By Peter G. Christian |
Two earlier posts on the Schaefer Halleen website provided an introductory discussion of why legal counsel is important when a doctor is negotiating a contract and a brief discussion of contract law fundamentals and basic provisions that appear in almost all physician contracts. This post covers the promises doctors are typically asked to make when they enter into a contract, and the kinds of benefits and compensation they typically receive in return. Subsequent posts will cover:
- Provisions governing termination and severance pay;
- Malpractice insurance, non-compete and non-solicitation provisions, and confidentiality and intellectual property rights, and
- Other provisions, such as legal rights and remedies if disagreements arise
As discussed in an earlier blog post, contracts are essentially an exchange of promises. Typically a doctor entering into a contract with an employer is asked to promise that she or he:
- Is licensed in the state where she or he will be working
- Is board certified as necessary
- Will provide services in a designated medical field for a specified number of hours per week or month as instructed by the employer. Scheduling requirements are sometimes laid out in detail, and doctors should make sure they understand what their schedules will be. Three twelve hour days per week is very different from five eight hour days. A doctor also should consider whether there is an allowance for time spent on administrative tasks
- Will adhere to “standard practices.” A doctor should understand just what “standard practices” involve
- Will follow and adhere to the employer’s rules and procedures (including administrative and record keeping tasks). Again, a doctor should understand just what actually is involved
- Will refrain from doing other work without the employer’s permission
In some cases the importance of the employer’s rules and procedures is emphasized by explicitly incorporating them into the contract. Another potentially significant detail relates to the prohibition against outside work. Many contracts can be read to prohibit the physician from performing any outside medical work or even from volunteering. On the other hand, teaching, research, volunteer work and the like sometimes are explicitly allowed. For a physician who may be interested in these types of activities, they should be considered and potentially negotiated before a contract is finalized and signed.
The compensation and benefits that an employer promises in return for the contracting doctor’s promises come in many forms, varying from a straightforward annual salary to pay based on relative value units (“RVUs”), a combination of factors developed as part of the Medicare system. It supposedly accounts for differences in the time and skill required to provide various medical services. A doctor looking to maximize compensation should take into account regional differences and the prognosis for pay raises and an eventual ownership interest, as well as other elements of the compensation package being offered.
When compensation is largely based on RVUs, it can be difficult for the physician to know how much he or she can reasonably expect to earn. Thus, it’s important to have frank discussions with the prospective employer about how many RVUs other physicians doing similar work have typically generated. The incoming doctor might also want to speak directly with other employees working on the same basis.
Contracts often include signing bonuses and additional compensation tied to performance, as well as a wide variety of other benefits. Is health insurance included, for example? Or disability insurance, a retirement plan, vacation and personal leave, additional leave for continuing medical education or participation in professional societies? Will the employer provide administrative leave for personal emergencies or things like studying for and taking board or certification exams? What expenses will be reimbursed? Will moving costs be covered?
Some employers also promise to pay for things like a mobile phone, subscriptions to medical journals, or even the cost of an automobile or membership in a private club. If a doctor has immediate expenses to cover, the employer will sometimes advance a loan, which may be forgiven over time if the doctor remains with the practice or medical institution. If a doctor is allowed to engage in outside activities like teaching or research, the contract may allocate any money received to the employer, or it may allow the doctor to keep it.
Sometimes contracts will make explicit what kind of support services the employer will provide. For example, how much staff assistance will the doctor receive on record keeping or other obligations he or she has promised to fulfill? Though there is virtually never an outright promise of an ownership interest in the future, contracts will in some cases make clear that ownership is the expected outcome after the initial contract term. Sometimes the prerequisites for an ownership interest will be explicitly spelled out.
Malpractice insurance is another benefit typically provided by an employer, but it is an issue complex enough to merit a separate blog. Obviously, the variety of “promise exchanges” in physician contracts can be vast it not infinite. Consultation with a Minneapolis Employment Law Lawyer for Medical Professionals will help a doctor to obtain the exchange best for her or his circumstances.