Employed Physicians: Negotiating Successful Contracts

Adrienne Lea
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The number of physicians employed by hospitals or medical groups continues to increase, reflecting changing trends in physician reimbursement and pay-for-performance models as well as the increased infrastructure to support ongoing changes. According to a 2014 survey of more than 20,000 physicians conducted by the Physicians Foundation, 53% of US physicians describe themselves as hospital or medical group employees, an increase from 44% in 2012 and 38% in 2008.


You may not have ever negotiated an employment contract, and you may face a significant debt burden. These factors can shift your focus to the base salary number in a proposed contract; while that’s important, you need to assess all aspects of the agreement to ensure your professional and personal satisfaction.

First things first:

  • Make sure you know the difference between the offer letter and the signed agreement, and that you understand what you are committing to when you sign an offer letter. This varies from state to state, and most experts recommend you seek an attorney’s advice before signing an offer letter.

Negotiation is an art:

  • Educate yourself by understanding the interests of your employer and determining your own interests.

  • Hire an attorney who understands physician employment contracts; this is probably not your real estate attorney. Ask people who have been through the process to recommend attorneys you should—or should not—use. Make sure your attorney understands the specifics of nephrology practice.

  • Don’t assume your attorney knows everything. Take the time to educate yourself (Table 1).

  • Work with your attorney to set priorities, and convey the items you consider immutable, and those about which you are more flexible. Your attorney should protect your interests, and should fully understand your priorities in order not to sour the future employer/employee relationship.

  • De-personalize the process. Pretend you are reviewing the agreement for a brother, a sister, or a friend. What advice would you give that person regarding relative importance of the items in the agreement?


Hidden costs and benefits

The salary number provided on the proposed contract should be a fair reflection of the market value for nephrologists with your experience, training, and in that geographic area. That is only part of the story: the total compensation package may contain hidden costs and benefits.

A few items you should review:

  • Health benefits and out-of-pocket health insurance costs for you and your family.

  • The nature of the retirement benefits, including when you become fully vested.

  • Vacation time, how often you are paid, timing of salary review, nature and timing of bonus payments.

  • Performance-based metrics:

    • Understand how your employer integrates production (relative value units) or quality-focused incentives into your compensation plan. Before you finalize an agreement, learn how these metrics may affect the hours you work and the money you take home, and possible incentive payments.

  • How you care for patients:

    • Are there limitations on where you can practice, what patients you see, treatments you can prescribe, or other restrictions on how you will administer care to your patients?

  • Telehealth requirements and/or restrictions?

  • Requirements and/or restrictions regarding exchanges with patients via email? If you are required to respond to patients via email, does the contract include reimbursement for this time?

  • Are there restrictions on your personal use of social media? Or are you required to maintain a professional social media presence, and if so, how much of your time will be required to maintain this presence?

  • If you are just entering the workforce, educate yourself regarding the personal financial costs and time requirements related to licensing, certification and recertification, and credentialing.

  • Your contract may restrict outside compensation, so understand the details and limitations.

A few worst-case scenarios

  • Discuss with your attorney hidden malpractice costs, most notably “tail coverage”—coverage that extends after you leave the organization. If tail coverage is not part of your agreement, providing it yourself can be expensive.

  • Restrictive covenants. If your employment ends, does the contract place restrictions on your ability to practice in that geographic area? How is the geographic area defined? How long do the restrictive covenants remain in place?

  • What will happen if your employer merges with another organization, or if your employer is purchased by another organization? Work with your attorney to anticipate the worst-case scenarios and make sure they are addressed in the contract, including whether certain restrictive covenants otherwise in place might be lifted in the event of a merger or acquisition.

  • If you are participating in a loan forgiveness/loan repayment program, find out how your new salary might impact your eligibility. If you will no longer be eligible for loan forgiveness/repayment, this should be figured into your assessment of your total compensation.

Bottom line: you may be negotiating an employment contract during one of the busiest times in your life—wrapping up a fellowship, selling a house (or finding a new place to live or both), and coordinating with your partner regarding his or her future employment. This employment contract will affect your future professional and personal life, so do not shortchange yourself, your ability to achieve professional satisfaction and provide optimal care to your patients.

Adrienne Lea is a healthcare consultant.