Five Keys to Negotiate and Properly Memorialize Physician Employment Agreements

person-agreement-1138686-m.jpgThe trend in the United States toward physician employment by hospital systems, large medical practices, and other health care employers is continuing. Physicians should not make the mistake of failing to negotiate fair terms and good language in their physician employment agreements.

Atlanta Physician Employment Agreement Law Firm

The excitement of a new career opportunity may cause some physicians to forget that for the employer, the employment of doctors is business and nothing more. Employers invest considerable financial resources and take on significant business risks by employing doctors and, understandably, must protect themselves. That employers protect themselves with proper legal representation and documents drawn in strongly in their favor should never be a surprise.

What is surprising is that many doctors either take the particular language used in a hospital’s template physician employment agreement for granted altogether or, if they carefully study it, incorrectly assume it is written in stone and non-negotiable. It is always a mistake to not to carefully evaluate the terms of employment, how language is used to memorialize the terms, and the possibility of proposing some changes. While all provisions of a physician employment agreement should be carefully evaluated, the following five steps are essential to proper negotiation and drafting of physician employment contracts.

1. Know what you want

Methodically breaking down a particular job opportunity into attributes that you like, dislike or would improve is an important first step to prepare for the inevitable give-and-take of the contract negotiation process. To negotiate effectively, you must know what you want and what does not really matter to you. For example, for some doctors, family circumstances may render a particular schedule or the absence of call time a critical part of a contract; for another doctor who evaluates the same job, the particular schedule may not matter so much or call time may actually be desired. The same form contract may be presented to both doctors. Employers like to use their template contract forms (at least as a starting point) for all physician contracts. In negotiating terms or language, typically it is advantageous to leave alone points or issues that do not make a material difference to you since the more you change terms the greater the chance that you will sour the deal. To help properly limit how much change you broach with the employer, you must first determine what matters to you — what terms you really want or do not want. Make a list, then ask yourself whether the contract accurately states your intentions as to the material terms of the contract.

2. Do not assume a term or particular language is non-negotiable

Too often physicians assume that just because the employer is large and has counsel prepare a form agreement every word of the contract is a take-it-or-leave it proposition. While the flexibility employers have about their form physician employment agreements will vary from employer to employer, if the employer is reasonable and acting in good faith, rarely is any terminology written in stone. To the contrary, more often than not, the input of the physician and his lawyer about how contract language can be improved can make the agreement more fairly stated to the benefit of both sides. All contract language should be stated in a mutually fair, precise and accurate way that reflects the true meeting of the minds. Signing anything that does not achieve that basic objective can be a large mistake.

3. Realistically gauge your bargaining position

Although obvious, the importance of this point is often forgotten by physicians when trying to decide whether and to what degree they should make counter proposals to a hospital about substantive employment terms or how language is used in a contract. How badly do you want the job? How badly do they want you? This basic assessment is fundamental to the negotiation of any contract for employment. If you must have the job, you will negotiate less aggressively, if at all. If the employer must have you, you can negotiate more aggressively and may be able to substantially improve the agreement from your standpoint. Every physician should try to realistically and honestly assess how much he or she needs the particular job and how much the employer needs him (or her). The stronger your position, the more freedom you can feel to propose more favorable substantive terms or for more advantageous language in the contract. The stronger the employer’s position, the less likely the employer will entertain your suggestions.

4. Require reasonably precise, mutually fair language

Ambiguous or overly broad contract language is typical in many form agreements, which are designed to protect a hospital employer and apply to a group of physician employees rather than your particular circumstances. Usually, ambiguous or overly broad language is avoidable, but if it is not avoided, it is always a risky proposition for a physician. For example, if the contract says that the physician can be terminated immediately without notice “for cause,” but includes in the definition of cause “any act or omission that breaches this agreement,” the breadth of such a definition is virtually unlimited because it calls for a unilateral, subjective determination by the employer. If the physician contract indicates that you must abide by “all compliance standards,” does it define the standards with precision? Does it require written notice by the employer of the alleged compliance infraction and a reasonable opportunity to cure it by the physician? All material contract provisions (e.g., compensation and benefits, physician schedules and duties, professional liability insurance, practice standards and legal compliance, termination, restrictive covenants and similar provisions) should be drawn in reasonably precise, mutually fair language.

5. Assume the relationship will end

Assume the employment will end because it will, sooner or later. In considering how this reality impacts your physician employment contract, weigh the consequences of a surprise turn for the worse in the relationship by evaluating the proposed contract terms and understanding how the mechanics of the agreement respecting compensation and restrictive covenants at termination. For example, if the restrictive covenant would, under your personal circumstances, effectively preclude you from obtaining another job or practicing your medical specialty in the geographic are where you will need to live, you would make a mistake to simply dismiss that concern based on your desire to start the job. If the agreement forbids you post termination from having copies of your patients’ medical records, language that will enable you to obtain the medical records for legitimate reasons (e.g., to defend a professional liability case or if a patient selects you as doctor) should be included in the agreement.
Our Georgia health care law firm represents healthcare providers, professionals and closely held businesses. Contact us at (404) 685-1662 (Atlanta), (706) 722-7886 (Augusta), or info@ksllawfirm.com to schedule a consultation today.

*Disclaimer: Thoughts shared here do not constitute legal advice.

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