|Home | About | Journals | Submit | Contact Us | Français|
When starting a new employment position, make sure you have a written contract, and have it reviewed by an attorney or practice management consultant familiar with the applicable laws in the state where you will practice. The attorney should be one who is familiar with the business of medicine, in addition to having familiarity with employment law and employment contracts. Remember, you are investing your time in building a business of which you may potentially buy a piece. Your attorney should understand this.
One young oncologist—let's call her Dr Landry—learned the hard way that a “handshake agreement” can lead to problems. She accepted her first position during her interview with a small group that hadn't hired anyone for many years. “I was focused on the medicine I would be practicing, and I didn't know the right questions to ask,” Landry said. “I worked without a contract for 7 months. I didn't get paid until I'd been there 6 weeks, and I never had any health benefits.” She left the group after a year.
Unfortunately, according to San Antonio attorney Michael L. Kreager, Dr Landry's experience is all too common. “It's most likely to happen with a small group or solo practice, especially if the hiring physicians have been practicing for an extensive period of time and haven't recently added new physicians to the group.”
L. Michael Fleischman, FAAHC, a principal with the Atlanta-based consulting group Gates, Moore & Company, agrees. “When physicians are in training, nobody tells them what to look for. That's why so many younger physicians bounce around from job to job.”
All terms guiding your relationship with the group should be explicit and in writing. Keep in mind that what is in the contract is important. Never accept a statement dismissing something in the contract, such as, “Oh, that provision is never enforced,” or “That won't ever apply to you.”
Ask for copies of the corporate bylaws, partnership agreement, and other documents that may affect your future relationship with a practice. One young oncologist signed a 2-year contract with two partners in their 50s, only to find out later that a policy existed that physicians older than 55 years would not take night calls.
Any attachments to the contract are part of the contract and are enforceable. If the contract refers to another document, such as corporate bylaws, a health plan, or a retirement plan, obtain a copy and be sure it is dated.
If you have found a practice that is interested in hiring you, a letter of intent is a typical starting point. “A letter of intent is not legally binding, but it will spell out previous conversations and put them in writing so there are no misunderstandings,” Fleischman said. “If it is not offered, the candidate can suggest that the practice prepare a letter of intent so that he or she can discuss the details with family and advisors.”
Kreager adds, “Never select from a pool of one. There are plenty of opportunities out there for oncologists now, so job applicants should take the time to look at each one very closely to make good comparisons.”
Once you have decided to proceed, the practice should offer you a written contract. Obtaining professional advice in reviewing the contract is critical. In most cases, you will do your own negotiating and consult privately with your attorney or other advisors about the contract terms and the effect they will have on your career. If you prefer, your advisor will deal directly with the practice. “I negotiate directly with a practice a lot of times for my clients who ask me to because they are too busy, or feel they don't understand the terms sufficiently,” Fleischman commented.
In considering a contract, you don't have to accept whatever is offered, but don't try to negotiate every point of the contract, either. Decide which issues are most important to you. Be firm on those and flexible on less critical areas. A future article in “Strategies for Career Success” will discuss negotiating strategies, not only for dealing with contracts but for many aspects in your career.
What should you expect to see in a contract? Naturally the specifics will vary greatly, but you should be familiar with the basics. “Physicians should know the lay of the land of what's normal in a contract,” Kreager pointed out. “If something is missing they should be able to ask for it. By knowing what is in the boundary of normal, they can be on the alert if something is outside those boundaries.”
The term of a contract refers to how long it is in force before it expires or has to be renewed. Be sure the start date is realistic and takes into consideration any need to obtain a state medical license or to become credentialed by the hospital(s) and the group's insurance plans. Most employment contracts have a term of 1 or 2 years, and they often have an “evergreen” provision, stating that the contract is renewed automatically unless terminated by either party. If your contract is automatically renewable, you can renegotiate the terms before it expires. You should start discussions about any such changes about 90 days before the term ends.
The contract should describe the conditions on which continued employment is contingent, such as appropriate licensure, maintaining hospital privileges, and participating in continuing medical education (CME). It may include a requirement that you become board certified within a certain period. The following are other aspects of your work that the employment contract should cover:
In comparing positions, consider the entire compensation package, not just the base salary. Some positions may guarantee a higher salary but require you to pay practice expenses. Fringe benefits and tax implications also change the compensation picture. In addition to describing the method of your compensation (salary or salary-plus-productivity, for example), the contract should state how often you will be paid. The following are various elements that may be included in your compensation package:
Fleischman noted that productivity incentives are becoming more common. “I think that's because a lot of younger physicians are looking for opportunities to increase their income to pay off educational loans,” he commented.
The contract should be very clear about how productivity is defined, such as fees billed, number of patients seen, hours worked, fees collected, or profits of the entire practice. The measures of productivity should cover details such as whether (and how) your productivity will be affected when you provide services to a partner's patients, and vice-versa. If expenses are included in the compensation formula, the contract should specify how the group's expenses are allocated to each physician.
A noncompete clause or “restrictive covenant,” prohibiting you from practicing in the same area if you leave the group voluntarily, is included in most employment contracts. The rationale behind a restrictive covenant is that the group has expended resources in recruiting you and setting you up in practice and doesn't want you to have the advantage of those resources if you leave the group and set up a competitive practice.
A noncompete clause will specify the scope of services, the geographic area, and the period of time that are restricted, such as practicing oncology within a certain radius from the practice for the next 1 or 2 years. Most states allow restrictive covenants that are reasonable in scope and duration; check with your attorney about how the courts have ruled in the state where you will be practicing.
You and your attorney should review any noncompete language carefully and try to limit the restrictions. Usually the terms can be negotiated to reach a satisfactory compromise that is reasonable and fair for both parties. Although a 2-year restriction is common, Kreager counsels oncologists that 1 year is a reasonable length. “One year provides plenty of protection for the group. For one thing, in oncology, within a year, your referral sources are going to go somewhere else, so you don't really represent a threat to the practice after a year. In considering a noncompete clause, physicians should ask themselves, ‘Can I live with this if this position doesn't work out?'”
Your agreement should include a section describing the conditions under which the employment contract may be terminated before the scheduled end date. Death or permanent disability are conditions that terminate the contract. In the case of disability, typically there is a “qualifying period” ranging from 60 to 180 days before the contract ends. Look for a provision stating that you will receive your salary during the qualifying period. The agreement should also specify provisions for termination.
The contract should stipulate what payments you will receive for unused vacation days if you leave the practice. In addition, if your compensation is based on your collections, the contract should state how long after the end of the contract you will continue to receive payments from collections.
Your contract should state how major disagreements can be resolved. Binding arbitration may be called for, or the contract may state that, in the case of a lawsuit, the prevailing party is reimbursed for legal fees and other costs.
It is not common for an employment contract to cover specifics about your becoming a shareholder in the practice, but discussions about future partnership should be documented in the letter of intent. Be sure you are made aware of how much a buy-in to share ownership might cost.
Kreager suggests that the contract specify a date at which time the employee will be evaluated for share ownership. “If you are interested in becoming a partner (or shareholder), ask for a provision committing the employer to consider you for equity ownership at a certain time, such as after 2 years,” he advises. “It's very important to have a specific goal.”