Physiatry Practice Management Resources

The employment document is a blueprint for your life at the new practice. Don't pick up your pen in haste.

You've met the doctors. You've toured the practice. You're a huge hit. The partners offer you the job and hand you a contract. Smiling in gratitude, you reach for a pen.

Stop right there. Are you happy with the salary promised? Does the wording make clear what your bonus will be based on? Who'll pay for your malpractice insurance? What are your ownership prospects? What will happen if things don't work out in a year?

Since the employment agreement dictates almost every aspect of your working life, before you sign it you need to devote time and thought to the details it covers. "Consider the contract you're offered a rough draft," says Rosary Payne, an attorney with the AMA. "Study it, and highlight everything you don't understand or would like to change."

Don't even think about handling this on your own. The contract has most likely been drawn up by an attorney, and—no surprise—favors the employer. You, too, should be represented by an attorney or other professional who is familiar with physician employment contracts.

Michael J. Clippard, who's finishing a dual residency in internal medicine and pediatrics at the University of Tennessee in Memphis, asked his financial adviser to review the employment contract he was offered by a Missouri multispecialty group he plans to join next summer. The adviser raised questions Clippard wouldn't have thought to ask. For example, would the group help the doctor pay off a school debt? Yes, it would, Clippard has since learned.

Among other concessions, the group changed its bylaws to include a stipulation about compensating permanently disabled doctors—including forgiveness of certain loans. The partners also agreed to replace a vague definition of disability with the definition in the group's insurance contract. "I tried to remove as much subjectivity as possible from the contract," says Clippard's financial planner, Richard Carman of Germantown, TN.

Don't worry that involving an adviser in the contract review will make you seem pushy, counsels Richard S. Cooper, a health care attorney in Cleveland. "No one will think that, as long as you and your adviser approach the negotiation in a reasonable, nonadversarial way," he says. "The people you're dealing with went through the process themselves and ought to understand your point of view."

It could, however, be overkill to bring a lawyer to negotiating sessions, cautions James G. Stuart, a health care attorney with KarenZupko & Associates in Chicago. "This can limit the flexibility of both parties," he says. The deal is likely to move faster when there's free give-and-take just between the principals. But be sure to consult with your attorney before and after each meeting, and leave any document drafting to your lawyer.

A simple contract review should cost $500 or so, more if negotiations are protracted—hardly the most expensive legal bill of your career. "This is not rocket science, legally speaking," Stuart says. "Yet it's one of the most important documents you'll sign."

For clarity and security, get everything on paper
"The biggest mistake doctors make is not getting every aspect of the employment agreement in writing," says Carman, who frequently helps his doctor clients, most of whom are young, negotiate those pacts. "You might think your new colleagues are all nice guys. But after six or eight months, they may renege on oral promises."

Adds the AMA's Payne, an author of Annotated Model Physician Employment Agreement (AMA, 2000): "A written contract requires both parties to think clearly about their expectations and obligations, and prompts discussion of important issues. Misunderstandings that arise during these discussions can be clarified before the contract is signed."

Moreover, says Payne, as time goes on, the parties may forget what was promised. "A written contract serves as a clear reminder of precisely what the parties agreed on."

Aim for a structured and highly detailed contract that leaves no room for interpretation, cautions Carman, who has an attorney review every contract he negotiates. Sufficiently thorough documents can run eight to 15 pages. "I've seen some that are 30-something pages," says Cooper. "That's absurd."

Before you begin negotiating, decide what salary, benefits, and working conditions you're looking for, says Jeffrey J. Denning, a practice management consultant in Long Beach, CA. Figure out what your deal breakers are, and prioritize them. If your heart is set on becoming a partner in two years, but the group won't consider you then, this might not be the spot for you. Long office and on-call hours may be an issue if you have young children and want to spend evenings at home.

But be realistic. Employers aim to maintain as standard a contract as possible; major concessions to a newcomer can cause disputes within the group. "While most groups will be willing to make reasonable compromises, it's counterproductive to define success as getting everything you want in a contract, especially if you're just coming out of residency," Cooper cautions.

Don't hesitate to ask questions, even if you're uncertain how they'll be received. "It might seem awkward to ask about, say, bonus structure or revenue growth, but there is an etiquette," Denning says. "Give the other party permission not to answer. Say something like, 'I hope you won't think I'm prying when I ask these questions. If you'd prefer not to answer them, I'm sure you'll say so. But since this is an important step for everyone involved, I feel I should ask.' " You'll probably get answers to questions presented this way, but if you don't, you might want to think twice about whether this is the group for you.

Concentrate on the heart of the deal
The employment contract should cover a myriad of details, such as office hours, time on call, CME reimbursement, and vacation time. But experts advise you to focus on these key issues:

Compensation and benefits. Typically, a new recruit is guaranteed a fixed salary for at least the first year, when he's building up a referral network and patient base. The amount varies by specialty and region. (For information on physician compensation, see "What they're paying.")

Salary is usually negotiable to the extent that the physician has additional training in a needed specialty or is joining a practice in an area where recruiting doctors is difficult. Richard Carman says that if his client is board-certified in two specialties or is filling a gender need at a practice, such as when a female urologist joins an all-male urology group, he aims for 10 to 20 percent more than the offer. In internist-pediatrician Michael Clippard's case, Carman didn't press for a higher salary because the practice kicked in a larger-than-usual bonus to help him pay off an education debt. The group also agreed to a less restrictive noncompete clause.

If the salary is based on productivity, be sure all details are laid out clearly. For example, if you're offered 55 percent of any fee-for-service income the practice collects for the patients you treat, find out how many fee-for-service patients you're apt to see. Will you also be expected to treat capitated patients, and how much will you be paid for that work?

"If the contract is for more than one year or renews automatically, ask for a provision addressing salary increases," advises Cooper.

You may have some more room for negotiation if moving expenses are part of the deal. The employer might offer $10,000 for a move that will cost only $2,500. "Try to get the $7,500 difference in salary," Carman says. "Every practice has a cumulative budget in mind when it's hiring. The extra $7,500 in salary isn't any more than the practice has budgeted for."

Be very clear about what benefits you're offered. Cooper suggests you request a copy of the summary plan descriptions, that most employers are required to maintain. These documents give an overview of all benefits, including health, life, and disability insurance, as well as pension and retirement provisions, with terms for vesting and eligibility. "They're especially important when you're weighing competing offers," Cooper says.