The Physician Employment Contract: Ten Terms to Negotiate Before You Sign

1. The compensation model

Understand exactly how you are paid. A guaranteed base for one or two years followed by productivity pay is common. If productivity is measured in work RVUs, know the conversion factor, the threshold at which bonus pay begins, how the threshold compares with realistic volumes for a new physician, and when the guarantee ends. Ask for the data the employer used to set the threshold.

2. Signing bonus and repayment

Signing bonuses and relocation payments almost always come with a repayment clause if you leave within a set period. Negotiate the period, whether repayment is prorated, and whether it applies if the employer terminates you without cause. Understand the tax treatment: the bonus is wages, withheld at a flat supplemental rate that is usually below your marginal rate.

3. Term and termination

Look for the without-cause termination provision. Ninety to one hundred eighty days’ notice is typical, and it cuts both ways. Read the for-cause definitions for vagueness. Know what happens to bonuses, benefits, and the non-compete under each type of termination.

4. The non-compete

Restrictive covenants are governed by state law, and several states limit or prohibit them for physicians. Where they are enforceable, negotiate the radius, the duration, and the scope, and ask that the covenant fall away if the employer terminates you without cause. A non-compete that covers every facility in a system can effectively require a family to move.

5. Malpractice coverage and tail

Determine whether the policy is occurrence or claims-made. If claims-made, someone must pay for tail coverage when you leave, and it can cost one and a half to two times the annual premium. Negotiate employer-paid tail, or at minimum employer-paid tail if the employer terminates without cause or you leave after a defined number of years.

6. Call, duties, and location

Call frequency, the ability to change it, additional sites, and the right to assign you elsewhere should all be specific. “As assigned” is a blank check.

7. Benefits and retirement plans

Identify every plan: 401(k) or 403(b), match formula and vesting schedule, whether a 457(b) exists and whether it is governmental or non-governmental, health plan and HSA eligibility, group disability and life terms, CME allowance, licensing and DEA fees, and relocation. These are worth tens of thousands of dollars a year and are often more negotiable than salary.

8. Partnership track

In private practice, ask for the timeline to partnership, the buy-in amount and how it is calculated, how ancillary income is shared, and what happens if the practice is sold before you are a partner. Ask how many associates have made partner in the last five years.

9. Outside activities

Moonlighting, expert witness work, speaking, consulting, and intellectual property are often restricted or claimed by the employer. Negotiate what you want to keep.

10. Assignment and change of control

If the employer is acquired, does the contract transfer to the new owner with all its terms, including the non-compete? A change-of-control clause that lets you exit without penalty is worth asking for in a consolidating market.

How to run the process

• Request the full agreement, including exhibits and compensation plans, not a summary.
• Engage a physician contract attorney for the legal terms and a planner for the financial ones. The fee is small against what is at stake.
• Prioritize three asks. Employers respond to focus.
• Get every change in the signed document. If it is not in writing, it is not in the contract.