Navigating physician contracts
Posted by Megan Trippi
Physician contracts outline the terms and conditions of employment or partnership between physicians and your organization. These contracts play a vital role in establishing a clear understanding of responsibilities, compensation, benefits and expectations for both parties involved. Crafting a well-structured physician contract is imperative to ensure a harmonious working relationship and to protect the interests of all parties.
There are multiple sections in a physician contract, so it’s important to know what to include and what to omit.
What to include in a physician contract:
- Contact information
Begin the contract by clearly identifying the parties involved. Include the names of the physician and the organization, along with their addresses and contact information. Make sure all names and contact information are spelled correctly. This establishes the foundation for the contractual relationship.
- Duties and responsibilities
Define the specific duties and responsibilities of the physician. This section should outline the expected clinical and administrative tasks, patient load, on-call responsibilities and any teaching or research obligations. Providing a comprehensive overview of the role helps avoid confusion and potential conflicts in the future.
- Terms of agreement
Clearly state the start date and duration of the contract. Specify whether the contract is for a fixed term or open ended. Include conditions for contract renewal or termination by either party to address potential changes in circumstances.
- Compensation and benefits
Outline the physician’s compensation structure, including base salary, productivity bonuses and any other incentives. Detail benefits such as health insurance, retirement plans, malpractice insurance coverage and reimbursement for continuing medical education (CME) expenses. Transparent and defined compensation terms contribute to a positive working relationship. When physicians understand their overall compensation and how they are paid, it improves their job satisfaction and eliminates questions or issues later on.
- Hours and schedule
Clearly state the expected work hours, including regular office hours, on-call duties and weekend requirements. This section should address any potential variations in the schedule and the process for requesting time off or changes in hours.
- Noncompete (If your organization requires)
If applicable, include a noncompete clause that outlines geographical and time limitations on practicing medicine outside of the organization. Ensure these clauses are reasonable and necessary to protect the organization’s legitimate interests. Many health systems and other industries are finding alternatives to noncompete agreements as they don’t always hold up in court.
- Termination clause
Define the conditions under which either party can terminate the contract. This section should cover voluntary resignation, termination with cause and termination without cause. Clear termination provisions help both parties understand their rights and responsibilities in case the agreement needs to be dissolved.
- Dispute resolution
Specify the jurisdiction whose laws will govern the contract. Include details on how disputes will be resolved - whether through arbitration or litigation. A well-defined dispute resolution process can save both parties time and resources in case of disagreements.
What to exclude in a physician contract:
- Unclear terms
Avoid vague language or terms that could be interpreted differently by each party. Ambiguities can lead to misunderstandings and potential conflicts in the future. Ensure that the language used is precise and leaves no room for misinterpretation.
- Unrealistic performance metrics
Be cautious when setting performance targets that are overly aggressive or difficult to achieve. Unrealistic expectations can lead to stress and dissatisfaction, ultimately affecting patient care and the physician’s well-being.
- Single-sided agreements
Contracts should benefit both parties. Avoid contracts that heavily favor one side over the other. Negotiate terms that are fair and reasonable, considering the physician’s expertise and contributions.
- Excessive restrictions
While noncompete clauses are common in physician contracts, excessively restrictive terms can limit a physician’s career opportunities. Ensure that the noncompete clause is tailored to protect the organization’s legitimate interests without limiting the physician’s future. Many organizations are reconsidering noncompete clauses, so it might be worth finding other options.
- Incomplete benefits
A competitive benefits package is essential for physician job satisfaction. Avoid contracts that lack benefits such as health insurance, retirement plans and Continuing Medical Education, or CME, reimbursement. A comprehensive benefits package demonstrates the organization’s commitment to the physician’s well-being.
- Incomplete termination clause
Failing to include clear and fair termination clauses can lead to disputes in the event of contract termination. Avoid contracts that lack requirements for termination with cause, termination without cause and notice periods.
Crafting a well-structured physician contract requires careful consideration of various factors to ensure a mutually beneficial and transparent relationship between physicians and healthcare organizations. Both parties should engage in thorough negotiations, seek legal counsel if necessary and collaborate to create a contract that respects the rights and interests of all parties involved.