Effectively negotiating your employment contract may be as important as the actual choice of position itself. Although most emergency doctors focus primarily on money paid and hours worked, career quality and longevity are optimized by good contract negotiation.

I am often asked: What are the most important contract provisions to consider?

First, one must carefully study the more general, descriptive contract provisions beyond just compensation. Most importantly, try to understand how the standard contract language, general provisions, and definitions interface with your personal situation.

Important Contract Considerations

• Are the work performance requirements—hours, shift times, staffing coverage models—modifiable, and under what circumstances?
• Is there compensation for additional work?
• How closely does the benefit package align with your needs?
• Is there a call coverage requirement?
• Is the institutional culture and goal setting comfortable with your personal practice style?
• Are the merit-based incentive programs defined, objective, and achievable?

Specific Contract Provisions: Renewal Term

Most contracts are not designed to bind parties together forever and will have a renewal provision. A practice that may be encountered is the use of an “evergreen clause” allowing a clear delineation of time and terms of renewal that allows planning for both parties. However, it is often used to allow for contract expiration, without the employer requirement to invoke a non-renewal or termination clause.

Ensure that there is an adequate transition notice requirement—typically 90 days in most full-time agreements—in the eventuality the contract is not renewed. This requirement provides an opportunity to review responsibility for medical malpractice tail transition and residual bonus or incentive payment.

Covenant to Not Compete

Another area of concern is the “restrictive covenant,” or covenant to not compete (CNC), attempting to exclude the physician from continuing to work at a facility in the event of a service contract change. This is contract placeholder language that attempts to prohibit an independent physician practice from competing against the facility. Hospital-based physicians may be excluded from rehire in the attempt to avoid loss of the provision of service contract by the vendor.

Although unlikely, the goal for the contractee is to eliminate the provision entirely; limiting its application and scope—by decreasing the geographic radius, length of exclusion, and type of practice—may be more likely. Additionally, you may minimize the financial effects by negotiating a liquidated damages provision attaching a value to foregoing this provision for the vendor. This construction should reflect lower unwinding costs for the parties to separate, rather than the higher costs associated with potential litigation to resolve the contract separation process.

The enforcement of these provisions typically relies less on equitable principles of physician coverage, and more on the prevailing jurisdictional law. In states that support a right-to-work statute—typically focused on the right to not require participation in a union to maintain employment—extending this rationale to non-exempt employees, this noncompete work exclusion may violate the right to work.

Due Process

Define what, if any, due process rights are available to the employee in a unilateral separation scenario. First, there may functionally be no contractual rights to contest a separation, as a termination without cause, or “no cause” provision invocation may avoid any discussion of rationale. Second, termination with cause often has declarative issues related to failure in licensure, certification, insurance qualification, civil transgressions, or criminal law violations. Typically, due process is not applicable in these definitive qualification issues.

Third, a mutual arbitration clause may compel this first procedural step in a contract dispute. Likewise, a litigation venue clause may be present, with notice paid in both cases to the location of resolution. Ideally, it should be the primary clinical location, rather than the location of a distant corporate headquarters, that decides venue.

Fourth, recognize that for hospital-based specialties, the co-termination of privileges mandates loss of business-specific hospital privileging as well. The physician may reapply; however, in an exclusive contract scenario, it will unlikely be successful.

Force Majeure

Force majeure or “greater force” provision was a seldom, if at all, invoked provision related to an unforeseeable circumstance beyond control of the parties. Typically, these events are specified in contract language that might include pandemic, natural disaster, war, or act of terrorism, and became more prominent after COVID-19. This change may include unilateral contract termination or change in material contract elements, such as time of engagement, terms of separation, liability insurance coverage, or compensation change.

However, this type of contract language clause is not meant to be invoked to alleviate financial responsibility for adverse market conditions, financial distress, or to avoid monetary losses for the business entity. The contractee should ensure that the “act of god” provision excludes the application of any market downturn conditions to this provision.

Summary

The keys to a successful contract negotiation include your ability to set priorities and be strategic about your goals. Attorney review, by someone practicing in health care law with contract experience, is helpful. Decide what is most important, target your high priority negotiation goals, and, after careful review, present all concerns initially.

Typically, most parties in a professional service contract negotiation can agree on a few provisions. However, a significant number or gravity of requested changes in a corporate standardized contract are unlikely to be successful. A successful strategy often presents a positive approach, emphasizes your contributions, and illustrates how you will assist in the collaborative process.

Dr. Vukmir is professor of clinical emergency medicine at Drexel University, Philadelphia, has a legal degree with a health law specialty, and is published in the areas of contracts, EMTALA, medical malpractice, and high-risk medicolegal liability.

References

1. Vukmir RB. Physician Contract Guidebook (1st ed.). MGMA/Medical Group Management Association, 2014.
2. Hinz C. Navigating employment contracts. Practice Link Magazine. 2022(Fall);58-64.