The Employment Contract
Health care employment contracts are always unique, and the contract language will be the binding legal foundations of your relationship with your new practice
Health care employment contracts are always unique, and the contract language will be the binding legal foundations of your relationship with your new practice. You will never need your contract unless something goes wrong, so be sure it includes everything in detail.
Brilliance in the medical field will make you an excellent physician, but please understand that this will not necessarily make you an excellent attorney!
- Hire a health care attorney to look over the contract. It is a good idea to solicit recommendations from other local physicians or visit the American Bar Association website to find a good attorney.
- Focus only on those who practice in the state where you will be working.
- To manage costs, discuss up front the legal budget you have to work with. Open-ended services can potentially run into the thousands of dollars!
Negotiating Employment Contracts
When accepting a position, you will negotiate and ultimately sign an employment contract. While this process is extremely important to your career and for your peace of mind, it need not be a source of worry. Once again, preparation is key, and if you so desire, U.S. Renal Care can offer guidance during this process, but we cannot provide legal advice! We have assisted numerous physicians over the years.
“A verbal contract isn't worth the paper it is written on.”
Most employment contracts offered by physician practices include a non-competition (or “non-compete”) clause. These are sometimes called Restrictive Covenants.
Many graduating fellows are unacquainted with non-compete clauses, but they are important to the strength of a practice. These clauses are intended to allow the practice to protect its assets — primarily the goodwill it has created in the form of referring physicians and their patients.
It may be helpful to think about non-competition clauses from the perspective of a partner in the practice (as you may someday be). A graphic example would have the practice hire a new associate, help them be successful, and then see them leave to open a competing practice across the street.
A non-compete will invariably be part of your contract, and you will still want to ensure that it is reasonable and enforceable. Some non-compete clauses allow you to buy out of your contract for the ability to continue practicing in the local market.
Be certain your employment contract spells out the exact terms and conditions of your compensation and other benefits to avoid any misunderstandings down the road.
- Salary details
- Future changes to your salary and any pre-conditions to those changes
- Vacation details
- Health insurance
- CME allowances
- Bonus structure details
- Call schedule
- Practice locations
- Non-compete clause
Most physicians join private practices as an employee for a specific period of time, after which they may be offered partnership. While you can and should identify the partnership structure in advance of signing your employment contract, partnership terms are generally not included in your employment contract. What is partnership eligibility based on? It is a good idea to have clarity regarding the “qualifications for partnership” and understand fully what being a partner in the practice means. For example, some partnership tracks include ownership of direct practice revenue, but may not include real estate. Some partnerships require a “buy-in.” You’ll want to make sure you understand the value of the partnership, and the exact formula used to calculate your buy-in. Once again, it is best to consult with your health care attorney.
Term and Termination Clauses
The term of your employment agreement is the time period during which you and the practice are required to comply with the terms of your employment contract. The employment contract may also contain provisions allowing for earlier termination. Your health care attorney can help you understand how these provisions may apply.
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