10 Red Flags in a Physician Employment Contract [Infographic]

Contract reviews and negotiations can be overwhelming, and worse, they can limit your long-term career opportunities if you don't catch major red flags. Here are 10 red flags you should look out for when trying to navigate your way through the process and prepare to negotiate.

Red flag #3. Contract only states minimum number of patient hours per week and allots no time for administrative work or other tasks

Many contracts state the physician must devote a minimum of 40 hours to patient care—not considering administrative tasks (e.g., electronic health record [EHR] entry, prior authorizations, reviewing test results, referrals)

A physician with a role 100% dedicated to patient care should understand how many hours in the workweek will be devoted to direct patient care rather than administrative tasks.

How to navigate this issue:

• Make sure the agreement contains enough information so that duties and schedules are clear.
• Be clear and open about your schedule expectations.
• Confirm the agreement aligns with conversations you’ve had with the employer about your schedule.

Red flag #4. In an independent practice, the contract expires when you become eligible for equity, even if no equity is offered

In instances in which future equity in a practice is an option, physician employment agreements often expire immediately when the ownership opportunity arises.

If an offer is not made or is not promptly made, this approach can leave you without a written contract before signing new ownership documents. Even worse, if no equity offer is made, this can leave you without a contract or a job.

How to navigate this issue:

• Request that the employment agreement be written to continue until it is terminated by one of the parties according to the terms of the agreement or it is replaced with a new agreement or partnership documents.
• Alternatively, ask that the offer of employment be made for a fixed period before expiration, which allows you time to negotiate the buy-in documents and sign them before the contract expires.

Red flag #5. Contract allows the employer to accelerate your termination date when you give notice

Employers sometimes write contracts that include a termination without cause provision specifying that a physician providing the proper notice required under the agreement in good faith can be summarily terminated and no longer receive any compensation.

For an example of how a termination without cause provision might be worded, download the AAFP member-exclusive resource A Family Physician Guide to Employment Contracts.

How to navigate this issue:

• Focus on your exit strategy when reviewing a new contract so you aren’t surprised when an agreement is terminated.
• Discuss revising the contract so you continue to receive compensation and benefits for the entire notice period.

Red flag #6. Subjective reasons for termination, like reputation or opinions about conduct

An agreement should ideally require your employer to give you written notice of the cause for termination (e.g., failing to satisfy requirements of the agreement, failing to complete medical records in a timely manner, failing to comply with a policy) and an opportunity to fix alleged breaches or deficiencies within a reasonable period of time.

How to navigate this issue:

• Inquire whether such a subjective termination provision requires the employer to act reasonably and in good faith when terminating a physician.
• Download A Family Physician Guide to Employment Contracts and know the questions you should be able to answer about termination before signing any agreement.

Red flag #7. Broad geographic regions in noncompete provisions

Many noncompete provisions try to restrict a physician from competing with any employer locations or anywhere a physician ever practiced while employed. The reasonableness of the geographic provision will depend on the location of the practice, specialty, and from how far away the practice attracts its patients.

An example of an increasingly common and overly broad noncompete provision is one that would limit you from working for a new employer who has a location within a certain radius of your previous employers’ sites—even if you currently practice outside the noncompete area. Such wording could prevent you from working for an employer in another state because it has a clinic within the designated radius of the previous employer’s location(s).

How to navigate this issue:

• Look for contract language to be clear and specific so you understand your obligations.
• Clearly understand the exact location to which the geographic noncompete is tied.
• If the location is described as where the physician spends a certain percentage of time or effort at the time of termination, it is important to understand how time and effort will be measured. From the physician’s perspective, choose as high a percentage as possible so that the noncompete covers fewer locations.

Red flag #8. Noncompete provisions that interfere with a patient’s right to select their physician

Nonsolicitation provisions restrict you for a period of time from soliciting your former employer’s patients, employees, or independent contractors who may have worked for the employer.

However, some contracts may also prevent you from treating any patient you saw while employed by a practice—even if you did not solicit the patient.

How to navigate this issue:

• Work with a lawyer who can help you strongly challenge these types of provisions since it interferes with a patient’s right to select their physician.

Red flag #9. Required compliance with written materials that are not provided with the contract

It is not unusual for an employment agreement to refer to outside documents. Outside documents expressly incorporated by reference are generally considered terms of the contract.

Examples of outside documents include rules and regulations, policies, handbooks, ethical guidelines, bylaws, and similar materials. An employment agreement will often reference payer contracts; contracts between the employer, hospital, and other organization(s); and similar materials

How to navigate this issue:

• Obtain all copies of these outside documents. They may provide valuable information about working for the employer.

Red flag #10. Verbal promises are made but are not included in the contract

It is not unusual for an employer to reject making changes in writing and instead provide verbal reassurances. This process can be frustrating. If faced with this situation, think about your concerns and whether they are deal breakers.

Signing an employment agreement with the belief that a term will be changed in the future or won’t be enforced can be a mistake. You typically cannot rely on verbal promises, emails, and side letters.

How to navigate this issue:

• If you decide to sign the agreement with the verbal reassurances only, be sure you understand the termination provisions in the agreement and know what your exit strategy will be if these verbal, nonbinding promises are broken.

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