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Physician Employment Agreements: Key Provisions to Negotiate and Common Pitfalls to Avoid

January 7, 2022

As physicians continue to trend towards an employment model, the employment agreements physicians are asked to sign by hiring practices and facilities are likewise becoming increasingly standardized and more difficult to negotiate. Physicians presented with a proposed employment agreement should ensure that they understand the terms of the agreement and seek the advice of legal counsel before signing. This article discusses some of the key provisions commonly found in employment agreements which can significantly impact the physician’s employment, as well as common pitfalls physicians should avoid if possible.

Scope of Duties, Responsibilities, and Scheduling

The agreement should adequately describe the duties and responsibilities the physician is expected to fulfill as part of his or her employment, including any administrative, supervision, and/or non-clinical responsibilities that may be required. The agreement should specify the total work hours and any amount of call coverage the physician may be required to work. They physician should also understand how the physician’s schedule will be determined, including whether the employer utilizes any seniority system or other procedure for requesting time off or preparing the schedule. If the employer has offices or facilities in multiple locations, the physician should understand at which location(s) he or she is expected to work and whether those locations(s) may be subject to change.

Compensation and Sign-On Bonuses/Incentive Payments

The agreement should identify the physician’s compensation to be paid by the employer for services rendered by the physician during his or her employment. If the physician’s compensation (including any periodic or annual bonuses) follows a certain model or formula, the model or formula should be specified in the agreement, with sample calculations if necessary or appropriate for clarification purposes. Physicians, and particularly physicians with several years of experience who are practicing in high-income specialties, should be mindful of provisions which impose caps on compensations, such as a certain percentile of a national survey. Likewise, physicians who are offered any sign-on bonus or other incentive payment to become employed at a practice or facility should understand the amount of the bonus or incentive, how and when the bonus or incentive will be paid, and whether any amount of the bonus or incentive may be subject to repayment under any circumstances.

Read Kathleen’s complete article on page 12 in the Fourth Quarter 2021 edition of the Detroit Legal News.

Kathleen A. Westfall maintains a business practice focused primarily on Close Up - Kathleen Westfall of Kerr Russellhelping clients to navigate complex licensing and regulatory issues related to state and federal health care laws and regulations. She assists health care clients with a number of corporate and contractual issues and disputes, including third party payor audits, insurance coverage matters, and reviewing, drafting and negotiating various contractual agreements. She also represents health care professionals and facilities in connection with licensing investigations and other enforcement actions by state and federal agencies.

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