Signing a Contract With a Physician Practice

- Ashley Umbach

While physicians today learn cutting edge medical treatments and technologies, most of them don’t receive any instruction on the business side of medicine. That’s an unfortunate omission; practicing medicine requires doctors to enter contracts, to be aware of applicable rules, laws and regulations, to market themselves, to understand proper coding requirements, and to properly collect patient payments.

Today we will focus on one of the first business documents a physician will encounter: a contract with a physician practice. What subjects will it cover? What questions can you ask? Should you get a professional to look at the document?

Compensation is one item that will be addressed in the contract. Be sure you understand how your compensation is determined, whether you have the opportunity to earn a bonus, and exactly what a bonus will be based on. You may be offered a trial period to practice as a salaried physician (perhaps one to three years) before you can join the practice as a partner.

Don’t be afraid to ask questions. If you are required to work as a salaried physician for a time, how does the practice decide whether or not to offer you a partnership? What has happened to physicians who have come before you? Has anyone failed to make partner, and if so, what were the reasons?

If you are fortunate enough to be considering competing offers, don’t look at salaries in a vacuum. A quick google search will reveal the average income of a physician in your specialty in the city you are considering. Similarly, you can search and compare the cost of living in different cities. A slightly lower offer may go farther in a city with a much lower cost of living.

Do not forget to factor in benefits as well. A practice that pays for your CME, malpractice insurance, health and disability insurance, and makes generous contributions to your retirement account is relieving you from paying thousands of dollars per month.

You will want to think about the daily aspects of practicing medicine as well. Do you know where you will be based, and whether you will work at one specific office, hospital or outpatient center, or will you be expected to rotate? Do you know roughly what hours you will work? Are you clear on how taking call will work, not only at night, but on weekends and holidays? Are you paid for taking call or is that part of the job?

Do you know what type of support staff you will have, and who oversees hiring, firing, training and supervising those people? Will you have the support you need? Do you feel comfortable with the level of support the office provides, or will you need to learn to work with advanced practitioners or without your own nurse?

Are you familiar with the practice’s EMR, or will you need some training on the program before you feel comfortable documenting patient encounters? What about other equipment and machines you will work with?

The contract ought to specify under what circumstances you can be terminated, and what steps you should take if you wish to terminate your obligation. It is common for professional contracts to contain covenants not to compete, but they must be reasonable. A contract may specify who is to purchase tail coverage if you leave the practice, and that burden may shift depending on whether you leave voluntarily or not.

Everything is negotiable, but you should educate yourself before you start making demands. There are several people that you can, and should, consult with before signing any agreement. An employment lawyer familiar with the healthcare industry can break down the legal issues for you and provide advice about your relative bargaining power. Someone who deals with employee benefits for a living can estimate the worth of the benefit package offered, and a representative from a malpractice insurer will know how tail coverage is typically handled. If some topics are not covered in the contract, be sure to confirm your understanding of them in an email so you have a written record.

Whether you have questions about terms or want a practice to renegotiate a point, be sure to ask questions, raise issues, and consult the appropriate experts.