American College of Physicians: Internal Medicine — Doctors for Adults ®

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Getting ready to sign a contract? Read these tips

From the May 2001 ACP-ASIM Observer, copyright 2001 by the American College of Physicians-American Society of Internal Medicine.

By William Hoffman

Contract help from the College

Atlanta—When it comes to negotiating a contract, you’ll never have as much bargaining power as the day you first walk through a potential employer’s door. That’s why Boston health care attorney Lee Dunn, JD, tells residents to scrutinize contracts and get professional help before signing on the dotted line.

During an Annual Session presentation on contract negotiations for residents, Mr. Dunn emphasized that physicians should retain a lawyer when negotiating an employment contract.

“Physicians by and large are poor at conducting business affairs,” he said. While doctors often conduct business based on a handshake or a promise, neither carries much legal weight.

Once you sign a contract, Mr. Dunn explained, you are bound to its terms regardless of anything else that was agreed upon over a handshake or promised. That’s why you need to get everything in writing, he said, and have a lawyer review all documents.

Mr. Dunn gave the following pointers on contract issues that residents—and their lawyers—should consider:

  • Employment status. Does your contract make you an independent contractor or an employee? Mr. Dunn said the answer may affect your tax burden. It can also determine who pays legal fees and judgments if you are evernamed in a malpractice suit.

  • Pay. “You need to know when and how much you’re going to be paid,” Mr. Dunn explained. While this might seem obvious, he said that he’s seen contracts that stipulate the physician will be paid just once a year. Also ask if the practice has ever missed a payday—and consider such incidents a red flag.

  • Revenue. Your lawyer or accountant should review the practice’s billing figures, Mr. Dunn suggested, and compare billings to collections. If a practice bills $10 million a year but collects only 30% of that amount, something is wrong.

  • Benefits. Health and life insurance and other benefits are part of most contracts. Ask if health benefits cover pre-existing medical conditions and get vacation policies in writing.

  • CME. Some practices will expect you to schedule continuing medical education during your own time. Mr. Dunn suggested building time for license renewal requirements into your contract.

  • Work hours. A contract should spell out the minimum and maximum number of hours you’ll be expected to work in a week or month. It should also spell out the practice’s approach to call duty and contingency plans for covering other physicians.

  • Outside activities. “If you want to continue to do something that’s very important to you, get it in the contract,” Mr. Dunn said. If an employer refuses to agree to give you time for volunteer work or continuing medical education, consider it a sign that the work environment may not be flexible or supportive.

  • Restrictive covenants. While contracts often contain covenants to prevent you from working for competitors after you leave, Mr. Dunn suggested trying to remove such language. If an employer insists on keeping no-compete language in a contract, your lawyer should examine such clauses carefully. A covenant prohibiting you from working within five miles of your old practice may be fair, he said, but language that prohibits you from practicing in the same state probably isn’t.

  • Termination. Some contracts allow employers to terminate employees without reason or cause. Mr. Dunn suggested modifying such language to identify predetermined conditions that must be met before a physician can be terminated. He also emphasized that residents should not sign away their due-process rights to examine evidence, confront witnesses or examine charges against them during disputes.

William Hoffman is a freelance writer in Fairfax, Va.


Contract help from the College

The ACP-ASIM Practice Management Center’s manual, “Physician Employment Contracts,” is available at www.acponline.org/pmc/employment_contracts.htm. The manual is free for College members and $25 for nonmembers.

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