Do Doctors Sign Contracts?

Do doctors sign contracts? This question can be answered right away with an unequivocal yes. After their residency, a doctor will very likely go to join a practice group. In this case he will be asked to sign a medical contract.

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Dealing with Medical Contracts

Physicians go to school to prepare them to work with patients and to work in medical settings. Many physicians are not adept or comfortable in working with agreements and with negotiating agreements. However, it is something that must be confronted head-on as it can make a huge difference in your future. Before executing the medical contract, you should use that time to negotiate what is needed to make sure the medical contract covers all points effectively. Some things won’t be negotiable but that doesn’t prevent you from asking.

How Are Contracts Negotiated?

Contract negotiations are like any negotiation. It is both conversation and numbers. You are establishing a relationship with an employer and he or she is establishing a relationship with you. You both are determining how you are going to fit in with the company, the operations and the business strategy. You are searching out a good fit, and making sure everything is covered in the medical contract with the proper terminology.

Some Tips on How to Make a Successful Contract Negotiation

  • When negotiating a contact, before you sign, you should read over it and take your time to understand everything. Clarify anything that isn’t clear to you.
  • Ensure you get anything in writing that was promised prior to receiving the medical contract.
  • Ask about money and long term plans. This is important for your future.
  • Know what kind of patients the practice sees and what sort of payment contracts they have.
  • Study and find out the total compensation package, not just the salary.

What Should I Look for in a Physician Contract?

Many ask what should I look for in a physician contract? Hiring a medical contract attorney is a very wise decision as you want to be sure everything is in order before you sign. A medical contract attorney will know and understand the rules of the region where you practice and will see that everything in the medical contract is worded and formatted correctly so you and your practice of medicine are protected in the future.

There are a number of key elements to look for in a DR contract. A physician contract covers a large variety of areas, many of which reflect compensation. But there are other concepts that a contract does need to cover. Needless to say, the medical contract needs to specify what the employer wishes, but it also needs to reflect your rights and your interests.

Vital Elements in a Medical Contract with AMA Considerations

We can’t cover every single element in a physician contract here, but we do want to cover the most important points if possible. Here are some vital elements that you should look for in a physician contract.

  • Guarantee of Income – an income guarantee is something that ensures a physician will earn a certain amount each month after expenses. The period that this is done usually extends for one or two years. If a physician makes less than the guaranteed income from the hospital, the hospital will make up the difference. If the physician makes more, he keeps it at the end of the guarantee period. If at the end of the period, he makes less, he would owe the hospital the difference. However, many of the income guarantees come with a forgiveness clause. Details should be reviewed in any contract.
  • Benefits – benefits should be written out clearly in any contract. They usually include malpractice and health insurance. There can be other benefits offered when the salary is less than competitive.
  • Hours Worked – the employer’s requirement may be quite different than the physician’s idea of how many hours he wants to work or is expected to work. This has to be looked over in any contract, and negotiated as needed.
  • Vacation Time – this should be specified in any physician’s contract and is often a negotiated point.
  • Forgiveness of Educational Loans – at times the contract may specify that the employer will pay the medical education loans of the physician. This is an important point to look at in the contract.
  • Partnership – especially for high in-demand specialties, a contract should contain a point about the path to partnership. This needs to be reviewed to ensure it is clearly spelled out.
  • Termination – the contract should contain a clause about termination – the two types of provision being covered (with cause, without cause).

What Should I Review in a Contract?

Many ask what should I review in a contract? When executing a physician contract, you should first review the contract. You will need to know what to look for in doing a review. This can reduce your future risk and set you up for a successful future. Agreements are just a fact of life when working in the healthcare system, and it is best to know what you are doing in signing a contract.

Reviewing Contracts 

Reviewing contracts can require a special care and keeping an eye on detail. Key information must be included, as well as ensuring your expectations are managed properly. Too many times, those who are normally very careful just plunge ahead, barely glance over the contract, sign it and do not think of the consequences. This can end them up in a bad situation. Consulting with an attorney can assure you have a contract where your interests are fully protected.

What to Look For in a Review

There are a number of points that need to be reviewed, and if they don’t meet expectations, they will need to be negotiated. Some of these points are:

  • Compensation
  • Benefits
  • Schedule
  • Vacation Time
  • Sick Days
  • Time Off
  • Conditions of Termination
  • Hold harmless provisions
  • Indemnification provisions
  • Rights and Responsibilities

Negotiations

The contract you are given to look at is only a starting point. Any point within a contract can be negotiated. Both parties want the relationship to happen, so feel free to work on it to get everything to your satisfaction. Be sure to fill in every blank on a contract so they can’t be filled in later by someone else. Initial any changes. Keep everything clear.

Doing Due Diligence

In reviewing a contract, even when having an attorney help you with the review, it is vital you do your own due diligence. It all comes under the heading of managing risks for your career. You want to have all parties happy but everything written in proper, legal form so nothing is in question. The safest bet is to hire a contract attorney to work with you on any review and negotiation.

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 physicians have in mind 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 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 and Meeting Expectations

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.  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 Contract Lawyer

Since a physician contract is such an important document, it is vital that it is reviewed by competent eyes. A contract attorney has the expertise and experience to do a thorough review.