Physicians almost always work under contract, and as exciting as it may be to receive a new job offer and a new contract to go along with it, you should never ever sign it on the spot. Contracts are legally binding agreements, full of legal terms and clauses that can have lasting effects on your career, long after the agreement ends.
Whether you’re about to sign an employment agreement with a new employer or renew an existing one, here are the best practices for reviewing your physician contract terms.
Read the Entire Contrac
The first step in reviewing a contract is to read it. That includes every term, every clause, and every page from top to bottom. Print a copy that you can write on and make notes for yourself regarding terms that don’t seem right or terms you don’t understand. Your initial notes will be helpful when it’s time to meet with a contract review attorney (more on that in a minute).
Review the Compensation Mode
While you may have discussed salary during the interview process, it’s important that you understand exactly how that salary will be paid. Physicians work under various compensation models, such as the straight salary model, the salary plus incentive model, and the productivity-based compensation model where your earnings depend on how many patients you see or how many procedures you perform.
If you’re working under a productivity-based model, read this guide to learn exactly how wRVU physician compensation works.
Confirm That Oral Agreements Appear in Writing
During the hiring process did you discuss a signing bonus? Relocation fees? A limited number of on-call hours?
Anything that you were promised verbally won’t matter if it’s not written into the contract. It’s up to you to make sure that the terms you expect to work under are clearly specified in writing.
Hire a Contract Review Attorney
You should never sign an employment agreement without having a contract attorney review it first. Your attorney will be able to determine if the terms are fair and just for your state or region as well as spot key clauses or terms that might be missing.
Your attorney will look for the standard terms and clauses that appear in every physician employment agreement, but you’ll need to inform them of any specific elements that you’ve already identified as missing. For example, not every physician gets relocation costs or a signing bonus. If you discussed that with the employer and they omitted it from the contract, be sure to let your attorney know.
Make Sure You Understand Restrictive Covenant
If you don’t know what restrictive covenants are, you’re not ready to sign the contract.
Restrictive covenants, which include non-compete clauses, can put limitations on where you can and can’t work when your employment contract ends. Your attorney may tell you that the included non-compete clause is fair and lawful, but you need to be fully aware of what a non-compete is.
Non-competes put geographical limitations on where you can work after your contract ends. That can restrict your next job search, which can be problematic if physicians in your region and your medical specialty are not in high demand.
The Federal Trade Commission has proposed a rule to ban non-compete clauses in employment contracts, but if and until they do, this is something you’ll want to pay close attention to.
Keep an Eye Out For Post-Employment Financial Obligations
Depending on the terms specified in your termination clause, you could face some hefty financial obligations if you terminate the contract before its end date.
Some employers require that you pay back relocation costs or signing bonuses if you terminate your contract early. Some require that you pay for tail coverage when you leave, which can be thousands of dollars out of your pocket (in one lump sum).
Just like your compensation model, pay special attention to any financial obligations you may be on the hook for when your employment period ends.
Consider Negotiating Your Terms
As you review your contract, keep in mind that your contract is negotiable. Until you sign it, it’s not set in stone.
From your salary to your signing bonus to the future option to buy into the practice as a partner, your attorney can identify areas of the agreement that you might be able to negotiate to get better terms. Your lawyer may even be able to negotiate the terms for you on your behalf.
Hiring an attorney for contract review is a must, but that does not mean it’s a hands-off process. You’ll still need to read the contract for yourself and take the time to understand the terminology and obligations.
The bottom line is this:
No matter how excited you are to sign the contract and start the job, you should never sign a physician employment agreement unless you know exactly what you’re agreeing to.
Your employer created the contract to protect them. It’s up to you to make sure that it protects you.