As a physician, have you ever negotiated your employment contract with your employer? If you answered no, you are among many other physicians who don’t negotiate their contracts.
There are many misconceptions with employment contract negotiations that leave physicians confused or unaware of the options they have when starting a new job or renewing their contract.
In 2018, 47.4% of practicing physicians were employed, while 45.9% owned their practices. As this trend continues and more physicians choose to take advantage of being an employee instead of running their own practice, there is a need for doctors to negotiate with their employer.
Sean Wagner, a Business and Healthcare Attorney of Wagner Hicks, specializes in reviewing doctor employment contracts in dentistry, medicine, and the veterinary industry. He shared insights with us to address the pitfalls of contract negotiation and offer tips to understand the nuances between contracts. You should walk away able to ask the right questions and feel confident when committing to a contract that has one too many pages of fine print. Let’s start with the basics.
An employment contract is a signed agreement between an individual employee and an employer. It establishes both the rights and responsibilities of the two parties: the employee and the company.
Even though employment contracts should be simple, it is no secret that contract agreements can be confusing. Why is it confusing though? The reasoning is because the scope of what is negotiable depends heavily on the employer. Even with that being said, there is almost always room for negotiation on important issues like salary and benefits.
When it comes to contract agreements, there are plenty of myths that follow suit. More often than not, employee contract agreements are kept secretive amongst other coworkers, so it can be hard to gauge what a sound physician employee contract should look like. Should you just take what the contract says without raising any questions? Here are some of the contract agreement myths you might have started to believe yourself:
All in all, let these 3 myths stay as myths. Don’t allow these myths to hinder you from negotiating what you deserve out of the position. Your experience has value that should be reflected in the contract. If it isn’t, you need to discuss the contract agreements further before signing anything.
There are several reasons it is important for physicians to have an attorney review your employment agreement.
While it may seem basic, it is always important for a physician to fully understand the benefits, obligations, and restrictions associated with his or her contract. It is surprising how often physicians think they understand, based on conversations with recruiters or hospital representatives, the terms of their employment contract, only to find out that there was a misunderstanding and the contract is inconsistent with his or her understanding on key terms. The problem with discovering these issues after the contract is signed is that the terms of the contract almost always supersede statements made during interviews or other conversations that take place prior to execution of the contract.
“I have encountered situations where the contract contains inconsistencies or ambiguities regarding key provisions, including base compensation, signing bonus repayment, incentive bonuses, administrative duties, and vacation time. These types of inconsistencies or ambiguities can be very meaningful and need to be corrected on the front end, before the contract is executed. More often than not, we see contract negotiation questions arise due to this confusion within the medical community. Fortunately, there are professionals that can help physicians understand their contract and most importantly know what you are signing your name to,” said Sean Wagner.
A key to avoiding mistakes or opting out of negotiating the contract all together is to avoid eagerly signing a binding letter of intent or agree to terms without reviewing them in detail first. Now that you know why it is imperative to get a second opinion, how do you find a credible professional to help you?
You have to find a lawyer who understands the healthcare industry and has experience representing providers and healthcare practices. The healthcare industry has some of its own unique regulatory and contractual issues, so it is incredibly important that you find an attorney that can help you navigate those unique issues.
In more recent years, it has been surprising to see some hospitals have completely eliminated non-compete provisions. A non-compete agreement is part of the employee contract where an employee promises not to enter into competition of any kind with an employer after the employment period is over. Some of the terms of the contract may include the length of time the employee is bound to the non-compete agreement, the geographic location, and/or market. Employers have begun to eliminate the non-compete provisions from their contracts to stay competitive in the market and attract employees. Since this is a newer concept healthcare lawyers are seeing, Sean says doctors are still afraid they will have to find a new city to work in if they decide to leave their employer. Furthermore, they are unaware they aren’t bound to a non-compete. He has also seen that often physicians are offered a lower salary when employers leave out the non-compete agreement.
Smaller dental or physician practices typically don’t have the extensive human resources or legal staff to leverage when they hire new physicians and offer employee contracts. Sean sees this as a pitfall because the contracts are a hodge-podge of rules and responsibilities they have found on the internet. These piecemealed contracts are not clear to the employee or the employer who put them together. When Sean is reviewing these types of contracts, he says it is necessary for an attorney to help clarify what the contract verbiage actually says so the employer can update and correct it.
As Sean mentioned above, the verbiage in an employment agreement does not always match up with what is promised by the recruiter during an interview. Once you track down the fine print, the compensation formula often does not match up to what they have verbally been told. The misinformation is not usually given intentionally by the employer and can be a result of outdated contracts. Moreover, they aren’t being dishonest; they just haven’t updated the pertinent provisions that are necessary. In these cases, a lawyer can help clarify contractual provisions to make sure you get paid what you were told you would. Sean notes that he sees big red flags when employers are uncooperative when asked to clarify compensation. They may not be pleasant employers to work with if they want to nickel and dime you. It’s important to know what you are worth.
The final pitfall we will touch on is one that brings frustration as a result of poor communication. It sounds normal for an employer to reference a physician code of conduct in a contract, right? However, if the contract says the physician code of conduct may change from time to time, it becomes abnormal if the employee is not even given the handbook that was referenced when it is time to sign the contract. These types of gaps between the contract and code of conduct have also led to situations where employers included unethical provisions in the handbook that would not align with an employees’ values. This is a big red flag because it shows the employer is intentionally hiding information in the handbook that must be disclosed. Though this example might sound extreme, it does happen. Reviewing the employee contract can help a physician avoid committing to rules or responsibilities they would be uncomfortable with. Even if a physician handbook is not mentioned in the contract, it can’t hurt to ask the employer if they have one, so you are aware in the event they forget to give it to you or they are hiding things from you. The latter might cause you to deny that contract all together.
With the number of physicians working for a hospital or larger practice now exceeding those who own their own practice, contract negotiation skills are critical for physician employees to develop. There are many benefits working for a hospital or other medical entity offers, including less liability, health benefits, and no responsibility of managing and paying employees.
If you are a doctor who has chosen to work for someone else instead of owning a medical or dental practice, don’t fall into the trap when you see pages of legal jargon. Eagerly signing your name might be easy and feel like the best option because you can avoid reading the fine print and start the new job you are excited to begin. As you can see, there can be several consequences like inadequate compensation or unclear expectations if you don’t take the time to review your contract. The skill of negotiation can help you stay a happy employee so you can focus on caring for your patients, avoid the headache of owning a practice, and exceed your company’s expectations.
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The team at Spaugh Dameron Tenny works to present timely educational content that benefits doctors and their unique financial situations.
