Now that you have a job offer, an employer will follow with an offer letter or a detailed contract. Some institutions still do not use written contracts and abide by “employment at will,” which essentially allows them to terminate an employee without cause. Even though most employment contracts are written in favor of the employer, you should insist that all verbal promises be in writing. Always have an attorney knowledgeable in medical contract law in the state you will be practicing (not the state you are currently residing) review the agreement.

A sample agreement is highlighted with the sections below that are important for you to review. You should discuss each of these areas with your attorney in detail.

Terms of Contract

• Review the Effective Date: Does it become effective immediately, or is there a presumptive start date?

• Length of Contract: Usually the length is one year with automatic renewals. Are there conditions for renewals such as performance?

Duties and Responsibilities

• Hours: Are the hours and on call policy specified?

• Patients: How are patients assigned, especially if there is a productivity clause?

• Restrictions on Outside Work: Are you restricted from moonlighting? This is typical in most agreements.

Compensation

• Salary: What is the amount, and how frequently is it paid?

• Tax Withholding: Are you considered an employee or an independent contractor? If you are an employee, all taxes are computed and deducted from your paycheck. If you are an independent contractor, you are responsible for all taxes including the employer’s contribution of Social Security taxes, which effectively decreases your net income.

• Bonuses: How are bonuses calculated and paid? If productivity or a number of patients seen is a criterion for a bonus, make sure there is an accurate tracking system to count the numbers.

Benefits and Time Off

• Health Insurance: Does the employer cover the entire cost for an employee? Is family coverage available? Is there a choice of plans with HMO and PPO?

• Malpractice Insurance: Is there malpractice insurance with a carrier or self-insurance? Who pays for tail insurance? An employer usually pays for tail unless an employee voluntarily leaves.

• Other Insurance: Is life and disability insurance available? What are the costs?

• Vacation: What is the policy for vacation, sick leave, jury duty, and military duty?

• CME: Is there coverage or reimbursement for CME?

• Other Benefits: Is there reimbursement for state license fee, hospital privileges fees, professional dues, books, and journals? These are all usually negotiable.

Buy-in for Partnership

• Terms: What are the exact terms and buy-in amount for the practice? Often the terminology is “to be negotiated at that time,” which is not desirable.

• Valuation: Does buy-in include accounts receivables, equipment, goodwill, real estate, inventory, and un- unknown liabilities?

• Calculation: How will the value of all assets be determined? By appraisal?

• Payment Plan: How is the buy-in paid? As a lump sum or over a period of time?

• Estimated Amount: Approximate value of buy-in: it is IMPORTANT to get an approximate value of the buy-in in advance so you are prepared for the amounts required. Practices that have significant real estate and equipment can have buy-ins that are much higher than your annual salary and will require financial planning. Most practices will not commit to a specific buy-in number as assets and values change over the time required for your partnership track. However, they can give you an idea of the current valuation, which is nonbinding.

Termination

• Termination for Cause: There are specific reasons that the employer can terminate the agreement, such as loss of license, loss of hospital privileges, conviction of a felony, failure to follow and not correct policies and procedures. The employee can also terminate the contract for breach, such as not getting paid, insolvency, or exclusion from Medicare.

• Termination without Cause: Most employers will insist on a thirty-day notice for termination without cause. You should have a reciprocal right to terminate also.

• Issues at Termination: Several issues need to be clarified at termination including malpractice tail coverage, liability for previous actions, status of hospital privileges, and restrictions on competition, which is discussed next.

Restrictive Covenant

All employers want to restrict your ability to do harm to the practice if you leave by either taking your patients with you or actively recruiting patients from their practice. So most contracts will have a “non-compete” clause, which will limit your ability to practice within a certain area.

All employees prefer to avoid signing a “non-compete” because if the position is unsatisfactory for any reason, then you may be forced to move elsewhere to practice due to that “non-compete.” You want to make sure the area covered is limited to where the practice is geographically located, usually within fifty miles or less. The term of the “non-compete” is also important as you may be able to move back after some time. The minimum time is one year with a maximum of three years. State laws vary widely, and it is crucial that an attorney who is well-versed in this area in the state you are practicing review this clause carefully.

Ultimately, you may be forced to sign a “non-compete,” especially with a group practice that has been successful and well-established in the market. You may be able to ask them to waive the “non-compete” if termination is without cause. However, if all members of a group have signed an agreement, there is no point in wasting your time as the group cannot have different conditions for different members of the group.