A new contract holds the promise of opportunity—and the risk of a job that isn’t quite what you expected. By thoroughly reviewing your contract, you avoid surprises and make sure the position comes with terms that protect and benefit all parties involved.
Here’s a guide to the physician contract review process, along with key contract components, red flags to look for, and important terms to know. Just keep in mind that every situation is different, and if you need personalized advice to resolve physician contract matters and mitigate risk, you should contact a specialized contract attorney.
The review process: 3 key steps
Whether you’re just starting the negotiation process or are about to sign, make sure you have your ducks in a row. Take the following steps to avoid missing details:
1. Research the position and workplace
Before signing any contract, you should know as much as possible about the prospective workplace. Find out if its location, values, and growth opportunities align with your goals—both short-term and long-term.
Beyond the basics of the workplace, explore more about the position itself. Who would your team members and supervisors be? How long has the job been open for? If it’s been vacant for some time, why? If the employer seems to have struggled to fill the position, you may want to dig deeper and look at average pay rates and reviews from previous employees.
2. Visit the site
Site visits help you gather information while building a rapport with the employer. If the new role demands relocation, this is also a great opportunity for you or your family to explore the local community.
Site visits aren’t necessarily about talking salary. Instead, they’re about asking the right questions to inform your negotiations and general role suitability. Depending on your needs, consider asking:
- What challenges does the group anticipate in the next few years, and how do they plan to address them?
- How is success measured in this role, and what metrics or benchmarks will I be expected to meet?
- What does physician morale and work-life balance look like here?
- How is the call schedule managed?
Think about what questions you might want to ask before you arrive. Consolidate them to avoid asking more later in the negotiation process, which can prolong agreements and create unnecessary confusion for both parties.
3. Thoroughly review your contract
Reviewing your contract is arguably the most important step because it directly affects your experience on the job. One word can drastically alter details or increase liability.
Remember to:
- Take the time necessary: Give yourself a few weeks for a thorough review. Rushing to sign can cause you to miss important details that affect your pay or duties. Remember, a fair employer will respect your need to fully understand the contract before making a decision (as long as you respect the sign-by date).
- Consider legal aid: Consulting a physician contract lawyer can help you uncover omissions or identify vague details. If in-person support isn’t feasible or you’d prefer a more budget-friendly approach, you can also explore contract review online services through reputable platforms that specialize in physician agreements.
- Know your best alternative: If you have other offers or more time to search, you have greater negotiating leverage. Keep a viable fallback option, also known as the best alternative to a negotiated agreement (BATNA), in mind so it’s easier to walk away from terms that aren’t quite right.
- Seek clarity: Ask questions about any provisions you don’t understand or that seem vaguely worded. Confirm that the contract explicitly spells out all essential details—including compensation, malpractice and termination clauses.
- Aim to work together: Negotiations aren’t a zero-sum contest. The objective isn’t to come out on top but to reach an agreement that benefits you and your employer.
One Sermo poll found that, of participating physicians who had negotiated a contract, 39% chose to renegotiate compensation, with 38% of respondents choosing compensation as the most important part of a contract. The same poll had 50% of respondents say they negotiated their last contract before signing, so don’t worry: It’s very common to come back with additional terms or questions about the contents of your contract.
Understanding your contract: 5 key areas
There’s a lot of variation among contracts. Here are some key commonalities and red flags to look out for and understand.
1. Term and termination
Contracts specify two main ways to end employment: without cause and with cause. For Sermo members, termination terms and conditions are one of the top considerations of a contract — with 15% citing them as the most important aspect of a contract in a Sermo poll.
Without-cause termination lets either party end employment for any reason by giving advance notice, typically a month or two. Some situations warrant different periods. Rural specialists, for example, may need 180 days to ensure proper patient handoff, while independent contractors might only need 30 days.
With-cause termination occurs immediately for more serious issues, like inappropriate conduct or malpractice. In most cases, the employer provides a clear reason for termination.
While all term and termination details are important, pay careful attention to minimum term length requirements. While many contracts allow termination at any time with proper notice, others restrict when you can leave. Watch for language requiring you to complete an “initial term”—often 1–3 years—before you can give notice. Overlooking this detail could lock you into a position longer than intended, even if better opportunities or personal circumstances arise.
2. Compensation structures
Physician contract negotiations often center on compensation structures. The most common models include:
- Base salary only: This is a fixed annual amount without additional production-based bonuses. Employers usually set these salaries using external market surveys or internal pay scales.
- Work relative value unit (wRVU) plans: Pay depends on the volume or complexity of services, measured in wRVUs. Each wRVU has a set conversion factor that varies by specialty or location.
- Compensation based on collections: You earn a percentage of the practice’s collected revenue from your work.
As you review your contract’s compensation section, confirm which model applies to you and verify how the employer calculates each component (salary, bonus or collections). Make sure the structure aligns with your goals and meets the professional standards set by your medical credentials and specialty.
The same goes for evaluating benefits, which should appear in the contract’s compensation section. The more you know about your earnings, the easier it is to streamline your financial planning.
3. Malpractice insurance
Physicians’ jobs are unique because they include the possibility of malpractice, ethical issues and related insurance. A contract review for doctors should include detailed standards and policies.
There are two main malpractice policy types to look for: claims-based and occurrence-based.
- Claims-based: A claims-based policy covers lawsuits filed only while the policy is active. If you change jobs or the policy ends, you need “tail coverage” to protect yourself from future claims arising from past services. Claims-based policies are typically less expensive up front, but the tail premium can be costly.
- Occurrence-based: An occurrence-based policy covers any incident that took place during the policy term, regardless of when a claim is filed. Once the coverage period ends, you remain protected for that time frame without needing tail coverage. These policies are generally more expensive initially but can be more comprehensive long-term.
Determine if you or your employer is responsible for purchasing tail coverage on claims-based policies and whether any policy terms can change mid-contract. Confirm that the coverage limits meet your state’s and workplace’s requirements and remain consistent throughout your employment. This helps avoid gaps or unexpected costs.
4. Restrictions
The most common restrictive clauses include:
- Non-compete agreements: These provisions prevent you from working for a competitor or establishing a similar practice in a set area for a defined period. Most non-competes are a few years in length.
- Non-solicitation clauses: These clauses bar you from directly contacting or hiring your former employer’s patients, staff or contractors for a certain timeframe.
- Liquidated damages provisions: Some contract terms specify a fixed financial penalty if you violate them.
As you review your contract’s restriction clauses, confirm whether they still apply if the employer ends your contract without cause. Also compare the restriction’s duration to the employer’s commitment—for example, if a non-compete lasts four years but your contract is only for one, it’s worth inquiring about further. Finally, check for liquidated damages provisions, since many contracts penalize breaches at a few times your annual salary.
Sermo members often share strategies for negotiating non-compete clauses inside the community, offering invaluable insights from their own experiences.
5. Schedule and duties
A contract should clearly define your responsibilities using unambiguous language. One common red flag is a contract containing “as needed” or open-ended language about call or shift coverage without specifying the frequency of, or compensation for, required work.
Make sure there are no provisions allowing the employer to unilaterally change your schedule or practice location at any time. There should be a requirement for mutual agreements to schedule or duty changes.
6. Letter of intent (LOI)
Approximately 20% of applicants receive an LOI. If you don’t receive one, don’t worry—but if you do, you should know what it means and what the implications are.
LOIs, like contracts, are high-level summary documents that outline the key terms both parties intend to formalize in the final employment agreement. While they’re often non-binding, some LOIs can include language that obligates you in certain ways, so don’t overlook them.
Don’t sign an LOI without fully agreeing to or understanding its terms. If it imposes any requirement that limits your ability to negotiate with other employers or locks you into certain obligations, proceed with caution and consider seeking legal advice. Always clarify whether the LOI is truly non-binding or if certain clauses—like non-compete clauses or exclusivity—become enforceable upon signing.
Discuss contractors and more with over 1 million licensed physicians
The goal of physician contract reviews and negotiations is to create favorable terms for all parties. While it helps to have a healthcare contractual lawyer by your side, you can also connect with, and gain insights from, other physicians on Sermo.
Sermo is an ecosystem that brings physicians together to exchange insights, learn from peers and participate in medical market research. Through posts and polls, you can connect with physicians who’ve gone down the same contractual road you’re currently on – and enjoy a few laughs along the way.
