The who, what, where, why and when of contracts

Before signing on to a new practice, ask these important questions.

By Bruce D. Armon | Legal Matters | Winter 2011

 

Before signing on to a new practice, ask these important questions.

There are five primary “W” questions that every physician should ask and understand before signing their employment contract.

1. Who is the employer?

It is critical to learn as much as you can about your prospective employer. If the employer is a private practice, what turnover (if any) has the employer had in its leadership? If the employer is a hospital, what is the relationship that it has with its employed physicians? Does the employer share your short- and long-term objectives? Does the employer have a good reputation in the medical community and the community at large? From a corporate standpoint, does the employer have affiliate entities? Will you ever have the opportunity to have an equity piece in any of the affiliates?

2. What does the employer expect?

After a few in-person meetings and e-mails, you may not have a good sense of the employer’s professional expectations. A properly drafted employment contract should delineate your and the employer’s rights and responsibilities. Don’t be surprised on your first day of work by the staff or equipment (or lack thereof) in the office. Understand the path to promotion. What are the benchmarks related to each step in advancement? Get as many as you can described in detail in the contract. The disappointment of not fulfilling expectations will be compounded by not knowing, in advance, what you were supposed to do.

3. Where will you be working?

Many employers have multiple practice locations. Depending upon the community where you live, you may have to travel great distances—even across state lines—to get from one office to the other.

There can be advantages and disadvantages to working in the main office versus a satellite office. The feel of the practice may be very different in one practice location versus another. This can be dictated by the physician(s) who regularly work in a practice location, the staff who are primarily based at a practice location, and even the patient population that frequents a particular location.

Will you be visiting more than one office in a single day? You should be particularly aware of this circumstance if your compensation is based upon productivity.

Because you will have down time while you are commuting from one office to the next, this will negatively impact your productivity compensation even though you are still making a meaningful contribution.

4. Why does the employer want to hire you?

Besides the fact that you are an excellent clinician with great interpersonal skills and a wonderful bedside manner, there must be some other motivating factor.

Has the employer had significant physician turnover? If so, why? How can you bring some needed stability to the employment setting? Is there enough patient demand and lack of physician capacity to keep you busy on day one of employment? If not, how much hustling will you have to do to build and/or maintain a viable practice? Do you have a unique skill set or clinical contribution or business acumen you are bringing to the employer? Will you be appropriately compensated for that contribution?

5. When can you or your employer decide it is time to part ways?

Nothing lasts forever. Though you likely expect your boss to love your work performance and effort, when negotiating your employment contract, expect the worst. How much written notice will your employer give you if the employer decides it is time to part ways? Will you get 30, 60 or 90 days’ notice? Or if the employment is at will, will you get any severance upon separation?

Make sure you understand the difference between “without cause” and “for cause” termination. The latter is often immediate, but there should also be clear reasons (such as loss of license, insurability) related to a “for cause” termination.

When can you decide to leave? Do you have the same ability to terminate the agreement with or without cause? If there is a disparity in the termination options between you and your employer, ask why that is the case before you sign the agreement.

Of course, these who, what, why, where and when scenarios are only some of the questions you need to address. The actual language in the contract will generate comments and questions.

Often, the initial answer to a question inevitably leads to follow-up questions. The process needs to be interactive. There is never a wrong question to ask. There may be a wrong way or time to ask the question, but ultimately the question must be asked and the answer addressed to your satisfaction before you take the next step and execute the contract.

Bruce D. Armon, Esquire (barmon@saul.com) is the managing partner of the Philadelphia office of Saul Ewing LLP. Armon focuses his practice on health care contractual, regulatory and compliance issues and is a frequent speaker to physician audiences.

 

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