Contract negotiations

Many physicians change jobs within three years of graduating training, so even new physicians in practice who are currently under contract can benefit from a greater understanding of contract negotiations and pitfalls. According to one medical executive, “Doctors only read their contracts twice: when they are signing, and when they are leaving; they never gain an understanding of what the things actually say.”

Medical school and residency prepare us for many challenges and successes, but business acumen and contracts are not necessarily included. Everyone wants to believe that their situation will be a “happily ever after” experience, but contracts do come to an end, and most of the pain for many physicians lies in the provisions of how a contract ends.

Non-compete clauses can heavily restrict future employment options, and in many areas dominated by large hospital groups, the restricted area can be dozens to hundreds of miles wide.

Tail coverage is often a significant unforeseen cost of leaving. If your employer supplies occurrence-based malpractice, you will not require a tail. Most malpractice plans are “claims-made” instead. In claims-made policies, once the agreement terminates, there is no further coverage, and “tail” is purchased to fill that gap. This can cost more than $60,000 and is often a burden placed solely on the physician leaving. Negotiating for the employer to cover some of this cost, possibly on a graduated scale based on time of service, represents an opportunity to limit this exposure.

Finding an attorney who specializes in physician contracts can be invaluable in the negotiation process, as they often have intricate knowledge of the salaries and incentive structures in your area. Shop around and find the right fit for you, as not all contract lawyers are as savvy in the realm of health care. AOA members get 10% off services from Resolve contract negotiation services.

AOA members also receive a discount on “The Final Hurdle: A Physician’s Guide to Negotiating a Fair Employment Agreement,” from the AOA store.