Physician Contract Review Mistakes Newbies Make

As a medical student, resident, and fellow you have overcome your share of challenges.

You’ve done something that only a very rare group of people manage. You survived the application process, long hours of study, and many uncomfortable moments in your quest to become an attending physician.

I promise you, the next step is less of a challenge! It’s more of an art, and it’s one that you can easily learn.

The most important thing to keep in mind is your worth.

Remember what you have already invested so much into your future. I am not just talking about money. There is that, but there was also sweat, tears and time. Doubts and anxiety.

Forget being afraid to raise your hand in class! Being a budding medical professional often meant times of being in the spotlight while working on questions of life and death.

As someone whose brain is regularly exposed to new circumstances, and compared to the effort of becoming a doctor, contract negotiation will be a breeze for you!

That is, once you understand a few things about physician contract negotiations, which is unique in the broader field of contracts. There are no standard physician contracts. They range from very simple to extremely complex!

Physician contract negotiations will involve knowing which areas are “just a problem” for new attending physicians and which ones can be real landmines down the road. I am talking about several years in the future.

That means you will want to know how to handle the physician contract negotiations in a way that benefits your future goals.

Let’s look at some areas that you’ll want to become familiar before you begin the process.

Physician Contract Negotiations 101

What does having multiple job offers or being prepared to walk away from a job offer do for you? It gives you the leverage to ask some tough questions.

During physician contract negotiations you will be told the agreement they are offering is “standard” and “non-negotiable”.

However, your ability to make some changes, for example with your working hours, makes the process seem more like a negotiation, instead of a dictatorship!

Daily Concerns

These are the things that concern your daily life. In the excitement of signing a new contract they might not seem to weigh very much, but overall and over time, they will have a huge impact on your lifestyle.

The first step will be finding a job that’s a good fit.

How will you know if the job is right? When you are involved in your physician contract negotiations, you listen to your gut and read the small print.

A good fit will reveal itself in the details–make sure those are written into your contract.

That means the hours you work during a shift, your call schedule, and how far you drive to your work stations. These all have a huge impact on your “outside” life.

The administration you are working with may attempt to gloss over these daily details, and in your excitement and the newness of it all, you may be tempted to let them. However, the nitty-gritty of your schedule is very important to your life outside of working hours.

One of the daily grinds can be commuting. Most people want to keep spending hours in their car to a minimum. As a busy physician, you probably feel that way, too. That is why it is important to make sure the exact locations of your workplace will be clearly stated.

Find out if the employer expects you to spend time at the main hospital location or at a satellite office.

Don’t assume, know for sure!

The employer may leave your scheduling clauses vague.

While you want to be flexible in order to deal with the unexpected things that come up when you are a physician, you don’t want to put yourself in the position of being pushed into a corner without any control.

The employer may leave your scheduling clauses vague.

While you want to be flexible in order to deal with the unexpected things that come up when you are a physician, you don’t want to put yourself in the position of being pushed into a corner without any control.

As the new attending physician with the least seniority, you can expect to get stuck with the worst on-call hours. However, the hours should still be fair in comparison to the other new physicians.

The ability to take time for yourself and recharge will benefit you in relationships and the longevity of your career. Burnout is real and it can happen to you.

How do you balance the need for workplace flexibility, that goes along with a demanding career, and make sure that you have time to rejuvenate?  during your physician contract negotiations?

The work hours, call schedule or shift location must be written into the contract.

Why written?

Yes, they promised you.

But did you get it in writing?

We would like to take people at their word and trust them. However, things change, people change, most importantly administrations change!

A verbal agreement won’t cut it for a long professional relationship, especially if a new administration is brought in during the time covered by your agreement.

Compensation and Benefits

Another important section of your physician contract negotiations is compensation and benefits.

Standardized compensation is typical in the current climate of large hospitals and medical groups compensation. That means a new attending physician may not have room to negotiate their starting base pay. The only caveats may depend on location, smaller group size or if you are trained in a specialty field.

Are you applying with a physician-owned practice or a hospital group? Or an academic, state or federal employer? What is the leadership structure like?

Depending on what type of employer you are considering, you can check out their policy and procedure manual, and there may be some negotiation wiggle room.

However, part of the way you are compensated are the benefits. They add value to your income.

Benefits that some employers typically offer:

  • Paid Time Off
  • Parental leave
  • Health insurance
  • Disability insurance
  • 401 (k) contributions
  • Continuing medical education

There are additional ways that employers compensate employees, so pull out the employee handbook and take the time to review them.

It will “benefit” you to become familiar with the benefits package!

What Does Productivity Have To Do With It?

Productivity may have something to do with your compensation–or receiving a bonus.

That means it is important to find out during your physician contract negotiations how a potential employer will define your productivity!

Is it going to be how many patients he sees a day? How many shifts worked? Relative Value Units? Will there be a productivity ramp-up period?

Why is it important?

How you and your fellow physicians are compensated will ultimately affect the workplace atmosphere. I am talking about the relationships you have with the administrators and other physicians.

Not to mention the effect your “productivity” may have on your personal finances!

Termination and Tail Insurance

You sign a contract and you think you’ll stay until you reach the end. The problem is that you might not. The decision you make could affect your finances for a very long time. That makes the termination and tail insurance section another great place to pay attention during physician contract negotiations. This is also a section where you can do some negotiating.

Tail insurance covers your tail in the event you leave your place of employment and someone files a malpractice suit.

Why are you leaving?

Did you reach the end of your contract?

Were you terminated without cause? With cause?

Some contracts can be ended with due notice without any cause.

Each scenario has a different implication for who pays the tail insurance. You may be liable to pay all or part of the tail insurance.

It all depends on the reason you leave and the wording of the contract.

Read this section of the contract carefully and understand what each everything means!

Make sure that “cause” is clearly and specifically defined.

Pay It Back

We’ve all heard the phrase “Pay it forward”. Well, this is not that.

In the event of termination, you may be required to pay sign-on bonuses or student loan repayments back.

Whether you will have to pay anything back depends on how long you’ve been working for the employer and if you met the prescribed forgiveness time period.

Something you may try to do when working on physician contract negotiations is to shorten the vesting schedule or pro-rate the forgiveness schedule.

I’ve had clients who “vested”, for lack of a better word, between two to five years. Clients are not supposed to pay taxes on the student loan incentive until it was actually forgiven.

However, when they left their position early, and they had taxes withheld and paid the taxes, then there was a huge problem. The client would probably not have the cash to pay back the employer and run into income tax reporting complications.

It’s important for you to understand what the payback requirements are, just in case you terminate your contract early for any reason.

The takeaway for this section is to understand how long you have to work for your employer before any bonuses or loan repayments will be forgiven, and what will happen to them if you leave.


Then there is the non-compete.

Which is designed to protect the employer from an employee who comes in and learns all the “trade secrets”, then moves somewhere near and taking clients with them.

You shouldn’t dismiss the possibility that you may want to leave your new place of employment before the contract ends.

Many non-competes are examined to determine their reasonableness before they are legally enforced. The time period, geographical area and what the noncompete excludes a physician from doing are taken into consideration.

I know, you are wondering what is considered reasonable. For instance, something that is so subjective, what is a reasonable length of time? I’ve been told the window was six months to three years. However, they are usually between one and two years.

I had a client whose noncompete was for a sixty-mile radius. Which meant they couldn’t work in most of Southern California. This was in addition to having to pay back a bonus that had been stretched over three years. I felt like that was unreasonable.

The radius reasonableness depends on whether the radius is in a highly populated urban area or sparsely populated rural area.

In California, your patients will more than likely be from a smaller, but densely populated area. They don’t have to drive sixty miles for healthcare. However, in rural Kansas…the draw area is farther out.

Although some non-competes are believed to be unethical when they are too restrictive or disrupt the flow of patient care, most states allow them, with the exception of California, which doesn’t uphold them–even the “reasonable” ones!

Having a non-compete clause can potentially away some of your immediate power. Consider how you would feel if the job was a terrible fit. Is there a walkaway clause? Would you be able to leave and find another position nearby?

A non-compete could potentially prevent you from practicing your medical specialty within a certain geographical area or for a period of time. This part of the contract could affect any new job offers you are considering or your ability to set up your own practice.

When working on physician contract negotiations check out the wording in your non-compete. You do have some wiggle room, but try to envision every possible scenario. Find out what you will or won’t be able to do in the event of voluntary (or otherwise) termination.

There you have it…something to get you started when you consider physician contract negotiations.

I want to gather some tips so that you can review them before you start your own physician contract negotiations:

  • Understand the benefits offered
  • Understand the non-compete clause
  • Research your employer (financial stability, employee review comments can be found online and  how many locations)
  • Watch out for vague language and consider what you want in specific language
  • Understand the terms of termination (under various conditions)
  • Are you able to moonlight? What are the terms and conditions related to outside employment?
  • Consider getting an attorney who has experience with physician contracts

Know what type of situation you are agreeing to when you sign your name on the dotted line.

Remember during physician contract negotiations to educate yourself, research well, and ask questions. If you are in any doubt be sure to consult an attorney who is familiar with physician contracts.

Have you encountered a situation in which you needed your contract reviewed?