The cornerstone of a practice arrangement is the professional service agreement, or contract. Modern physician contracts adhere to federal compliance standards and generally favor risk mitigation on behalf of the employer. Limited content regarding the obligations of the employing institution or corporation is included in most. It is not unusual for employers to consider, and further to articulate that the contracts are all “boilerplate” now, and not subject to revision or negotiation. New physicians entering practice often find the transition overwhelming and may easily fall prey to such behavior, not recognizing the opportunities to negotiate on their own behalf (Table 7.1).
A further pitfall is that contract content and language are based on the practice setting, local market, and fair market value. These issues are important, but they do not necessarily encompass the elements that build a successful practice, nor do they promote a professional career. Engaging trusted colleagues or mentors and legal review will aid in negotiating an optimal contract; ideally one that will provide protection to your employer and you for years to come. Realizing the mutual needs of both parties and laying foundation to meet such needs will generate a healthy, functional basis for this process.
CONTRACT TERMS AND RESTRICTIONS
Emphases of terms and restrictions relate to termination and relocation issues. The contract itself will have a term of activity, which may be either a set term, expiring upon completion of a certain amount of time, unless both parties enact a renewal or a new agreement. Alternatively, contracts commonly have an “evergreen” clause, which ensures automatic renewal for set periods of time unless either party discontinues the agreement.
In some cases, either party may terminate the agreement at any time without cause. Often this is included, at least during the first 30 days or first 90 days of a new contract. Termination with cause refers to the written rationale for proposed termination of the contract provided with a time period to address alleged breaches of contract by either party.
Restrictive covenants have also become common in contracts. However, variation exists by state regarding allowing and enforcing restrictive covenants. Most restrictive covenants strive to protect the employer against market competition. Noncompete clauses restrict the provider from performing similar clinical services for another employer within the same geographic region. This may be based on miles from a given center or time-based travel. Noncompete clauses pertain to a period of time following the employee’s departure from the system, ranging from 6 months to several years. Noncomplete clauses are likely not enforceable if a physician is providing emergency care to patients. Nonsolicitation clauses are less restrictive and refer to prevention of a physician from soliciting former patients, coworkers, or others affiliated with the former employer to another practice within the geographic region of interest. When physicians provide trauma care to a given community, it is prudent to negotiate removal of noncompete or nonsolicitation clauses.
TABLE 7.1 Pitfalls of Contracting
Not defining vague contract terminology
Not understanding restrictive covenants; some of which may be local or state laws and not necessarily
included in the contract verbiage
Not researching potential employers and partners
Not defining procedures and terms for incentive compensation
Not protecting additional (external) income
Not including details of overhead or related limitations on net revenue
Not scrutinizing benefits
Not obtaining legal counsel
Contract language includes terms relating to the practice setting and business model. Patient care quality and productivity must be expressed in concrete language with objective deliverables. The physician is responsible for time and productivity in the outpatient clinic and operating room, and the employer must ensure access to outpatient clinic, inpatient unites, and operating room facilities with appropriate ancillary staff. Nursing, radiography, cast technician, physician extender, and other forms of personnel support should be expressly specified. Physicians are generally responsible for call coverage, but limitations and compensation are negotiable. Table 7.2 summarizes basic contract provisions for providers and employers.
Other negotiable terms may include incentives related to quality of patient care, patient-reported outcomes, cost savings, and other administrative contributions, which may afford incentive compensation or other resources. Academic terms and expectations, such as access to or expectations for student or resident teaching, participation in research studies or registries, and academic title or rank, may also be included.
TABLE 7.2 Contractual Deliverables to Be Considered by Physicians and Employers
Baseline:
Quantified operating room time for elective and nonelective cases. Should include adequate operating room nursing, anesthesia, and other support staff as indicated
Instrumentation and inventory to support contracted procedural services. Process and procedures in place to acquire new technology (capital equipment, instrumentation, implants, supplies) for regular or intermittent usage should be specified
Quantified outpatient clinic access in specified locations supporting optimal patient care and physician and patient access. Should include competent support staff and services as indicated
Specified plan for practice coverage during planned or unplanned absence
Continuing medical education allowance each year
Future:
Annual review of professional fee schedule, revenue procurement, and compensation
Annual cost of living increase in base compensation of ≥3%
Annual review of quality metrics, patient-reported outcomes, and other data reflecting individual physician and group practice effectiveness
Only gold members can continue reading. Log In or Register to continue
