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7 Things You Need to Know About Negotiating Physician Medical Contracts

The Parzivand Law Firm, PLLC Sept. 5, 2024

Physician contracts are more than just employment agreements; they are comprehensive documents that can significantly impact your professional life, income, and career trajectory. Whether you are a newly-minted doctor entering your first job or a seasoned physician considering a new opportunity, negotiating your contract is essential to ensuring a fair and beneficial agreement. Here are seven critical things you need to know when negotiating a physician medical contract.

1. Understand the Key Components of the Contract

Physician contracts typically cover several important areas, each of which can have long-term implications for your career:

  • Compensation and Bonuses: Includes base salary, performance bonuses, and incentives.

  • Benefits: Health insurance, retirement plans, malpractice insurance, and more.

  • Work Schedule and Call Duties: Details about your expected working hours, on-call requirements, and any flexibility in scheduling.

  • Termination Clauses: Conditions under which either party can terminate the contract, including notice periods and any associated penalties.

  • Non-Compete Clauses: Restrictions on where you can work after leaving the practice.

  • Partnership or Ownership Opportunities: Options to become a partner in the practice or own a share of the business. Understanding these components will help you identify which areas to focus on during negotiations.

2. Know Your Market Value

Before entering negotiations, it’s crucial to research and understand your market value. Factors influencing your worth include your specialty, location, years of experience, and the demand for your services. Websites like the MGMA (Medical Group Management Association) and industry salary surveys can provide valuable benchmarks. Knowing your value will give you leverage in negotiating a fair compensation package.

3. Consider the Compensation Structure

Physician compensation can be structured in various ways, such as:

  • Salary-only: A fixed annual salary.

  • Productivity-based: Compensation tied to metrics like RVUs (Relative Value Units) or collections.

  • Hybrid: A combination of base salary and productivity bonuses. Understanding the pros and cons of each structure is vital. For example, a productivity-based model may offer higher earning potential but also involves more financial risk. Ensure that the compensation structure aligns with your financial goals and work-life balance.

4. Be Wary of Non-Compete Clauses

Non-compete clauses are common in physician contracts, restricting your ability to practice in a certain geographic area for a specified period after leaving your employer. These clauses can severely limit your future career options. It’s crucial to carefully review the terms of any non-compete agreement and negotiate to minimize its impact. If possible, negotiate for a shorter duration, a smaller geographic radius, or the removal of the clause altogether.

5. Understand the Termination Provisions

Termination clauses dictate how and when the contract can be ended by either party. There are generally two types:

  • Without Cause: Either party can terminate the contract without a specific reason, typically with a notice period (e.g., 60 or 90 days).

  • For Cause: Termination can only occur under specific conditions, such as breach of contract or failure to meet performance metrics. It’s important to negotiate terms that protect your interests, such as a reasonable notice period and clear definitions of what constitutes “cause” for termination. Additionally, be aware of any financial penalties or obligations that could arise upon termination.

6. Evaluate the Benefits Package

Beyond salary, the benefits package is a crucial component of your overall compensation. Benefits can include:

  • Health Insurance: Ensure the plan meets your and your family’s needs.

  • Malpractice Insurance: Understand the type of coverage provided and whether tail coverage is included. Tail coverage is often very expensive to obtain once you separate from employment.

  • Retirement Plans: Look for employer contributions or matching, and understand the vesting schedule.

  • Continuing Medical Education (CME): Consider the allowance for CME, time off for conferences, and other professional development opportunities. A strong benefits package can add significant value to your contract, so don’t overlook it during negotiations.

7. Seek Professional Advice

Physician contracts are complex, and the implications of each clause can be significant. It’s highly recommended to seek professional advice from an attorney versed in employment law and physician contracts. They can help you understand the legal language, identify potential red flags, and negotiate terms that protect your interests. Investing in professional advice upfront can save you from costly mistakes down the road.

Final Thoughts

Negotiating a physician contract is a critical step in your career. It’s an opportunity to secure not only fair compensation but also favorable working conditions and long-term career growth. By understanding the key components, researching your market value, and seeking professional guidance, you can enter negotiations with confidence and achieve a contract that supports your professional and personal goals. Remember, this is your career—take the time to ensure your contract reflects your value and sets you up for success.