a negotiation, learn who you will be talking to and what their priorities are. Think about how you can be the solution to their problems. Some of this information can be found on the company’s website or connecting with other employees. Don’t forget to ask for information during interviews.


Know and feel confident about what you bring to the table with your clinical skillset, quality metrics of the industry, leadership, and communication skills. Reminding yourself and your institution of how your importance can be used for mutual advantage.


Lastly, think about alternatives to what you are asking, in case that they say no to some of your requests. Prepare to respond and advocate for yourself ahead of time to ensure a smooth discussion. Consider consulting with a financial advisor or legal expert to review a contract if you have questions.


Sources:

1. https://www.medicaleconomics.com/view/5-things-to-consider-before-signing-a-physician-employment-agreement?page=6

2. https://financeforphysicians.co/2021/07/15/how-physicians-can-negotiate-better-employment-terms/

3. https://www.ama-assn.org/residents-students/career-planning-resource/understanding-employment-contracts

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