Doctor Employment Lawyer Blog

Everyone knows that training to be a physician is expensive. Not only do you pay the outrageous expense of medical school, but you follow graduation with residency and internships earning a pauper's pay. Clearly, negotiating your first year attending salary is pretty critical. At least it seems pretty clear to us.

Despite all of the expense of a medical education very few residents we speak with are prepared to negotiate their first physician employment contract. Instead, many residents accept the pay they are offered and sign whatever is put in front of them.

Your first year's salary is the starting point for all future salary discussions, raises and negotiations. Therefore, if you start out $10,000 below your value, you will be spending the first few years of your career trying to catch up. It's possible that you will never the notice the difference, but not negotiating means you have no idea whether you are missing out on an opportunity.

I am not saying that the first offer is always a bad offer, or even that the first offer is never the bottom line last offer. But I am saying that, if you don't ask, you don't get.

Have you ever had a situation where someone made you a promise and then later tried to change the terms of that promise? Maybe a friend offered to drive you to work every day for nothing in return and, after a month or so got sick of that deal and asked you to start paying for gas.

Contracts (even physician employment contracts) are really just promises where both sides give something up in exchange for some agreed upon terms. And sometimes (even in the case of an employment agreement) conditions change and the deal has to too.

Many practice groups today have complex compensation models that based on revenue estimates that can only be met by maintaining a specific patient load, physician staff and/or medical support staff. A significant change in any of those factors could make a compensation plan unsustainable.

So what happens if you meet all your obligations under your employment agreement and, for reasons completely outside your control, the practice loses 50% or more of your revenue? Can your employer alter the terms of your employment contract?

As usual, it depends on the specific terms of your agreement. However, in most cases, changes to the employment agreement require that both you and your employer agree to the changes. At the same time, if your employer has an employment termination provision, your bargaining power may not be all that powerful.

Before making any decisions about how to respond to a proposed contract amendment, evaluate your value and ask yourself the following:

(1) How necessary am I to this group? Keep in mind that everyone is replaceable. But being replaceable is not the same thing as "easily replaceable." If you come with a renowned reputation or a valuable research grant you likely have more room for push back than a newbie with no experience.

(2) What are my colleagues doing? There is often strength in numbers. A practice group may risk losing one physician, but would it really risk losing all of you?

(3) What is my Plan B? Having other opportunities waiting in the wings makes pushing back a much less risky option.

Keep in mind that there is usually more than one solution in contract negotiations. Taking an all or nothing approach can often leave you with nothing. That doesn't mean you should accept a compensation reduction, but it does mean you should explore all options before walking away.

What do you have to disclose on your physician employment application? The easy answer to this question is: Everything. Well, not EVERYTHING, but everything that is specifically requested. For example, if you are asked to disclose "any arrest history (regardless of conviction)" and you fail to disclose that underage drinking ticket that you received when you were 18 years old, it could come back as a basis for termination with cause in the future.

Not only do you need to read the questions you are asked very carefully, but also make sure you understand what your Physician Employment Agreement requires with respect to to the answers you provide.

This seems pretty straight forward, but often the questions are not quite as clear as the example above. Whenever a question might be subject to interpretation, you have to determine whether to err on the side of caution. It really depends a lot on what is asked and the context within which it is asked.

As we always do in this blog, it comes back to reading everything you submit or sign very carefully. It may take an extra hour that you don't think you have, but it will be worth protecting your job and your reputation down the line.

By: Poonam Khatri

This time of year, many residents receive their first offers of employment as a physician. This is an exciting time; all those years of hard work are finally paying off. Many residents, however, make the mistake of focusing too heavily on their salary and ignore benefits, which can be just as valuable.

Some of the benefits provided by employers include a bonus, expense reimbursement, retirement plans, insurance, and paid time off. It is also important to review any restrictions imposed. A physician employment contract may place restrictions on you that can extend even after your employment ends. Here are some important things to think about when reviewing your employment contract.

If you are eligible for a bonus, it is important to look at its structure and evaluate the likelihood that you will receive the full amount. A bonus can be structured a number of different ways, it may be tied to the collections you personally generate, or it may be tied to practice group's performance.

If you are moving, reimbursement for your moving expenses is another fringe benefit to consider. Other reimbursable expenses may include professional society dues, attendance at conferences, and continuing education credits.

Your contract should make your schedule and duties relatively clear. Although your schedule may not be very detailed, a general description including your call schedule should be noted. If you have agreed to work at a specific location, make sure your employer cannot move you without your approval. The contract should also clearly define your paid time off, including vacation and sick time.

Although you are early in your career, it's never too early to start thinking about retirement. Many employment contracts will offer a 401(k) plan, a profit sharing plan, or a money purchase pension plan. It's important to understand and take advantage of these benefits, particularly if your employer offers a matching contribution.

Speaking of the future, it is also important to think about your future role with your employer. If you are joining a practice, will you be able to one day be a partner? When should you expect to make partner? What is the buy-in formula that is used? Will you be an equal voting partner? In some circumstances, it can be beneficial to have this information included in your contract.

Another issue, often overlooked, is potential restrictions the employer will place on you. Some contracts require that any income earned though professional activities, such as lectures or expert testimony, belong to the practice. This restriction may include moonlighting as well. Another important restriction is a non-compete agreement. Many employers will prohibit you from practicing within a certain radius of their facility for a number of years after you employment ends.

These benefits can add up to be very valuable and contribute to your quality of life. It's always a good idea to have your contract reviewed to make sure you are getting everything that you deserve.

Before there is even a physician employment contract to review, doctors should investigate whether a hospital or practice group is truly going to be a good fit. Too many times we have seen physicians get into bad employment situations just because the pay was good. It does not take long for them to realize that no amount of compensation can justify staying in an uncomfortable working situation for the long term.

The following tips will help you conduct a little due diligence before accepting an offer of employment:

1. Culture. Speak with as many team members as possible. Don't just contact the physicians. Try to speak with the nurses, PTs, assistants and support staff. They will likely have a different perspective to share.

2. Reputation. Use the internet to find out what people are saying about the practice/group. Search each individual physician as well as the practice itself.

3. Volume. Ask the following questions: How many patients does the practice have? What is the breakdown of private pay versus public pay patients? How many patients does each doctor see per clinic? What were the previous year's total collections for the practice/group?

4. Vision. Ask about the practice/group's future plans. Are there plans for growth? What opportunities exist for you and what opportunities have your potential colleagues been able to conquer?

5. Attrition. How many employees have left the practice/group over the last 3 years? If a high number of people in any position have left, that might be an indication of how your potential colleagues interact with others.

Most doctors we meet are so focused on patient care and medicine that they fail to protect their interests when signing their physician employment contracts. They proceed under the impression that, as long as they do well for their patients and build a successful practice, things will be fine with their employment. In most cases, that is an accurate assessment. However, sometimes doctors get into horrible employment situations and have almost no protections in their agreements. They get overloaded with administrative work; they are under paid because of a lack of adequate billing procedures; or they lack enough patients to build a practice because there is no marketing investment by the employer. Whatever the issue, sometimes good doctors get into bad employment situations.

You might think that a simple solution would be to resign and move on. And, sometimes that is the best and simplest solution. But, what about when you have signed a broad non-compete agreement or have committed to a community supported position that requires a substantial payout to terminate the contract? The costs of getting out of those contracts can be higher than the costs of suffering through the terms. But, no one should have to stay in a bad employment situation.

If you want out of a bad employment contract that seems to have no way out, you need to be a bit more creative about your departure. You need to analyze why the situation is so bad. Determine whether promises were made, but not kept. Identify who or what is making your employment dissatisfying. And, review your physician employment agreement. Does your employer have any obligations under the contract? Is your employer performing all of its obligations?

Find your leverage and create a plan of action. With contracts, there is almost always a way out. The key is finding the least expensive way out.

By: Poonam Khatri & Kristen Prinz

Moonlighting among physicians is growing in popularity. Often physicians, particularly residents and fellows, moonlight for extra income, especially those looking to pay off the massive debts from medical school. More experienced physicians also look to moonlighting for exposure to different practice areas, to keep their clinical skills sharp, or to improve their standing within the community.

Physicians looking to moonlight may choose from clinical or non-clinical opportunities. We have seen physicians obtain positions through billing companies, medical device providers, insurance companies, or on their own as expert witness consultants.

Moonlighting can be a great opportunity, but there are a number of important legal issues that a physician must consider before accepting a moonlighting position:

Part 1: Negotiate for moonlighting.

If you know you will need to moonlight to cover your expenses or, even if you just want to moonlight, negotiate this term on your way in. Most physician employment agreements do not allow moonlighting. Those that do, only allow it in certain limited circumstances.

Some employers have gone even further. They allow you to moonlight, but all income goes to the employer. Make sure you ask for exactly what you need: a way to make some extra money.

Ask questions before you agree to accept a position. Make sure you understand your obligations and the employer's requirements relating to moonlighting.

Part 2: If you didn't negotiate, read your agreement before seeking out any side work. Additional provisions may be at play.

Be sure to review your employment contract closely before accepting a moonlighting position. As explained above, many employers prohibit moonlighting altogether, claim ownership over income derived from moonlighting, or have an arduous process for getting moonlighting approval.

If your contract does allow moonlighting, other provisions in the agreement may put such income at risk. For example, a contract with the clause "While employed by Employer, any remuneration generated by Employee shall be solely that of Employer" can include not only income earned through outside sources, but also non-cash benefits. We assume you do not plan to work extra hours just so your employer can have some extra income. Make sure you are not defeating the purpose of moonlighting and read your employment agreement.

Non-compete clauses can also affect your ability to moonlight. Contracts will generally set out specific limitations of your non-compete, but they may not specify specialty practice restrictions. Don't be afraid to ask for clarification!

Your employer's policies and procedures for moonlighting approval can include anything from a simple written request, to a lengthy board approval process. However, failing to follow those policies can be considered a breach of your employment agreement. Abiding by the policies is the only way to protect your current employment while seeking approval for other opportunities.

To be continued.
PARTS 3 and 4, next week.

While you may think that the non-compete provision in your employment agreement is just a standard term that can be addressed when the time comes for you to move on, it is in fact a powerful tool to restrict you from practicing medicine in a specified geographic area.

Earlier this week it was reported on the Indianapolis Business Journal at IBJ.com that Indiana University (IU) Health Morgan Hospital has file suit against a primary care physician alleging that she signed a non-compete agreement with the hospital, and that she is now attempting to breach that agreement by moving her practice to Franciscan St. Francis Health. IU Health is seeking a preliminary injunction to stop the physician's move.

Even when a non-compete is unenforceable, being sued by a hospital with deep pockets is a strong deterrent to violation. Litigation can, and often does, take years. When accepting a new position, many physicians don't even contemplate the possibility that their employment agreement might interfere with future employment options.

Many of the physicians we work with do not believe that the employer who is hiring them might someday sue them for trying to leave. Before you sign a physician employment agreement, if the hospital or practice group tells you "we never enforce those provisions," ask them to put that in the agreement.

Private practice can be extremely rewarding for doctors, but the practice of medicine is not a one-size-fits all profession and physicians have many choices today. Between hospital employment, flex positions, and locums tenens, new doctors can craft a medical career unlike those of the past.

For doctors who want to avoid the "business of medicine," hospital staff positions or temporary locum tenens positions may be a better option. You have the ability to negotiate a long term or short term physician employment contract, depending on your career and personal goals. Knowing your options is the first step to determining where you want to go with your career.

Regardless of which option works best for you, they each bring with them unique issues. In private practice you may be expected to build your own patient base and focu on practice development. In a hospital setting, you may be dealing with more bureaucracy. And most locum tenens positions require that you do a little of everything.

You are finishing your residency (or fellowship), and you've just landed the job of your dreams. Congratulations! Now you're faced with a great challenge: Resisting the temptation to immediately sign your physician employment agreement.

Joining a practice group is an exciting time for both you and the practice group or hospital you are joining, but signing a physician employment contract without understanding your obligations and rights can cause you long term pain.

A well drafted employment agreement creates reasonable expectations between the employer and employee. When expectations are clear and understood on both sides, everyone wins, and future legal battles are avoided. A careful review of your employment agreement will provide you with a complete understanding of your prospective employer's proposed expectations in connection your new position within the group. It can also give you insight to the culture of the employer.

In reviewing our client's doctor employment contracts, we often see vagueness in employment duties. Many times, the employer expects the physician to perform administrative duties "as requested" by the employer. This means that your employer could potentially ask you to handle administrative matters about which you are unfamiliar. Such an expectation can easily interfere with the time you spend on your primary duties as a physician. When working full-time as a new doctor, time management can be a challenge. If your employer is expecting you to spend your time on items other than treating patients, you should be aware, and plan accordingly.

As a condition of physician employment, employers often expect doctors to maintain unrestricted medical staff privileges at multiple hospitals. Even though this may seem like a simple administrative task, obtaining and maintaining privileges at various locations can take a lot of time and require a great amount of paperwork. A missed deadline could mean a violation of your employment agreement and a negative mark on your employment history. To manage deadlines in obtaining privileges, we often suggest that our clients only be required to initially maintain unrestricted privileges at one hospital. Then, after the group has provided a reasonable amount of notice, it can require responsibility for maintenance of such privileges at any other hospital. Also, it is often helpful to have a point person on the administrative end. During negotiations with a practice group on behalf of our doctor clients, we typically request a term in the employment agreement which reflects that such administrative support will be provided in complying with requirements for medical staff privileges.

Lately we have been seeing private practice employment contracts that are dependent on hospital support. These are typically physician employment contracts in areas where there is a shortage of doctors practicing in that particular specialty. These can be great arrangements, but they can also be strait jackets for doctors that end up in a bad employment situation.

Physicians considering these types of employment situations should do their due diligence before accepting a position. Be sure that the practice's culture and processes meet your expectations. Research the reputation of the practice and speak with the physicians and support staff about how the practice operates.

Of course, this sort of due diligence should be performed regardless of the type of physician employment you are considering. But, the reason it is especially key in these situations is because you could up having to pay huge sums if you decide it's not working out. These employment agreements typically have a repayment schedule that is based on how much of the contract term is fulfilled. The sooner you want to terminate, the more it could cost you.

In these cases, it literally pays to know what you are getting into before you sign the employment contract.

No one likes to think of the end of a relationship when you are just getting started. But, in employment, an end is inevitable. Hopefully, it is after a long and prosperous career. Regardless, physicians need to understand how their employment contract can terminate.

Most physician employment agreements set forth events that trigger termination "with cause" and "without cause." "Cause" typically means a serious breach such as suspension or loss of license, conviction of a felony, drug or alcohol abuse, loss of malpractice insurance, loss of privileges, or other material breach. These are serious events that would obviously affect a doctor's professional reputation.

Because the term "cause" is typically understood to be in connection with a seriously bad act, a doctor negotiating his/her employment contract should be careful that the definition of cause in the contract is sufficiently clear.

Our office has seen at least one situation where a practice group tried to use a doctor's tardiness as a basis for "cause." Although we were able to stop the employer from going forward with the termination and keep the physician employed through the term of her physician employment agreement, she may have avoided the situation entirely had she had her contract properly reviewed from the start.

Being terminated "for cause" can follow you throughout your career. And if you don't understand what "cause" means, how can you avoid it?

So many doctors that come to our office tell us that their prospective employer told them that the Employment Agreement is standard and the terms are not negotiable. And, maybe that is true. However, there are a number of terms in doctor employment agreements that both parties would benefit from revising such as defining practice development and administrative responsibilities.

Furthermore, if the agreements are all the same and non-negotiable, can you see everyone else's agreement? Finally, the start of your employment is the best time to clarify details. I always remind our clients: "if you don't ask, the answer is already "No." So where is the risk in asking?"

Most physician employment contracts that we see contain at least some form of productivity based compensation, but when we ask clients whether their employer is going to provide practice development support they invariably ask "what's that?"

Practice development support means that your employer is going to make and investment in helping you develop your practice. Whether by sponsoring a lunch for referring physicians so that you can present information that will help them treat and refer patients, or offering access to a marketing professional/consultant, or referring a percentage of new patients to you, your employer can promote you in a way that builds your practice and credibility.

Even though this seems like a clear benefit for all parties, it is not atypical for each side to think the other side is handling this. Many hospitals and practice groups will slap a physician's name, picture and practice areas on their website and leave the rest to the doctor. But, most doctors are focused on patient care, research and continuing education, as they should be.

A doctor's employment agreement can ensure that both parties know exactly what their responsibilities will be in terms of practice development. We always request that the practice group or hospital identify some specific means of supporting practice building efforts, in every doctor's contract that we see.