Physician Contract negotiation 101

*Disclaimer:  We are not licensed attorneys and this blog is for informational and entertainment purposes only.  Please do not follow any advice in this blog regarding legal advice.  If you need any legal advice please seek a licensed attorney in your state or feel free to email us for some referrals! 

In the beginning…

It is now well into April, and the operating room small talk with the senior residents often veers toward physician contract negotiation. A few years ago, I thought I was one of the savvier ones when negotiating my contract.  After going through some burnout, recalibrating my job expectations, renegotiating several points in my contract, and talking to my friend @Docofalltradez, it amazes me how little I knew then. Everything is possible if you ask in an effective way.  (The actual art of negotiation itself can be several blog posts long.)

This is the opening post in a series dedicated to negotiating the physician contract. I am writing from the perspective of an employed surgeon, thus the content will be skewed toward the productivity-based earnings agreement.

Why do we need contracts?

Firstly, let’s discuss the reason for the contract’s existence. Think of it as a prenuptial agreement between you and your employer. The contract does not exist to help either of you when things are going well. It is also there to help both of you when things go sour. It is a clear delineation of both parties’ responsibilities and obligations during the employment, and an outline of what happens during contract termination. Oftentimes, it is longer and more detailed than the contract for ancillary hospital support staff. A thoughtful employment agreement will delineate the following:

Your responsibilities

This will include practicing within the scope of your specialty. The contract may specify that you are board eligible at the time of hire and become board certified within a reasonable set timeline. Pursuing continuing medical education, attending professional organization meetings, and timely completion of medical records are standard obligations. You may be required to be in good standing with Medicare, Medicaid, and other insurance programs. If you are employed by a hospital or physician group, you may be required to use a designated office and operating room (rather than a free-standing surgical center where you have partial ownership). You may be required to divest in ownership of such facilities to prevent a conflict of interest. Referrals might only stay within the medical group unless the patient requests otherwise.

Employer responsibilities

The hospital should provide you with office and operating room facilities and personnel to assist with clinical and nonclinical aspects of your work. The employer is responsible for malpractice coverage and timely physician compensation.

Malpractice coverage

Your employer should be providing you with this. This can be in the form of claims-based, or occurrence-based coverage, of which the latter is preferred. Ask whether there is tail coverage, or if applicable, nose coverage. This is an important topic worthy of more detail in a future blog post.


As an employee, your earning potential may be less than if you are self-employed or a business owner, but the benefit of being employed is that your overhead and other financial risks are shouldered by the employer. Most likely you will be compensated on a productivity-based model. Is there a grace period of a base salary regardless of productivity, usually doing the first 2 years? If you are more productive than the base salary, is there a potential for a bonus? Are you measured by wRVU, or a collections-based payment model? Is there a cap on what you can earn? Is there a yearly CME expense reimbursement? Student loan assistance or a signing or starting bonus? Are relocation costs reimbursed?

Non-compete Clause

This is the one place where the employer can really make it unfair for the physician. I underestimated how important this is during my initial negotiation. Usually has a mile radius (can be 10 miles for a hospitalist, and over 25 miles for a specialist), and a set time frame of 1-2 years.

Termination without Cause

This should be a two-way street. You as the physician have the right to leave the company. If so, how many days of prior written notice are required? The number can range from 30 to 90 days. Conversely, the employer may terminate you without cause. The number of days of written notice should be equal to the days required by employee-initiated termination, such as 30/30, or 90/90.

Termination with Cause

A contract may outline clear reasons for termination with cause, such as conviction of a felony or a misdemeanor, evidence of substance abuse, insurance fraud. Other reasons are the loss of state medical licensure or revocation of board certification. If you are being terminated for suspension of clinical privileges or loss of medical staff membership, it must have followed due process afforded by the hospital’s medical staff bylaws, usually with avenues to argue your case in front of a committee, as well as clear improvement plans for repeat offenses.

Miscellaneous Items

Are the post-termination obligations delineated in the contract? What happens to unused vacation time? Are there guaranteed salary payments until termination? Is there severance pay? Who’s responsibility is it to make patient notifications? Medical records will likely need to be completed, as is the return of any borrowed medical equipment as a condition of final payment. Do you have to return all of, or a portion of any retention bonuses, student loan assistance payments if terminated?

These are the basic ingredients of a physician contract. Each of these bullet points warrants a discussion in further detail. At the time of my first contract, I was overly focused on the compensation “number” and paid little attention to the other aspects, which I feel are more important every day. What are your thoughts?

-Mindful Surgeon

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