What does it cost to leave a physician job? How your employment contract can make you pay

If I asked how much your new job pays, you might have a hard time giving me an exact number. Depending on your practice type, it may be a complex formula, but you could probably figure it out with some rough math around productivity and quality bonuses. What is even harder, and discussed far less often, is figuring out how much the contract can make it cost to leave your job.

Consider a fairly typical offer: $350,000 in annual compensation, a $40,000 signing bonus, relocation assistance and additional upside tied to productivity. Most of the attention naturally goes to the front end of that deal. Is the salary competitive? How achievable is the bonus? How much paid time off is there?

But let’s suppose the job is no longer working for you 18 months later. Maybe the workload is different from what you expected. Maybe the organization changed. Or maybe your own priorities changed.

Now the question is different: What does it cost to leave?

I have been looking at that question across 200 U.S. physician employment agreements analyzed by ClauseMD between January and September 2026. The contracts represent roughly eight specialties, with internal medicine disproportionately represented, so I would not treat the findings as nationally representative. Still, several patterns observed across a majority of the contracts were hard to ignore.

The signing bonus can become a liability

Signing or commencement bonuses appeared in 94% of the agreements in our sample. Almost all of them had a repayment obligation clause if the physician left before completing a required period of service.

About 78% used some form of prorated forgiveness, and repayment periods were typically around two years. But even “prorated” can mean very different things.

For example, a $36,000 bonus forgiven over three years could work very differently depending on the formula. Monthly forgiveness would leave about $13,000 outstanding after 23 months. On the other hand, annual forgiveness of $12,000 per anniversary could leave $24,000 owed shortly before the second anniversary.

Both of these can be described casually as a bonus that vests over three years, but their economic impacts would be very different.

That is why I would look beyond the size of the bonus and even beyond the repayment period. The better question to ask is: “Exactly how does forgiveness accrue?”

The American Academy of Family Physicians (AAFP) has similarly advised physicians to pay attention to recruitment incentives that may require 12 to 36 months of service before they are fully forgiven.

A $40,000 signing bonus is not simply $40,000 of compensation. Until the obligation has been satisfied, some portion of it may still behave more like debt than a bonus.

Malpractice insurance can create another exit cost

If the employer uses claims-made coverage, leaving the job may create the need for extended reporting coverage, commonly called “tail coverage.” Who pays for it can depend on how the employment relationship ends. Some agreements place the cost on the physician after a voluntary resignation or termination for cause, while the employer may assume the cost after terminating the physician without cause.

Physicians should therefore establish in the contract who is responsible for tail coverage before signing.

The question is not simply whether your employer provides malpractice insurance. It is: “Who pays for that insurance when I leave?”

Notice periods have a dollar value

Nearly 90% of agreements in the analyzed sample allowed employment to be terminated without cause.

Roughly 60% of those contracts required the physician and employer to provide the same amount of notice.

In the remaining 40%, the physician was required to provide more notice than the employer. I saw agreements requiring physicians to provide 90 to 180 days of notice while allowing the employer to terminate employment with 30 days' notice or, in some cases, immediately.

That does not automatically make the contract unreasonable, but the difference has economic value.

A physician changing jobs may need time to interview, complete credentialing, obtain a new state license or relocate. For a physician earning $350,000 annually, the difference between an employer being required to provide 90 days of notice and being able to terminate immediately represents about $87,500 in gross salary. Whether that amount is actually at risk depends on the specific termination language.

The broader point is that there is a meaningful economic difference between an employment arrangement that provides several months of predictable income during a transition and one that allows one side to end that income much sooner.

This is one provision that receives far less attention than starting salary but can carry substantially more financial exposure than negotiating another $10,000 onto the offer.

The bonus you earned may not be the bonus you receive

The most surprising pattern in the contracts involves variable compensation.

Approximately 90% of the agreements contained some form of productivity or variable compensation, including work relative value unit (wRVU)-based pay, collections formulas, quality incentives or other bonuses.

Yet during our contract reviews, we identified explicit treatment of that compensation after termination in only about 10% of those agreements.

Consider a physician who resigns in November after generating wRVUs throughout the year but whose productivity reconciliation does not occur until the following quarter. Or a physician whose pay depends partly on collections that arrive after the underlying patient care occurred.

The physician may have performed the work, but that does not necessarily answer when the compensation becomes contractually earned or payable.

Is it earned when the patient is seen? When the wRVU is generated? When the employer collects the money? When the bonus is calculated? Or only if the physician is still employed on the payment date?

The absence of a clause in the contract does not mean the physician forfeits the compensation. However, it does mean that an economically important question remains unresolved until the employment relationship is ending.

I would rather know the answer before resigning.

There are other costs too. A restrictive covenant may not require a physician to write a check to their employer, but it can delay the next job, increase a commute or force a move. Whether a particular restriction is enforceable depends heavily on state law, but its potential economic effect still belongs in the contract analysis.

If I were evaluating a physician employment agreement today, I would run the contract through a simple exit scenario at 12, 18 and 24 months. At each point, I would ask the following questions:

• What would I have to repay?
• Would I owe malpractice tail?
• How much notice do I owe compared with my employer?
• What happens to compensation I have generated but have not yet received?
• What, if anything, could delay or restrict my next job?

Some answers will produce a clear dollar amount. Others represent contingent exposure or limits on flexibility. The point is to understand the transaction from both sides of the table.

A good job can still have meaningful exit costs, a large signing bonus may still be worth taking and a service commitment may be perfectly reasonable.

But before signing the contract, physicians should know the price of leaving it.

Vikram Chahal, MBA, CFA, is the founder of ClauseMD, a physician employment contract review and analysis platform focused on helping physicians better understand the financial and contractual terms of their employment agreements.