Physician employment

Fine print: What to look for in a physician employment contract

Salary, benefits, termination: Your contract should spell out the terms of your employment so there are no surprises later on.


Before signing a physician employment contract, experts recommend consulting with an experienced health care attorney. But even if you seek out professional guidance, you’ll want to know what you do and don’t want to see in your contract. Here’s a primer; to learn more, check out the AOA’s guide to physician employment contracts (login required).

1. Salary and incentive payments: In addition to your base salary, your contract should state how long it will be guaranteed without adjustments; the longer it’s guaranteed, the better. If you’re offered an incentive payment for productivity, make sure you understand when it starts affecting your paycheck, how your performance will be measured and what you’ll need to do to achieve productivity targets.

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2. Call and coverage: Your contract should spell out your call and coverage duties, says Clair Montgomery Howe, a resident career coach for Community Health Systems, a national hospital network. For example, if your employer has indicated you’ll only have to work one weekend day per month, your contract should say so.

3. Benefits: Along with health insurance, benefits may include life insurance, a 401(k) plan, short- and long-term disability, and parental leave, Montgomery Howe says, though you’ll want to find out if parental leave is paid and when you become eligible.

Many employers also cover the cost of continuing medical education, licensing, and membership in medical associations. However, your contract should parse out how those allowances work, says Sonbol Shahid-Salles, DO, MPH, the new physician in practice representative on the AOA Board of Trustees. For example, ask if you have a separate allowance for CME and licensing, or if these budgets are combined, says Dr. Shahid-Salles, who is also an emergency medicine physician in Pensacola, Florida.

4. Malpractice insurance: Most employers pick up the cost of malpractice insurance, but if your insurance is claims-made, make sure your employer also offers tail coverage so that you’re still protected if a patient you treated files a lawsuit after you’ve moved on to another employer. If your employer offers occurrence-based coverage, which is more comprehensive, you won’t need additional tail coverage.

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5. Noncompete clauses: Noncompete clauses typically forbid you from doing two things for one to two years after the end of your contract: working for nearby competitors or luring staff and patients to a different practice. Initial contracts often last one to three years, with the option to extend the contract by a similar amount of time when the term runs out.

If you intend to remain in an area long-term, you should understand how the noncompete clause could affect your professional options in the future, says Dr. Shahid-Salles. “Suppose your contract at a hospital ends and you want to start practicing at a different hospital within the same health system—would that be a violation of the agreement?”

6. Termination: Most contracts stipulate that you or your employer can terminate employment without cause. However, your contract should state how compensation would work in this case. For example, if your hospital terminates you without cause during a merger, you should receive compensation—typically several months’ salary—when you’re let go, since your performance wasn’t at fault.

For terminations with cause, your contract should state that your employer is required to provide written notice of why you’re being let go and give you time—usually one to four weeks—to address any performance issues. Understanding what your obligations regarding bonuses are if you’re terminated is also a good idea, Dr. Shahid-Salles notes.