Common Questions with Employment Contracts

Common Questions with Employment Contracts

It’s exciting when you finally receive an offer from a potential employer. At the same time there might be several questions running through your head. You’re not alone. We often get questions during our fellowship education events about what to expect when receiving a contractual offer, as well as several questions about the contract itself. At this point we want to clearly state we are not a substitute for legal advice and we always encourage you to seek counsel from a licensed healthcare attorney. Below are the most common items we are asked about.

  1. Responding to the offer. The employer will want an answer promptly. It is okay to ask for additional time if you have other interviews scheduled. They will often grant it to you if it is reasonable, however do not expect them to give you months to make a decision. Most expect an answer within 30 days.

  2. Do you need an attorney? Yes. If you are seriously considering the offer you will want to hire a healthcare attorney to review your contract. See our blog for more details on this.

  3. Call Coverage. Many people ask if the call schedule will be guaranteed in the contract. It is generally not. At best you will see it listed as “call will be divided equally among the physicians.” If someone leaves the practice or is on vacation the employer is going to have a problem if they promised you in writing a call of every fourth weekend and it is no longer plausible.

  4. Partnership. It is typically not guaranteed and the terms are generally not provided for in the employment contract. We encourage you to find out the terms during your interview and make note of what was stated for future discussions. If partnership is offered you may encounter language such as “On or around the anniversary of the second year of employment an offer of partnership may be extended if both parties are in mutual agreement.” There is a lot of wiggle room in that type of statement. Employers want to make sure that you are the right fit, are productive and have good clinical acumen just as you would want to ensure that the employer meets your long-term interests and they are a good fit for your needs.

  5. Tail Insurance.

    • Private practices generally do not offer tail insurance.

    • Employed positions often do, e.g. hospitals, locum companies and academic institutions.

    • Some physicians have been successful in negotiating terms for tail insurance to be provided if they are terminated without cause. While if they were terminated for cause or quit without cause, the physician would absorb the cost of tail insurance.

    • There is a time frame outlined in your contract that you must show proof you have purchased tail insurance.

    • If you continue your malpractice coverage with the same provider with your new employer you may be able to just continue your coverage without purchasing tail insurance.

    • Claims based insurance is what is most commonly offered for malpractice. Your coverage for claims is only available if the claim is made during your specified term of coverage. Any claims made outside of those dates would require you to have the protection of tail coverage. Occurrence based insurance, also known as nose coverage, is when you are covered for all services provided during a specific time frame regardless of when the claim is made. Nose coverage is the same as tail coverage except you are paying for at the front of the policy rather than at the end.

  6. Moonlighting. Often viewed as unacceptable, especially with private practices. The practice wants you to focus your attention on building a practice and supporting the best interests of the employer. Speeches, expert witness, and research usually require approval and the income to be sourced through the practice. Side work as a hospitalist is often discouraged. However, some employers offer internal options to make more money, e.g. as taking extra weekend call.

  7. Non-Compete or Restrictive Covenants.

    • These vary by employer, service area and state/local laws.

    • Typically, the radius restriction is in direct correlation to the population density. In a major metro it may be a mile to two but in rural areas it can be far greater.

    • Generally, you are restricted from hospitals, dialysis centers and office locations.

    • Some contracts will include a buy-out which, for a hefty sum, enables you to buy-out of your restrictive covenant.

    • In addition to the time and geographic components, some covenants will try and limit you from practicing medicine of any kind during the restricted period. Make certain that the language does allow you to work as an internist or hospitalist in case you are unable to leave the restricted area due to your spouse’s work or other commitments.

  8. Loan Repayment, Sign-on Bonus, Relocation. All things that are wonderful but be sure to read the fine print.

    • Often if you terminate or the employer terminates the contract early you could be liable for repaying all or a portion of this benefit.

    • Check with your accountant. These are typically taxable.

    • Loan Repayment, specifically, is not offered as often by private practices.

This is just a general overview of a very important and complex topic. If you have any questions, you can always email us directly at and we’ll do our best to guide you in the right direction!

2019-12-01T13:08:20-07:00 September 13th, 2018|6-9 Months before Graduation|0 Comments

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