Do doctors sign contracts? This question can be answered right away with an unequivocal yes. After their residency, a doctor will very likely go to join a practice group. In this case he will be asked to sign a medical contract.
Dealing with Medical Contracts
Physicians attend school to prepare them to work with patients and in medical settings. Many physicians are not adept or comfortable in working with agreements and with negotiating agreements. However, it must be confronted head-on as it can make a huge difference in your future. Before executing the medical contract, you should use that time to negotiate what is needed to make sure the medical contract covers all points effectively. Some things won’t be negotiable, but that doesn’t prevent you from asking.
How Are Contracts Negotiated?
Contract negotiations are like any negotiation. It is both conversation and numbers. You are establishing a relationship with an employer, and he or she is establishing a relationship with you. You both are determining how you will fit in with the company, the operations and the business strategy. You are searching for a good fit and ensuring everything is covered in the medical contract with the proper terminology.
Some Tips on How to Make a Successful Contract Negotiation
- Before negotiating a contract, you should read over it and take your time to understand everything before you sign. Clarify anything that isn’t clear to you.
- Ensure you get anything in writing that was promised before receiving the medical contract.
- Ask about money and long term plans. This is important for your future.
- Know what kind of patients the practice sees and what sort of payment contracts they have.
- Study and find out the total compensation package, not just the salary.
What Should I Look for in a Physician Contract?
Many ask what I should look for in a physician contract? Hiring a medical contract attorney is a wise decision, as you want to be sure everything is in order before you sign. A medical contract attorney will know and understand the rules of the region where you practice and will see that everything in the medical contract is worded and formatted correctly, so you and your practice of medicine are protected in the future.
There are several vital elements to look for in a DR contract. A physician contract covers many areas, many of which reflect compensation. But there are other concepts that a contract does need to cover. The medical contract needs to specify what the employer wishes, but it also needs to reflect your rights and your interests.
Vital Elements in a Medical Contract with AMA Considerations
We can’t cover every element in a physician contract here, but we want to cover the most critical points if possible. Here are some vital elements that you should look for in a physician contract.
- Guarantee of Income – an income guarantee ensures a physician will earn a certain amount each month after expenses. The period that this is done usually extends for one or two years. If a physician makes less than the guaranteed income from the hospital, the hospital will make up the difference. If the physician makes more, he keeps it at the end of the guarantee period. If he makes less at the end of the period, he would owe the hospital the difference. However, many of the income guarantees come with a forgiveness clause. Details should be reviewed in any contract.
- Benefits – benefits should be written out clearly in any contract. They usually include malpractice and health insurance. There can be other benefits offered when the salary is less than competitive.
- Hours Worked – the employer’s requirement may differ from the physician’s idea of how many hours he wants to work or is expected to work. This has to be looked over in any contract, and negotiated as needed.
- Vacation Time – this should be specified in any physician’s contract and is often a negotiated point.
- Forgiveness of Educational Loans – at times, the contract may specify that the employer will pay the medical education loans of the physician. This is a crucial point to look at in the contract.
- Partnership – especially for high in-demand specialties, a contract should contain a point about the path to partnership. This needs to be reviewed to ensure it is spelled out.
- Termination – the contract should contain a clause about termination – the two types of provision being covered (with cause, without cause).
What Should I Review in a Contract?
Many ask what I should review in a contract? When executing a physician contract, you should first review the contract. You will need to know what to look for in doing a review. This can reduce your future risk and set you up for a successful future. Agreements are just a fact of life when working in the healthcare system, and it is best to know what you are doing in signing a contract.
Reviewing contracts can require a special care and keeping an eye on detail. Critical information must be included, and ensure your expectations must be appropriately managed. Too often, those who usually are very careful plunge ahead, barely glance over the contract, sign it and do not think of the consequences. This can end them up in a bad situation. Consulting with an attorney can assure you have a contract where your interests are fully protected.
What to Look For in a Review
Several points must be reviewed, and if they don’t meet expectations, they must be negotiated. Some of these points are:
- Vacation Time
- Sick Days
- Time Off
- Conditions of Termination
- Hold harmless provisions
- Indemnification provisions
- Rights and Responsibilities
The contract you are given to look at is only a starting point. Any point within a contract can be negotiated. Both parties want the relationship to happen, so feel free to work on it to satisfy you. Be sure to fill in every blank on a contract so they can’t be filled in later by someone else. Initial any changes. Keep everything clear.
Doing Due Diligence
In reviewing a contract, even when having an attorney help you with the review, you must do your due diligence. It all comes under the heading of managing risks for your career. You want to have all parties happy, but everything written in proper, legal form, so nothing is in question. The safest bet is to hire a contract attorney to work with you on any review and negotiation.
Employment Agreements and Covid
Since COVID-19 began, physicians have faced unprecedented challenges, like all health care workers. Being offered a salary reduction is one of them. Many of these physicians have the same story, with most employers offering them a temporary 10% salary reduction through the end of 2020. Some employers, however, have offered entirely new agreements with substantially different compensation systems. (These new agreements reduce base compensation drastically or shift the entire compensation structure to a production-based system. If a long-term reduction in volume necessitates future compensation reductions, a pure production-based compensation system would negatively affect overall compensation. This is all dependent upon the following:
- The specialty physicians have in mind and if it has been negatively affected by the pandemic.
- Where they practice geographically
- How COVID-19 has impacted the region and its number of Covid-19 patients. (This may have caused short-term cancellations of elective surgeries and other related procedures).
Our attorneys’ most frequent question is whether a provider unilaterally accepts a salary reduction or there are other options?
Physicians Without Cause Termination
Every Physician Employment Agreement contains a without cause termination clause. Without cause, termination allows either party to terminate the Agreement for any reason with some notice to the other party. 60 to 90 days notice is the industry standard. So, if the physician refuses to accept the salary reduction, one option would be to exercise the without cause termination clause and terminate the Agreement. This is the likeliest scenario if the physician refuses to accept the salary reduction.
The downside for the physician, if the business exercises the without cause termination clause, is that all restrictive covenants (non-compete, non-solicit) will still apply in this situation. Any repayment obligations (signing bonus or relocation assistance) will likely be enforced. A physician can do nothing to stop their employer from exercising without cause termination.
Termination Concerns and Meeting Expectations
Physicians who desire to stay in their current position but not accept a long-term salary reduction can agree to an amendment. This amendment may contain a salary reduction for a limited period. This gives the business short-term cost relief, but limits the time the physician receives a reduced salary.
Peer Pressure by other Medical Staff Members
The final tactic utilized by employers is pressuring the physician into taking a salary reduction by using intimidation. Employers tell the physician they’re a terrible colleague if they refuse a pay cut when other physicians have agreed without trepidation. The appearance of being a “bad teammate” applies pressure to physicians who are reluctant to agree to a compensation reduction. This is an effective management tactic which each physician must consider.
Overall, there isn’t much a physician can do if offered a unilateral compensation reduction if the business is willing to terminate. However, physicians who work in specialties that are difficult to staff or in undeserved areas where it is difficult to attract new physicians have a much better likelihood of refusing a unilateral pay cut and may not be terminated. As with any physician contract negotiations, leverage is everything.
Physician Contract Lawyer
Since a physician contract is such an important document, competent eyes must review it. A contract attorney has the expertise and experience to do a thorough review.