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What are the Sticking Points in Physician Contract Negotiation?

What are the Sticking Points in Physician Contract Negotiation?
Contract Diagnostics – 10/5/20

The priorities in your specific contract negotiation and discussion will always be customized based on what your story is. Long term opportunity? Just a few years? They have been looking for years or they just hired 3 last year in the same department? – each story matters and impacts how you approach the potential employer with your questions.

There are always several core considerations in any contract: Where are you going to work if it’s a large employer with multiple locations? What is the schedule? Call considerations? What’s your salary and bonus structure? How are they going to pay on termination? How is malpractice insurance structured? Are there restrictive covenants? These 100% core items should be very clear in all agreements.

So long as the position works out long term, maybe an extra level of detail doesn’t matter. It is when things do not work out that those core considerations -wages and schedule, insurance and restrictions, are going to impact your next move. Without a clear understanding of these items yourself and being clear in the actual agreement, might cost you $20,000 or $100,000+ if/when you leave. You may also be locked out of the area for work, and have to relocate your family.
Lost Wages
We’ve had many conversations with physicians who come to us and say, “I lost out on $20,000 in my last job,” or “They ripped me off $20,000” or “$50,000.” The employer might well have ripped off the physician, or it’s possible that the physician didn’t understand the employment agreement and how the bonus was paid. They might not have understood how the bonus was paid back if they left, or they might have misunderstood the expectation that it would be paid back. There may be policies about being employed the entire period (needs to be defined) or employed through the calendar year. These small details could be the difference between $25,000 in your bank account vs you feeling you were ‘ripped off.’ Some employers do act in bad faith, and yes, they try to rip off the physician. Other times, either the contract or the physician is just not clear on that expectation.

Not fully understanding your Physician Employment Contract could have significant costs on the backend when you want to leave a contract. You don’t want to face a situation where you’re ready to leave but you don’t even know what was included in your contract about lost wages. You do not want to be in the dark about a potential $50,000 payment due within 10 days of your last day – surprising costs like this can derail a young physician with their financial goals. When your financial compensation is at stake, you don’t want to find out unexpectedly that you have to pay for what you mistakenly thought was clear in the contract because you didn’t have it reviewed by somebody familiar with physician contract negotiations.
Frequently Overlooked Aspects
Besides clear details on wages, non-competes, and tail insurance, we also find lots of contracts that do not adequately define call. The employment agreement may not specify that call should be equitable or that call should be approved or even capped in a month. Often times employers do not want to include that in the agreement, but we feel this is important for both parties to know expectations.

Here’s a perfect story. Somebody close to me, a relative actually, was signing a general surgery contract. They had two surgeons. He was going to be the third, and they told him, “We have another one signing at the same time as you. You guys are going to start together.” In that situation, call will be Q4, right? He signed, but the other physician didn’t sign. Then they lost somebody over a couple of quality issues. Now general surgery call is 1:2, and it’s in a location that’s not as desirable for some people so the employer cannot easily hire another surgeon. Unfortunately, this surgeon did not have call defined well in the employment contract. They are now asking him to take more call, which he is forced to do as an employee. They are paying him, but the rate is less than what he feels his time is worth to take call. You may wish to just have your time, and not their money – but it may not be your choice when it comes down to it, pending how the contract is worded.

When you negotiate your physician employment agreement, have your call defined. Make sure it’s equitable, and then cap it. Specify compensation for additional call above the cap, and make the compensation painful for the employers so they can get locums in if you decide not to take the call. Call has to be covered, of course, but you should be able to control your schedule. The contract is where these expectations should be clear.

These are some sticking points that every contract should define: where and when you work, how and how much you’re paid, how your tail insurances and bonuses are affected if you leave, and the small but important matter of specifying call. Avoid the pain of unexpected lost wages and lost time with family by having us look over your contracts before you sign.

This is why it’s so important to have a professional review the minor details in contracts at the beginning of employment. Attorneys know the law, and they of course play a vital role. However, those that do not review these specific types of agreements daily may miss subtleties or various market trends.