It is always exciting to receive a new job offer as a physician. It is also the time when you are presented with the all-important physician contract. To help you navigate and understand your physician contract, we are publishing a three-part series on the subject. This first installment will provide you with an overview of the components included within a typical physician contract. The second installment will alert you to the process of negotiating an agreement, and the third installment will shed light on common mistakes to avoid.
Because you went to medical school—not law school—you may wish to have a lawyer review the employment contract before you sign on the dotted line. Especially during the early years of your career, it is vital to ensure your interests are protected.
Components of a Physician Contract
All of the clauses included in the physician contract presented to you are there for a reason. Most employers have developed a “standard” contract that they use as a base for the initial offer to you. Let’s review.
If you are being honest with yourself, you will probably admit that salary is the first thing you think about when considering your physician contract. While important, it is not the only factor that you need to consider. But, since it is on top of your mind, we will review it first.
Your salary can include many variables, some of which is predicated on your specialty and geographic location. It can be a straight salary or a combination of performance and productivity-based incentives, and even mathematical formulas called Relative Value Units. RVUs account for your time, skill-level, effort, and other factors in providing a medical service to the patient. The various methods of deriving a physician’s salary all have their pros and cons, so it is essential to do your homework. When looking at the salary listed in your employment contract, make sure it is clearly outlined.
One of the factors contributing to the overall value of your physician contract is the benefits package. This will include the obvious things like your vacation time, but also others that are not so obvious. Your benefits should describe whether or not your employer is providing malpractice and liability insurance, continuing education programs, relocation funds, and even time to pursue research opportunities. Depending on your family situation, understanding your health benefits package and whether they are offering retirement fund matching is critical. For many physicians, as they move on in their career, employment benefits often become a more important part of their contract than base salary.
3. Term Length and Termination
Obviously, it is important to know when the contract starts, but more importantly, the length of the agreement. A typical time frame will be three years, but that varies depending on the practice setting and location. Some contracts, called evergreens, remain open-ended and are automatically renewed year after year. Within the term length clause, there should be language that describes mechanisms for terminating the agreement. Particularly, “termination for cause” should be articulated so you understand what reasons or occurrences would lead to a potential termination.
While the contractual language that outlines restrictive covenants won’t be found in fine print, it will likely be spelled out in language that may be difficult to understand. Hence, this section is one you definitely want your attorney to review. Restrictive covenants typically spell out the terms that apply when or if you leave your position. This language may include non-compete clauses that restrict you from practicing in the same geographic location for a period of time. Going into a new job opportunity, when both sides are feeling positive about this new relationship, these types of clauses may seem unnecessary. But as we mentioned earlier, everything in your contract is there for a reason. The key is to understand the length of time the clause remains active, specific distances, and other factors that will impact what you can and can’t do without having to relocate.
Bonuses are typically included as part of your compensation language. But since they come in such great variety, they deserve to be considered independently. Bonuses that are available for you to earn or be given up front should be clearly identified in your contract. An extremely popular recruitment tool has been student loan forgiveness bonuses. These typically come with strings attached, such as staying in your position for a number of years. Similar to student loan forgiveness, because of the high cost of physician vacancies, many contracts now include retention bonuses to entice a physician to stay in a position for a pre-determined time. Other bonuses, such as those based on achieving quality targets, require you to clearly understand what is expected of you to earn them.
6. Career Advancement Opportunities
Depending on the practice setting or your specialty, your employment contract may spell out opportunities for you to advance your career or even gain ownership rights upon the completion of your initial term of employment. If you are interested in pursuing physician leadership opportunities, your contract may include language that helps you move in that direction. Typically, this will require achieving specific criteria over the life of your contract.
In our next installment, we will discuss how to negotiate your physician contract. Jackson Physician Search has decades of recruitment experience and offers a calculator on physician compensation. For personalized information about what we can do for your career, contact us today.