Physicians’ Employment Contracts
How to Survive Your First Contract
Thomas R. Hoffman
Associate General Counsel
American College of Radiology
Wednesday, August 3, 2006
Written and compiled by Leonard L. Lucey, J.D.
ACR Quality and Safety Department
1 © 2000 American College of Radiology
doctor
• (doc’ter), n. any of a number of
medical professionals who use a
variety of therapies to make sick
people well enough to sue
2 © 2000 American College of Radiology
Types of Contracts
• Individual Physician - Group (primary contract)
• Group - Hospital
• Managed Care Contracts
3 © 2000 American College of Radiology
Terms of the Contract
• Generally one year with automatic renewal
• One year provision allows either party to
terminate
– if the relationship doesn’t fit
– if business expectations change
– tax requirements
4 © 2000 American College of Radiology
Terms of the Contract
• Automatic renewal = continued relationship
• Renegotiation - compensation
(automatic increase)
5 © 2000 American College of Radiology
Partnership/Shareholder Status
• Specify number of years
• Special criteria
– buy-in
– terms
• Effect of changing business conditions
• Failure to meet expectations -- notice
6 © 2000 American College of Radiology
Compensation
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•
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•
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Specify amount and basis
Call: included or extra
Hours of employment, i.e., full-time
Automatic increases
Relocation expenses
7 © 2000 American College of Radiology
Compensation
• Outside compensation
– speaking at seminars
– honoraria
– reserve duty pay
– patents or inventions
8 © 2000 American College of Radiology
Contributions to Hospital
• Donation to Dean’s fund
• Administrative/equipment/space rental fees
• Percentage of income
– potential anti-kickback concerns
• Check for provision in contract between group
and hospital; consult with dep’t chair
9 © 2000 American College of Radiology
Responsibilities
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Maintenance of professional licensure
Availability for call - rotation
Record keeping - paperwork
Serving on hospital committees
Membership in professional organizations
10 © 2000 American College of Radiology
Responsibilities
• Compliance with department and hospital
written policies
• Work assignment schedule -- more than one
location?
• Meeting performance expectations
• Training/CME
– accreditation requirements
11 © 2000 American College of Radiology
Benefits
• Vacation, personal days, sick days
• Retirement plan
– vesting
– contribution - percentage
• Dues - licensure and professional organization
membership
12 © 2000 American College of Radiology
Employer Control Issues
• CME and attendance at seminars
• Right to assign work schedule
• Additional training
• Right to amend personnel policies or benefits
13 © 2000 American College of Radiology
Non-Compete - Restrictive
Covenant Clauses
• General purpose -- protect employer
• Requires consideration or value to employee
14 © 2000 American College of Radiology
Non-Compete - Restrictive
Covenant Clauses
• Must be reasonable
– cover specific geographic area
– specific time period → 3 to 5 years
• Restrictive covenants prohibit employee from
providing services to named hospitals, HMOs,
MCOs or within specific area
• Not valid in all states
15 © 2000 American College of Radiology
16 © 2000 American College of Radiology
Medical Research - Publications
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Right to any compensation
Ownership rights to patents, copyrights
Royalties
If done through employer, work for hire
Access to patient records
17 © 2000 American College of Radiology
Termination Provisions
• Just cause - define
– loss of licensure or staff privileges,
competency
• Employment at will - no cause needed
• Changing business environment
• Effect on privileges: check for “clean sweep”
18 © 2000 American College of Radiology
Termination Provisions
• Any notice requirement
• Severance package
• Relocation expenses
19 © 2000 American College of Radiology
Termination Provisions
• Tail coverage
• Death benefits
• Liquidated damages
20 © 2000 American College of Radiology
Review All Documents
• Contract may refer to other documents -- part of
the contract by reference
• Managed care contracts may affect your
compensation
• Group contract with hospital
21 © 2000 American College of Radiology
Points to Remember
• Contract is legally binding - don’t sign unless
sure
• Verbal contracts may be legally binding but
difficult to prove
• Ask questions
• You can negotiate -- modify provisions
• Strongly recommend legal review
22 © 2000 American College of Radiology
Helpful Hints
• Know the environment - visit the group
– talk to others in the hospital
– what is the group’s reputation?
– stability of the group -- internal disputes?
23 © 2000 American College of Radiology
Helpful Hints
• Know the environment (cont’d)
– any merger or takeover rumors?
– are you replacing someone -- how often is
there turnover?
– how much of the group’s practice is managed
care contracts, capitated?
• Don’t sign contracts with multiple groups -subject to damages
24 © 2000 American College of Radiology
Helpful Hints
• Hold off making major purchases until you’re
certain the arrangement works
– buying a home
– investing in property
– buying a car
25 © 2000 American College of Radiology
Helpful Hints
• What is appropriate compensation?
– AMA/MGMA surveys
– check with other residents
26 © 2000 American College of Radiology
27 © 2000 American College of Radiology