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Comprehensive Guide to Physician Employment Agreements

This detailed guide by Stacey A. Borowicz, Esq. of Dinsmore & Shohl LLP outlines essential components of physician employment agreements. Key topics include terms and renewals, work duties, compensation models, benefits, and termination clauses. The guide emphasizes the importance of legal review, negotiation strategies, and understanding covenants such as non-compete and non-solicitation provisions. It is a vital resource for physicians seeking to navigate employment contracts and ensure favorable terms for their practice.

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Comprehensive Guide to Physician Employment Agreements

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  1. Physician Employment Agreements Stacey A. Borowicz, Esq. Dinsmore & Shohl LLP 191 W. Nationwide Blvd. Suite 300 Columbus, Ohio 43215 (614) 227-4212 sborowicz@dinslaw.com October 8, 2008

  2. Gross Anatomy of an Employment Agreement • Term and renewals • Work duties and call schedule • Compensation- fixed salary vs. productivity • Benefits • Future opportunities

  3. Contract Review • Seek legal review • Attorney with healthcare experience • How long will the review take • Will you or the attorney negotiate terms • Expected legal fees

  4. Term • Fixed Term • Note contingencies • Licensure • Board certification • Hospital & payer credentials • Option to renew or automatic renewal • Notice for termination or non-renewal

  5. Work Duties • When do I work? • Where do I work? • What am I responsible for? • Who helps me? • What can I do when I am not at the office? • Can I get paid for it?

  6. Compensation • Annual salary- fixed each year • Productivity only – “eat what you kill” • Combination of salary and production

  7. Productivity • Regular pay = draw • Billings vs collections • Expenses • Variable = by production • Direct = individual • Fixed = equal • Reconciliation

  8. Other Compensation • Bonus • Signing Bonus • Annual Bonus • Discretionary • Based on production • Receipts > threshold amount • Percentage share of practice profits • Start-up costs • Reimburse moving expenses • Reimburse portion of student loans

  9. Benefits • Insurance • Health insurance (single vs family) • Life, disability, accident insurance • Retirement plans • Eligibility • 401(k), profit sharing, pension plans • Employer contribution or match • Vesting

  10. Benefits • Disability Leave and Insurance • How long can you be off? • What will you get paid? • Maternity leave • Time off (vacation and sick time) • Scheduling, notice, priority of requests, carryover • CME • Paid time off • Reimbursement of expenses

  11. Benefits • Reimbursed Expenses • Medical license fees • Board exam fees • Medical associations • Medical staff fees • Office and computer equipment • Books and Journals • Cell Phone & Pager • Parking • Mileage or auto allowance

  12. Malpractice Insurance • Occurrence Policy • Claims made Policy • Tail Coverage • Who pays • Based on termination • Nose Coverage • An issue if you don’t have tail paid

  13. Termination • Without cause • By who • Notice required (affects term) • With cause • Specified circumstance • Good cause (reasonable standard) • Notice

  14. Limitations & Covenants • Medical Records • Record belongs to practice, information belongs to patient • Right to use post termination • Non-Solicitation • Patients • Employees

  15. Limitations & Covenants • Non-compete provisions • Presume will be enforced • In Ohio, covenant must be reasonable • Geographic restriction • Temporal restriction • Damages

  16. Recruitment Agreements • Separate contract and loan from hospital • Guarantees salary and covers incremental practice expenses • Physician personally responsible to repay loan at end of guarantee period • Additional years of service = forgiveness of loan

  17. Negotiating Strategy • READ your contract! • Seek your own attorney review • Ask questions • Negotiate for what you want • Request all changes and terms in writing • No signature until contract is in final form

  18. Next Phase - Shareholder, Member or Partner status • When does it happen? • Set time or individual performance • Example: 2 yrs or $300K AR • How much does it cost? • Valuation: book value, fair market value, set value • Hard assets vs soft assets • Hard buy-in vs soft buy-in • What does it mean? • Share of profits and liabilities • Income continuation • Buy-out

  19. Stacey A. Borowicz, Esq.Dinsmore & Shohl LLP191 W. Nationwide Blvd.Suite 300Columbus, Ohio 43215(614) 227-4212sborowicz@dinslaw.com

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