What to Look For in Physician Employement or Professional Services Contracts?

What to look for in Physician Employment or Professional Services Contracts?

When you are looking to enter into a physician employment agreement, whether as an employee or an independent contractor you have to take into consideration a number of factors that will affect the relationship. We provide physician contract reviews for a flat fee of $750, that includes all strategy discussions, all emails, all phone consults, and proposing document changes, but it does not include negotiating with the opposing side.  The ability to call and text and discuss things with legal counsel is a must, before signing any contract.  Without a grounded and level conversation no strategy is complete.  We do this for all healthcare professions, including Dentists, Chiropractors, Physician Assistants, Nurse Practitioners

First Question is Always Compensation - Are you getting paid fairly?

If you are wondering whether you are getting paid fairly, we have certain salary surveys at our finger tips to help you gauge that. You may also want to consider vacation time, paid holidays, health insurance (individual or for the family), dental & vision insurance,401K contributions and matching, continuing education, conferences, number of required hours, student loan repayment - not-for-profit designations of the employer, etc. However, if your situation happens to be unique, there are fair market value companies we work with that will be able to help you at a budgeted price.  It all starts with compensation, but keep in mind the last contract that you or the employee had can come back at you, so you may want that reviewed at the same time.   

The Second Question is Always Restrictive Covenants - Are they fair? What is fair?

Restrictive covenants come in many forms, and here are a few considerations you should consider to see if the restrictive covenants are fair. 

  1. Geographic Restriction - Is there a geographic restriction to what the employee will be allowed to practice on?  Is it 5 miles or is it 25 miles?  is that reasonable, well the answer depends.  If your specialty is unique then the larger the geographic spread the more likely it will be enforceable, but if you have a more common skillset, the small the geographic restrict.  The hard facts are such, that what is a reasonable amount of distance a patient is willing to go to see a particular type of doctor/healthcare professional.   
  2. Specialty Restriction - Next you will want to specify the specialty area of practice you will be working in. I am not referring to all the specialties of the employee, but the are of work that the employee is specifically getting hired to work in.  That needs to be reasonable and tight, for the benefit of both parties.   
  3. Client/Patient Poaching Restriction - Many contracts have provisions regarding no client poaching from the business once the professional leaves.  Similarly, there is case law that is out there that states that a contract cannot interfere with a patient-doctor relationship. The circumstances to this always vary, and it is good to talk with a legal counsel to navigate through these restrictions. 
  4. Employee Poaching Restriction - Many contracts have what is called an employee poaching restriction, meaning that the professional will not take or attempt to take other employees with them when the leave.  So be careful of whom you hire at the next job that you go to. 
  5. Affiliates of the Employer Organization  -  Many times the restrictive covenants will have restrictions that apply to not only the employer, but also their affiliates and other parties the employer has a relationship with. Is that fair? Sometimes yes, when there are legitimate business issues that are worth protecting and the employee is informed as to those entities before the contract is signed; but usually no, if the restriction is bot specific.  This is a word of caution to both the employer and the employee.

Restrictive covenants come in many forms, it is advisable for you to get legal counsel on your side to help you navigate them.  

The Third Question is usually regarding Professional Liability Insurance Requirements - Are they fair?

Professional Liability Insurance requirements are less understood by most physicians let alone legal professionals. There is a science and an art to risk management.  Insurance requirements are a risk management tool, and to navigate them properly it takes knowledge, time and experience.  Here are a few thing to think about:

  1. Who pays for the insurance? - There are contracts that require the employer to carry the insurance and there are contracts that require the contractor to carry the insurance.   
  2. What is the Amount of Insurance Coverage Needed - Do you have to get the minimum statutory minimum required amount or a higher threshold?  Depending on the area of practice this amount will vary.
  3. Occurrence versus Claims Made Insurance - Many employers carry Claims Made insurance, and expect the employees to carry the "tail coverage" should they leave the practice.  Understanding when tail coverage is and what the cost of it is important to know up front. See below is a diagram explaining occurrence versus Claims-Made insurance coverage:

There are many other considerations that are often not at the top of mind for administrators nor physicians, but they are top of mind to legal counsels like those in our firm.  The other things to consider are:

  1. Who has the obligation to keep the records? Will the person have access if they need it to respond to an audit or a complaint?
  2. Who is responsible for billing? Most fraud & abuse issues arise from aggressive billing, so who bears the responsibility?
  3. In the event of a sale of the business will the non-compete restrictive covenants carry over to the new organizations? Good question.
  4. You Should also look for termination clauses, employment duties, directorship contracted duties, ownership interests, 
  5. What are the anti-tolling (not tolling of time) provisions in the contract?
  6. Who is waiving and releasing who's rights to liability issues, and who is indemnifying whom for issues that arise?
  7. What happens if a dispute arises? 

If you have questions or issues you need to run by an attorney, please reach out to your select healthcare hospital attorney who has experience in handling this sort of stuff; if you don't then feel free to call us for we have the experience on how to guide you through this process.  We provide physician contract reviews for a flat fee of $750 (this includes all strategy discussions, all emails, all phone consults, and proposing document changes, but it does not include negotiating with the opposing side). The ability to call and text and discuss things with legal counsel is a must, before signing any contract.  Without a grounded and level conversation no strategy is complete. We do this for all healthcare professions, including Dentists, Chiropractors, Physician Assistants, Nurse Practitioners

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If you are a physician, nurse, dentist, pharmacist, hospital, physician group, or medical lab looking for legal advice then you’ve reached the right site. Today’s healthcare environment is riddled with complex issues of professionalism, market strategy, and the law. Contact us now!

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