Physician Employment Contracts Troublesome Terms Whether Starting or Continuing A Medical Career

For graduating residents and fellows, their first physician employment contract may be received with emotions of joy and trepidation. The contract is typically lengthy, contains multiple restrictions on the physician’s practice of medicine, and legally complex. Even seasoned physicians recoil at first view of an employment agreement offered by large group practices and “captive” medical groups affiliated with hospital systems. In this blog, a few of the clauses that physician-employees will find challenging are examined—plus a few compensation tips:

• The “employment” paragraph leads off. The employer welcomes the physician-employee with warnings of immediate  termination if the physician fails to receive hospital privileges or, if before the start date, unsatisfactory background or reference information is received. Don’t permit the medical group to fire you before you have exhausted your appeal of an adverse recommendation by a hospital committee. Request the opportunity to correct or dispute any background or reference information the employer determines is unsatisfactory. Make certain that if early termination occurs, the non-compete covenant does not apply to you.
• Note that you are being retained on a “full-time” basis to see patients, take call, prepare medical records, comply with the group’s quality assurance program and risk management program and utilization review program and patient engagement and patient safety initiatives and…and…an endless list of policies and procedures. In consideration of these employer demands, request that you not be scheduled to see patients or have any other duties at least one-half day per work week.
• Did you get a signing bonus? Yes—nice! How about a retention bonus upon renewal of each term of the employment contract? Oh— you can ask for that?!
• Speaking of compensation—look at whether a sufficient amount is offered for continuing medical education and travel expenses reimbursement, paid time off (PTO) includes time for studying for the specialty board exam or taking the exam; and practice expense reimbursement includes license/DEA fees, local medical society dues, Texas and national professional society/association dues/fees, hospital and network credentialing fees, specialty board and life safety certification dues and fees, medical journal/newsletter subscriptions, books or online information services, and cell phone/pager monthly allowance. As Mick Jagger said “you can’t always get what you want, but if you try sometime, you just might find, you get what you need”.
• Are they paying you by work RVU? Are you paid a work RVU for performing non-clinical duties for your employer? Does your employer discount any of the work RVUs? What if you provide a medical service with an unlisted code—how is the work RVU calculated? There are countless ways to manipulate work RVUs that will decrease compensation.
• Working for a medical group that handles your billing? Must be nice—until the administrative staff or billing service start making errors and miscoding that result in denied claims. Demand the right to review all codes assigned and claims submitted for professional services. Make certain that your compensation is not affected by denied claims or overpayments that are due to coding errors or miscoding by the group’s billing staff or service.
• The non-competition restrictive covenant—if you are a primary care physician, no Texas court will enforce a noncompete of any length, geographic area or scope against you. If a specialist, know that no medical group may deprive the public of needed medical services for its own economic reasons. The public interests in access to specialized physician services and physician choice are negatively affected by attempts to reduce the supply of such services. Economic and population growth in Texas urban areas indicate the need to maintain the current supply of specialty physicians to meet patient demand now and in the future.

Other significant contract provisions that require scrutiny include post-termination medical malpractice insurance coverage (“tail”), practice buy-in, for cause termination events, without cause termination notice, “disability” definition, and legal fees and costs in the event of litigation/arbitration. A legal review is recommended to start or continue a medical career with full understanding of the physician employment agreement.