The Must-Have Checklist for Physician Employment Contracts

Matt Brewster

The physician contracting process involves many steps in order to get it right.  We’ve made a  checklist of the must-have elements that standardize the process to ensure that both the organization and the hired clinician are protected.

Key Pieces of a Physician Contract

The basic physician contract covers the employment status of a physician. Some of the critical component parts of these contracts include:

  • The work status of the physician; Employee vs Independent Contractor.
  • Most physician compensation plans today have a productivity clause.
  • Income guarantees and educational loan forgiveness.
  • Non-competes are typically covered in contracting.
  • Hours, duties, and on-call are defined.
  • Facility locations if required to work in multiple locations
  • Procedures they are expected to perform.
  • Non-medical responsibilities (administration, meetings, etcetera)
  • Benefits and compensation.
  • Credentials and privileges
  • Termination guidelines and restrictions.

Breaking it Down Further

Given that these documents are so complex, here are some best practices for a step-by-step contracting process

Determine the nature of the relationship. This includes:

  • Will they be an employee, independent contractor, or some other designation?
  • How many hours will the clinician be working on a weekly or monthly basis?

Next, decide the remuneration.

  • Has a needs assessment or a fair market value assessment has been performed?
  • The contract should define the compensation, including supplementals, such as relocation, loan forgiveness, and other bonus structures.

Categorize the physician duties:

  • What responsibilities medical and non-medical need to be written into the contract?
  • Are there duplicative duties the physician will be compensated for?
  • What is the term of the contract, and when can it be terminated?
  • What supervisory duties will the physician have?

Define the performance evaluation process:

  • Are there functional metrics to ensure care and service quality?
  • How often will the evaluation be performed?

Review the contract documentation, including:

  • Does the contract require the doctor to provide documentation of their work and hours spent providing services?
  • Supplemental compensation terms.

Review payment rate, processes, and controls, including:

  • Payroll, A/P, invoices, check requests, and non-monetary gifts and gratuities.
  • Have legal counsel review the document and sign off, along with the clinician.

As with any legal document, you want to minimize risks.  This includes:

  • Restrictive Covenants and Non-compete language.
  • Forgivable loan terminology.
  • Contracts that lack accountability for tracking terms and conditions.
  • Contract language that suggests the doctor is compensated for referrals in any way.
  • Evergreen clause stating automatic renewing without notice.
  • Compensation rates that exceed market value.
  • Agreements with no analysis of fair market value.
  • Duties submitted for compensation that is not included in the contract.

The complexity of the physician hiring process only ends with the development of the contract. There are extensive additional tasks associated with developing the contractual agreements for these high-end positions such as regulatory compliance, employer obligations, safe harbors, intellectual property, use of information etc.  It’s advisable to work closely with a trusted and experienced attorney to ensure the contracting process is completed properly.  Want to speak with an expert in the field of contract negotiations for no charge?  Call us at MedSource Consultants.