Contracts – The Basics

By Debbie Gleason | Web Exclusive

 

Many organizations have contracts or physician employment agreements (PEAs) that have key components that are similar and may contain ‘standard language’ that is non-negotiable.  In this article, I’ll list some of the key elements for you to begin considering in advance as you prepare for negotiations.  Most importantly, this article is not intended to provide advice with this exception–engage an attorney to review contracts with you one-on-one, who can tailor advice to your specific situation.  Because heath care has many unique legal aspects (including many compliance risks), an attorney who specializes in healthcare, specifically physician employment, is your best choice.  Remember—don’t be afraid to ask questions of both the organization with whom you’re in discussions and of your attorney.

Contracts and Agreements, when signed (executed) by both parties are binding.  All important information should be in writing.  Often there will be documents that are not fully incorporated into the agreement, but will be referenced in the agreement.  Examples of these may be benefits, medical staff policies, and compensation methodologies.  It is within reason to ask these be made accessible to you and your attorney as you review your agreement.  A definition of terms may be one of the first sections you see in your agreement.

Compensation and Benefits – Compensation methodology should be clearly outlined.  This may include bonus or production components.  Expect specific answers to questions about benefits, retirement and professional development expenses (CME).

Term, Start Date, Termination – The start date of your employment or the agreement will be identified along with the effective time period of the agreement.  Methodology for terminating the agreement by either party may be outlined (including the amount of notice that is required).  Reasons and consequences for ‘termination with cause’ should be clearly articulated.  A contract that has no end date and that is automatically renewed each year may be referred to as ‘evergreen’.

Liability/Malpractice Insurance – You should understand the amount of coverage required by the state, organization and/or medical staff committee along with the type of coverage (for instance, claims made v. occurrence, and tail coverage).  Understand who has the responsibility to pay this expense.

Work Expectations – The agreement may clarify things such as locations where you will be working and other details such as hours spent in clinical, research, in-patient, teaching, call coverage, etc.  The language may be generalized such as stating that ‘coverage may be distributed equally among providers’.

Assignment – Can the contract be owned by someone else in the future?

Patient Records and Revenue – Who owns the records and will you be given access when necessary (such as if there is litigation)? Who performs billing?  Who owns revenues if the agreement is terminated?

Restrictive Covenants/Non-compete Agreements – If you leave the organization, will you be allowed to practice nearby?  Conditions, distances and timeframes should be clear and specific.

Indemnification – Who will be “held harmless” and what losses, if any, will be covered and by whom.

Medical Staff Membership – What memberships are required (or prohibited).  What happens at termination?

Again, the best practice is to engage a healthcare attorney (one knowledgeable and experienced in physician employment) to review and consult with you through this process.

 

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