5 things to consider before signing a physician employment agreement
It can be very exciting to receive a letter of intent followed by a detailed employment agreement. It is imperative, however, to carefully review these documents before signing.
It can be very exciting to receive a letter of intent followed by a detailed employment agreement. It is imperative, however, to carefully review these documents before signing to avoid various landmines that may be buried in the dense language.
Here are 5 common clauses to consider carefully:
Indemnification clauses are becoming a very common clause among physician and mid-level employment agreements. Essentially, an indemnification clause means you will cover the employer’s liability, loss, damage, expenses (often, including attorney’s fees) that may arise out of your conduct. This could be an expensive, open-ended obligation and impossible to predict, even with malpractice insurance in place, as obligations may exceed policy limits and some claims may arise outside the scope of what the policy covers.
For example, a patient sues and the provider is named in the lawsuit, the provider may have agreed, by way of indemnification, to pay the employer’s attorney fees, court costs, and/or settlement amounts.
The enforceability of noncompetes varies based on the law of the state you reside in. If not carefully drafted, a noncompete can place restrictions on future employment. Some noncompete clauses also include liquidated damages clauses that would be due upon violation of the noncompete restriction.
Compensation terms can often be dizzyingly complex, especially as medical groups steer towards productivity-based compensation, typically tied to work relative value units (wRVUs) or net collections. The drawback is when wRVUs are adjusted by Centers for Medicare and Medicaid Services (CMS) and there are no protection terms – this can negatively impact compensation.
Often, there may be targets based on some percentile established by an industry benchmark. On its face it may seem fine; however, if you are engaged in any research, clinical trials, or administrative functions, this could impact your ability to meet a predetermined target.
Generally, contract amendments are effectuated through mutual agreement, in other words both parties have to agree and sign a separate, new document. Under unilateral amendment language, however, one party, generally the employer, can change or modify the terms of the agreement without your consent.
Typically, all contracts have a fixed duration. To allow for flexibility, however, it is important to ensure that there is either non-renewal or without cause termination language. Otherwise, you may be locked into an extended term with no easy way out.
