Chelle Law provides Physician Contract Review for physicians entertaining a new job or negotiations of an existing employment contract. You have worked hard to develop your skills and deserve to advance in your career with a fair market value contract with a review by a lawyer. So, when you are about to enter into a physician contract, getting physician contract services before signing is vitally important. The terms of the physician contract will impact your practice and your day-to-day life. Attorney Robert Chelle can provide a physician contract review, identify the areas that could be improved and assist you in contract negotiations to achieve the best contract possible. Physicians that request Mr. Chelle’s review assistance receives:
- Available for review in any state
- Flat-rate pricing, with no hidden financial costs for the review of the contract
- Lawyer review of your proposed contract or contracts
- Phone consultation reviews, analyzing the contract term by term
- Follow up with a review of the needed clarifications for the contract
Physician Contract Review Cost
Physician contracts are an obligatory part of every job search for doctors. Well-drafted physician contracts help to enumerate the responsibilities of the involved parties, divide liabilities, protect legal rights, delineate financial interests and assist in planning a beneficial relationship with health law concerns. Medical contract negotiations make these touchstones are even more crucial when applying their roles to the case of physicians employed by a hospital, corporate owned group, or private practice.
A review generally costs between $500 to $700 per Agreement with discounts provided for multiple contracts.
While drafting and negotiations of physician contracts can be a long and arduous process, a search for quality lawyer review is a must in order to ensure that your rights are being protected before you start your new job and sign a new physician contract. The present day conclusion is simple: Physicians should not sign a physician contract without having the physician contract reviewed by a lawyer. For instance, contract concerns include: license defense, periodic reviews of medical board policies, planning for employee financial increases, attorneys fees, insurance responsibilities, salary negotiations (and other financial considerations) upon expiration of contracts, AMA fees, AMA conferences etc.
Physician Contract Review Employer Checklist
Every employment contract is unique. However, nearly all contracts for health care providers should contain several essential terms. If these essential terms in the contract are not spelled out in contracts, disputes can arise when there is a disagreement between the parties as to the details of the specific term. For instance, if the doctor is expecting to work Monday through Thursday and the employer is expecting the provider to work Monday through Friday, but the specific workdays are absent from the Agreement; who prevails?
Agreement Terms with AMA Considerations
Spelling out the details of your job is crucial to avoid contract conflicts during the term of your employment. Below is a checklist of essential terms that contracts should contain (and a brief explanation of each term):
- Practice Services Offered: What are the clinical patient care duties? Are you given time for review of administrative tasks? How many patients are you expected to see (like in pediatrics)?
- Patient Care Schedule: What days and hours per week are you expected to provide patient care? What is the surgery schedule? Are you involved in the planning of your schedule?
- Locations: Which facilities will you be scheduled to provide care at (outpatient clinic, surgical sites, in-patient services, etc.)?
- Outside Activities: Are you permitted to pursue moonlighting or locum tenens opportunities? Do you need permission from the employer before you accept those practice of medicine related positions?
- Disability Insurance: Is disability insurance provided (short-term and long-term)?
- Medical License: Will the practice offer reimbursement for your license? Will an advisor be provided?
- Practice Call Schedule: How often are you on call (after hours office call, hospital call (if applicable))?
- Electronic Medical Records (EMR): What EMR system is used in the practice of medicine? Will you receive training or time to review the system prior to providing care?
- Base Compensation: What is the annual base salary? What is the pay period frequency? Does the base compensation increase over the term of the Agreement? Is there an annual review or quarterly review of compensation?
- Productivity Compensation: If there is productivity compensation; how is it calculated (wRVU, net collections, patient encounters, etc.)? Is there an annual review?
- Practice Benefits Summary: Are standard benefits offered: health, vision, dental, life, retirement, etc.? Who is the advisor of human resource benefits?
- Paid Time Off: How much time off does the job offer? What is the split between vacation, sick days, CME attendance and holidays?
- Continuing Medical Education (CME): What is the annual allowance for CME expenses and how much time off is offered?
- Dues and Fees: Which business financial expenses are covered (health law, board licensing, DEA registration, privileging, AMA membership, Board review)?
- Relocation Assistance: Is relocation assistance offered? What are the repayment obligations if the Agreement is terminated prior to the expiration of the initial term?
- Signing Bonus: Is an employee signing bonus offered? When is it paid? Do you have to pay it back if you leave before the initial term is completed?
- Professional Liability Insurance: What type of liability insurance (malpractice) is offered: claims made, occurrence, self-insurance?
- Tail Insurance: If tail insurance is necessary, who is responsible to pay for tail insurance when the Agreement is terminated?
- Term: What is the length of the initial term? Does the Agreement automatically renew after the initial term?
- For Cause Termination: What are the grounds for immediate termination for cause? Is a review provided to dispute the termination?
- Without Cause Termination: How much notice is required for either party to terminate the Agreement without case?
- Practice Post Termination Payment Obligations: Will you receive production bonuses after the Agreement is terminated?
- Non-Compete: How long does the non-compete last and what is the prohibited geographic scope?
- Financial Retirement: Is a financial retirement plan offered?
- Non-Solicitation: How long does it last and does it cover employees, patients, and business associates?
- Notice: How is notice given? Via hand delivery, email, US mail, etc.?
- Student Loans: Will student loans be repaid? If so, how much of the student loan?
- Practice Assignment: Can the Agreement be assigned by the employer?
- Alternative Dispute Resolution: If there is a conflict regarding the contract, will mediation or arbitration process be utilized? What is the standard review process for conflict? Who decides which attorney oversees the process?
Breaking a Physician Contract with a Non Compete
Physicians with non compete clauses in their contract were originally considered as restraints of trade, and thus were invalid on the grounds of public policy at common law; however, many restraints of trade incident to contracts were upheld based on the rule of reason. Thus, restrictive covenants between dentists not to compete after termination of employment are generally enforceable as long as it is reasonable.
However, there are a few states which prohibit non compete clauses. Please review your state laws for non compete rules and regulations to see what the specific rules for your state are. The general test for reasonableness of these clauses hold that on termination of employment, a covenant which restrains an employee from competing with his former employer is termed reasonable if:
- The restraint is not more than required for protecting the employer,
- It does not inflict any untold of hardships to the employer, and
- The restraint is not injurious to the public.
Reviews of Non Compete Reasonableness
For instance, in Ohio, a non-competition clause was considered unreasonable after judicial review when it was noted that a provider’s sub-specialty was uncommon, and that it would be harsh if the restrictive covenant was enforced as the hospital where he was precluded from practicing was only one of the few institutions in the area where he could practice his specialty.
Thus, in Ohio, covenants restraining providers from competing with his employer on termination of employment is considered unreasonable if it inflicts hardship on the doctor, is injurious to the public, if the demand for the doctor’s medical expertise is important for the community people and if the doctor’s services are important for the health, care and treatment of public. However, non-competition clauses for doctors, in general, are enforceable as long as they protect some of the employer’s legitimate interests. Having a non-compete review by a lawyer can assist in avoiding legal issues.
Contracts for Doctors that use RVU Compensation
It seems every five to ten years hospitals vacillate on whether to employ doctors because the costs associated with employing physicians is considerable. Those costs include office space, staff, supplies, equipment, malpractice insurance, CME reimbursement, in addition to the salary. The hospital’s motive behind employing them is to capture the downstream revenue generated by the practice. For instance, employed physicians are expected to use hospital services (labs, imaging, rehab, etc.) and other employed specialists when referring patients in need of continued care. The revenue collected from these “in-house” referrals is expected to more than cover the cost associated with employing physicians.
Contract Review of Productivity Bonus
However, when a hospital employs physicians who doesn’t see enough patients or generate enough downstream revenue to cover the costs of their practice the hospital can lose an enormous amount of money. Therefore, hospitals have begun to use productivity based agreements with employed physicians to ensure that physicians are financially driven to see more patients. A doctor who sees more patients not only bills more from an increase in patient encounters, but also creates more downstream revenue.
How to Incorporate RVUs in a Contract Review
The most effective productivity based model uses the wRVU to determine the compensation of the doctor. The wRVU combines the relative level of time, skill, training and intensity to provide a given service (determined through a CPT code) and it places a numeric value for each CPT code billed by the doctor. For example, a family practice doctor sees a new patient and codes a 99202 for the encounter. Let’s say the wRVU for a 99202 is 1.70 and a family practitioner receives $36.00 per wRVU (known as a compensation factor). Thus, the doctor would generate $61.20 per 99202. Hospitals that use wRVU based contracts use total wRVU’s generated for a specific period of time to determine how much the doctor is compensated.
If you are a doctor entering into an RVU based contract it is imperative that you understand the intricacies of the contract structure in order to maximize your compensation. My next post will review how a RVU based contract can ultimately be more lucrative for a doctor than the traditional models.
Employment Agreements and Covid
Since COVID-19 began physicians, like all health care workers, have faced unprecedented challenges. Being offered a salary reduction is one of them. Many of these physicians have the same story with most employers offering them a temporary 10% salary reduction through the end of 2020. Some employers, however, have offered entirely new agreements with substantially different compensation systems. (These new agreements either reduce base compensation drastically or shift the entire compensation structure to a production-based system. If there’s a long-term reduction in volume which necessitates future compensation reductions; a pure production-based compensation system clearly would negatively affect overall compensation. This is all dependent upon:
- The specialty the doctor is in and if it has been negatively affected by the pandemic.
- Where they practice geographically
- How COVID-19 has impacted the region and the number of Covid-19 patients it has. (This may have caused short-term cancellations of elective surgeries and other related procedures).
The most frequent question our attorneys are asked, should a provider unilaterally accept a salary reduction or are there other options?
Physicians Without Cause Termination
Every Physician Employment Agreement (Agreement) contains a without cause termination clause. Without cause termination allows either party to terminate the Agreement for any reason with some notice to the other party. 60 to 90 days notice is the industry standard. So, if the physician refuses to accept the salary reduction, one option would be to simply exercise the without cause termination clause and terminate the Agreement. This is the likeliest scenario if the physician refuses to accept the salary reduction.
The downside for the physician, if the business exercises the without cause termination clause, is that all restrictive covenants (non-compete, non-solicit) will still apply in this situation. Additionally, any repayment obligations (signing bonus or relocation assistance) will still likely be enforced. There is nothing a physician can do to stop their employer from exercising without cause termination.
Termination Concerns with Insurance and Loans
Physicians who desire to stay in their current position, but not accept a long-term salary reduction, can agree to an amendment. This amendment may contain a salary reduction for a limited period. This gives the business short-term cost relief, but limits the amount of time the physician receives a reduced salary.
Peer Pressure by other Medical Staff Members
The final tactic utilized by employers is pressuring the physician into taking a salary reduction by using intimidation. Employers tell the physician they’re a bad colleague if they refuse a pay cut when other physicians have agreed without trepidation. The appearance of being a “bad teammate” applies pressure to physicians who are reluctant to agree to a compensation reduction. This is an effective management tactic which each individual physician must consider.
Overall, there isn’t much a physician can do if they are offered a unilateral compensation reduction if the business is willing to terminate the Agreement. However, physicians who work in specialties difficult to staff or in undeserved areas difficult to attract new physicians have a much better likelihood of refusing a unilateral pay cut and may not be terminated. As with any physician contract negotiations, leverage is everything.
Physician Job Risks
A doctor faces much risk when they take contract matters into their own hands. Physician contract terms are highly negotiable and have a great impact not only on professional life but also on lifestyle, family and the future. There are many important contract terms and clauses which can present new complex and diverse issues for any lawyer, including:
- Unfavorable call schedules
- Small Production Bonuses
- Lack of Benefits
- Not enough paid-time-off
- Unfair Non-Compete
- Inadequate professional liability coverage (no tail coverage)
Physician Contract Review Lawyer
When your physician contract review is given by an experienced attorney, you will find financial benefits which end up outweighing the cost of the review. Leave it to the experts. If you are in need of a review of an employment agreement or contract analysis schedule a Physician Contract Review with Chelle Law today!