Important Things to Consider before Signing a Physician Employment Contract

Contracts with hospitals, private practice groups, or healthcare systems can be unpredictable, but they are essential to the operations of medical practices. They are often considered the most dangerous aspect of a doctor’s life. Contracts are not written in a language that most people speak, and they are designed to protect one party: the employer. Therefore, physician contracts should not be glanced over and signed just because a future employer seemed nice during the interview. A contract, or an agreement between parties, creates legal obligations for those parties. Consequently, these documents should carefully be examined with an experienced attorney.



What Are They Really Offering You?


Most physicians choose new opportunities based on compensation. But often this is not the most important factor when evaluating a job. A physician’s future career will be influenced by various factors, including location, type of practice, and clinical quality of the group or facility. Thus, it is in the physician’s best interest to map out all of their needs in order to create an employment relationship that is beneficial to both parties.


When evaluating a compensation package, practitioners must understand that compensation methodology generally is not negotiable. New physicians often have a fixed compensation model, while more established physicians usually use variable models to account for their performance.


It is important to consider the specialty and the location of the practice when considering compensation. Practices located in rural communities may entice physicians with larger compensation packages. Additionally, employers in low-cost-of-living areas should mention this to prospective providers during salary negotiations if the compensation package is on the lower side.




Most physician contracts outline duties required for the new physician if he or she signs. While these are often skimmed over quickly when reviewing a contract, these duties are affirmative obligations agreed upon by the parties. Once the contract is signed, these duties are binding. Physicians should review each responsibility and make changes to the contract where necessary so both physician and employer are on the same page. Additionally, physicians should be paying particular attention to what the contract forbids physicians from doing, such as paid speeches, moonlighting at other facilities, etc.


Call Coverage


Watch out for vague language in an employment contract regarding call coverage. Employers generally will leave the language undefined in order to leave room for flexibility. If possible, try to get an employer to be as specific as possible, especially concerning holidays, nights, weekends, and how calls will be divided if other physicians leave

the hospital or practice.




The termination section allows for the end of the employment relationship if certain events occur, such as a felony conviction, loss of license, or license restrictions.


Physician contracts may allow termination without cause as long as proper notice is provided to either party. This notice period is typically between 60 and 90 days.

Non-Compete Clauses


Non-compete clauses are usually the most contentious areas of physician employment contracts. A non-compete clause is a promise made by an employee to not compete in the same type of business in the same area for a certain time period. These clauses are fairly and regularly upheld in some states. In other states, they are not regularly enforced despite physicians’ duty of loyalty to their former employers. Agreements should address “remedies” for violating a covenant and may consider including a court injunction, which would prevent the physician from practicing in the restricted area.


Tail Coverage


Tail coverage is  an insurance policy that defends physicians against lawsuits that come about after they have cancelled their policy. Contracts generally state that physicians are responsible for purchasing the tail policy even if they are fired. However, it would be in the physician’s best interest to ask the employer to buy the tail policy in case the employer decides to prematurely terminate the relationship.




Signing a contract is one of the most important decisions a physician makes during his or her career. With so many important pieces to a contract, it is imperative that the agreement is reviewed with counsel, who can help a physician with the decision making.

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