Physician contracts are often lengthy and filled with legal jargon that can obscure critical terms and obligations. While compensation, benefits, and work schedules usually take center stage during contract reviews, many physicians overlook other clauses that can significantly impact their careers and personal lives.
These overlooked clauses can create financial burdens, limit career mobility, or expose you to unexpected liabilities. Protecting yourself from these hidden pitfalls requires a comprehensive understanding of your contract and a proactive approach to negotiation. In this guide, we’ll explore the most commonly overlooked clauses in physician contracts, the risks they pose, and actionable steps to safeguard your interests.
Why Overlooked Clauses Matter
Hidden Risks, Long-Term Consequences
Physician contracts are designed to protect the interests of both parties, but certain clauses may disproportionately favor the employer. Overlooking these terms can result in:
- Financial penalties.
- Limited career flexibility.
- Increased workload without fair compensation.
A Comprehensive Review Is Essential
By paying close attention to the entire contract—not just the salary and benefits—you can identify and address potential red flags before signing.
Key Clauses Physicians Often Overlook
Restrictive Covenants
What They Are
Restrictive covenants, such as non-compete and non-solicitation clauses, limit your ability to practice medicine within a specific geographic area or timeframe after leaving your employer.
Why They Matter
Overly broad restrictive covenants can force you to relocate or prevent you from serving your established patient base.
Red Flags to Watch For
- Large geographic restrictions in urban areas.
- Long durations (e.g., more than two years).
- Applicability to all practice locations, even ones where you rarely worked.
How to Protect Yourself
- Negotiate narrower terms, such as a smaller radius or shorter duration.
- Request exclusions for termination without cause or if the employer closes a location.
- Ensure the terms comply with state laws, as some states limit or prohibit non-compete agreements for physicians.
Termination Clauses
What They Are
Termination clauses specify how and when the employment relationship can be ended by either party.
Why They Matter
Ambiguous or overly restrictive termination clauses can leave you financially vulnerable or disrupt your career plans.
Red Flags to Watch For
- Short notice periods for termination without cause (e.g., less than 60 days).
- Vague definitions of “for cause” termination.
- Lack of severance pay for without-cause termination.
How to Protect Yourself
- Negotiate a longer notice period (90 days or more).
- Clarify “for cause” conditions with specific, objective criteria.
- Request severance pay to cover the transition period after without-cause termination.
Productivity Metrics and Compensation
What They Are
Many contracts tie a portion of your compensation to productivity metrics, such as Relative Value Units (RVUs) or collections.
Why They Matter
Unrealistic or unclear productivity benchmarks can lead to financial disappointment and burnout.
Red Flags to Watch For
- Undefined or vague RVU thresholds.
- Benchmarks that don’t align with the available patient volume or support staff.
- Lack of transparency about how collections are calculated.
How to Protect Yourself
- Request detailed explanations of productivity metrics and payment structures.
- Negotiate benchmarks based on realistic patient volume and support resources.
- Include a clause allowing for adjustments if circumstances change, such as reduced patient load or staffing shortages.
Call Responsibilities
What They Are
Call responsibilities outline your duties for on-call coverage, including frequency, compensation, and duration.
Why They Matter
Excessive or unpaid call duties can disrupt your work-life balance and lead to burnout.
Red Flags to Watch For
- Undefined call schedules.
- No mention of compensation for extra call shifts.
- Uneven distribution of call duties among physicians.
How to Protect Yourself
- Request specific details about call frequency, duration, and compensation.
- Negotiate for additional pay or time off for call duties exceeding a set threshold.
- Ensure the contract specifies how call responsibilities are distributed among colleagues.
Relocation and Repayment Clauses
What They Are
Relocation clauses cover moving expenses, while repayment clauses require you to reimburse certain costs if you leave the position within a specified timeframe.
Why They Matter
Unfavorable repayment terms can leave you with significant financial obligations if your employment ends prematurely.
Red Flags to Watch For
- Relocation stipends that don’t cover actual expenses.
- Full repayment required for leaving, even if you’re terminated without cause.
- No prorated repayment schedule.
How to Protect Yourself
- Negotiate for realistic relocation allowances that cover all moving expenses.
- Request prorated repayment terms that reduce the amount owed based on how long you stay.
- Ensure repayment is waived for termination without cause.
Malpractice Insurance and Tail Coverage
What They Are
Malpractice insurance protects you from legal and financial risks, while tail coverage ensures you remain covered for claims made after leaving the position.
Why They Matter
Insufficient malpractice coverage or unexpected tail coverage costs can leave you financially exposed.
Red Flags to Watch For
- Inadequate coverage limits for your specialty.
- Employer-provided policies that don’t include tail coverage.
- Tail coverage responsibility falls entirely on you after leaving.
How to Protect Yourself
- Confirm the type of malpractice insurance provided (occurrence vs. claims-made).
- Negotiate for employer-paid tail coverage or a stipend to offset the cost.
- Ensure coverage limits align with the risks of your specialty.
Non-Compensation Benefits
What They Are
These clauses cover benefits such as continuing medical education (CME) allowances, retirement contributions, and vacation time.
Why They Matter
Poorly defined or insufficient benefits can erode the overall value of your compensation package.
Red Flags to Watch For
- Fixed CME allowances that don’t account for inflation or rising costs.
- Vague language about retirement contributions or vesting schedules.
- Restrictions on when or how you can use vacation time.
How to Protect Yourself
- Ensure CME allowances reflect actual costs, including travel and registration fees.
- Request clear terms for retirement contributions and vesting schedules.
- Negotiate for flexible vacation policies that accommodate your needs.
Common Mistakes Physicians Make When Reviewing Contracts
Focusing Solely on Salary
While salary is important, overlooking other terms can lead to dissatisfaction or financial strain.
Failing to Seek Professional Guidance
Contract review by a healthcare attorney or contract specialist is essential for identifying hidden risks.
Assuming Terms Are Non-Negotiable
Many physicians hesitate to negotiate, but most employers expect some level of discussion and compromise.
Steps to Protect Yourself During Contract Negotiations
Understand Your Priorities
Identify what matters most to you—whether it’s compensation, work-life balance, or career mobility—and focus on negotiating those terms.
Research Industry Benchmarks
Use resources like MGMA data to compare compensation, benefits, and work conditions for your specialty and region.
Ask Detailed Questions
Don’t hesitate to request clarification or additional details about ambiguous clauses.
Document All Changes
Ensure that any negotiated terms are included in the final, written contract. Verbal agreements are not legally binding.
Taking the time to thoroughly review and negotiate your physician contract is one of the most important steps you can take to protect your career and financial well-being. By identifying and addressing overlooked clauses, you can avoid hidden pitfalls and ensure your agreement reflects your value and priorities.
Remember, your contract isn’t just a legal document—it’s a roadmap for your professional journey. Approach it with care, diligence, and the support of experienced professionals to set yourself up for long-term success.
