Physician Employment Contracts: 10 Pitfalls Every Doctor Should Watch For Before Signing

For many physicians, the employment contract is the most important financial and professional document they will sign during their career. Whether you are finishing residency, joining a large health system, or moving to a new practice, the terms of your employment agreement will affect your compensation, work-life balance, autonomy, and future career opportunities. Some of my favorite people in the world are physician so I have a soft spot for representing them to make sure they get a fair deal.

Unfortunately, many physicians focus exclusively on salary and overlook provisions that can have far greater long-term consequences. In my experience reviewing physician employment agreements, some of the biggest disputes arise from issues the physician never realized were negotiable.

Here are ten of the most common pitfalls to watch for before signing a physician employment contract.

1. Vague Compensation Formulas

Many employers advertise an attractive compensation package but fail to clearly explain how compensation is calculated after the initial guarantee period.

Questions to ask include:

·       How are wRVUs calculated?

·       What conversion factor will be used?

·       How often are productivity thresholds adjusted?

·       What support staff and resources are provided to help meet productivity goals?

·       Can compensation formulas be changed unilaterally by the employer?

A compensation plan that appears lucrative on paper can become disappointing if productivity targets are unrealistic or dependent upon factors outside the physician’s control.

Tip: Require all compensation metrics, bonus triggers, and productivity calculations to be clearly defined in writing.

2. Unclear Practice Location Requirements

Physicians often accept a position based on representations regarding where they will practice. Yet many agreements allow the employer to reassign physicians to different clinics or facilities with little notice.

Changes in practice location can significantly impact:

·       Commute times

·       Referral relationships

·       Patient volume

·       Call responsibilities

·       Future partnership opportunities

For specialists, a location change can substantially affect practice development and earnings.

Tip: Negotiate specific language identifying primary work locations and limiting the employer’s ability to reassign you without your consent. This issue frequently becomes a source of litigation when physicians rely upon promised sites that subsequently change.

3. Restrictive Non-Compete Clauses

One of the most significant contract provisions involves post-employment restrictions.

A non-compete may prohibit a physician from practicing within a geographic radius of former practice locations for a specified period after leaving employment.

Potential concerns include:

·       Large geographic restrictions

·       Broad definitions of competition

·       Long restriction periods

·       Multiple restricted sites

For physicians with established patient relationships, an unreasonable restrictive covenant can require relocation or dramatically limit future employment options.

Tip: Carefully evaluate the reasonableness of any restrictive covenant under applicable state law and negotiate narrower limitations whenever possible. Physician non-competes are increasingly scrutinized by courts and legislatures across the country.

4. Failure to Address Malpractice Coverage and Tail Insurance

Many physicians discover too late that they are responsible for expensive tail coverage when employment ends.

A claims-made policy generally requires tail coverage to protect against future claims arising from services rendered during employment.

Depending on specialty, tail coverage can cost tens of thousands of dollars.

Tip: Determine:

·       Whether coverage is claims-made or occurrence-based

·       Who pays for tail coverage

·       Whether tail costs are negotiated based on the reason for separation

This issue alone can have a significant financial impact.

5. Undefined Call Obligations

Compensation means little if call obligations are excessive.

Many contracts contain language requiring participation in call schedules without defining:

·       Frequency

·       Weekends

·       Holiday coverage

·       Backup responsibilities

·       Additional compensation

Physicians frequently experience burnout when call responsibilities exceed expectations.

Tip: Request specific language addressing call expectations and compensation for additional call duties whenever possible.

6. Termination Provisions That Favor Only the Employer

Every physician should understand exactly how the employment relationship can end.

Important questions include:

·       Is there a “without cause” termination provision?

·       How much notice is required?

·       What happens to bonuses upon termination?

·       Are relocation expenses repayable?

·       Does termination trigger loan repayment obligations?

A physician may find themselves effectively trapped if termination provisions are one-sided.

Tip: Ensure both parties have comparable rights to end the relationship upon reasonable notice.

7. Reliance on Verbal Promises

One of the most common mistakes physicians make is relying on assurances not reflected in the final contract.

Examples include:

·       Partnership track promises

·       Future leadership opportunities

·       Staffing commitments

·       Administrative support

·       Reduced call responsibilities

If those promises are not included in the agreement, they may be difficult to enforce.

Tip: If it matters to you, get it in writing. Courts generally enforce contracts as written, not as discussed during recruitment.

8. Lack of Resources Necessary for Success

Productivity-based compensation assumes the physician has the resources necessary to build and maintain a successful practice.

Before signing, physicians should investigate:

·       Medical assistant support

·       Nursing support

·       Scribing resources

·       Operating room access

·       Scheduling infrastructure

·       Marketing and referral support

A physician cannot be expected to meet productivity benchmarks if the employer fails to provide adequate operational support.

Tip: Consider adding language requiring the employer to provide facilities, personnel, and resources reasonably necessary to support the physician’s practice.

9. Ambiguous Disability and Leave Provisions

Physicians should carefully examine provisions governing disability, medical leave, and professional accommodations.

Questions to evaluate include:

·       How is disability defined?

·       Who determines whether disability exists?

·       How long does compensation continue?

·       What happens to benefits during leave?

These provisions become critically important during unexpected health events.

Tip: Seek clarification on any provision that grants unilateral authority to the employer regarding disability determinations.

10. Failure to Obtain Experienced Legal Review

Physician employment agreements are specialized contracts. Healthcare law, compensation models, credentialing requirements, Stark Law considerations, and restrictive covenants create issues that general contract review may miss.

The cost of a contract review is usually insignificant compared to the financial consequences of signing an unfavorable agreement.

Tip: Have every physician employment agreement reviewed by an attorney experienced in physician contracting before signing. The goal is not necessarily to make the contract perfect. It is to fully understand the risks and negotiate the provisions that matter most to your career.

Final Thoughts

A physician employment contract is more than a salary agreement. It establishes the foundation for your professional future. Seemingly minor provisions involving compensation, practice location, call coverage, restrictive covenants, malpractice insurance, and termination rights can significantly affect both earnings and career mobility.

The best time to address problematic language is before the agreement is signed. Once a dispute arises, leverage shifts dramatically.

Physicians should approach contract review with the same diligence they bring to patient care: ask questions, understand the risks, and never assume that what was promised verbally will appear in the final diagnosis of the deal.

By carefully reviewing and negotiating key employment terms, physicians can protect their careers, preserve flexibility, and position themselves for long-term success. for long-term success.