Employment Contracts with Hospitals Pose Risks and Benefits to Physicians

As trends suggest that more and more physicians will be employed by corporate entities such as foundations and other payors, physicians and other health care professionals facing employment agreements should consider reviewing those agreements carefully with counsel before signing on the dotted lines.

All sorts of terms that appear benign may become more important as time goes by.

For instance, most employment agreements have sections on length of the employment.  If a physician is giving up a practice for such employment, the long term consequences of the agreement must be considered.  While in most cases termination because of inadequate care is remote, termination because the organization makes major policy changes is very possible in the current medical environment.

Clauses such as arbitration clauses should also be carefully considered as an arbitration can be a very expensive way to resolve disputes.

Other issues such as usual customary care, assignment of billing, and the cost of liability insurance should all be carefully considered. Karen Cheung recently explored the issues involved in these contracts in a recent post at the Fierce Healthcare blog.    She references an article in American Medical News by attorney Steven Harris about the traps of hospital employment agreements.

Also, the American Medical Association site offers useful tips before signing such agreements, read here for their tips.

Before signing any contract, most people make a quick decision about whether it is valuable to have legal counsel.  There are some contracts that, in most cases, do not justify hiring an attorney, such as purchasing a car or contracts for purchases under $5,000. Before signing an employment contract in healthcare, however, it should be considered that:

 1.  Most attorneys these days will agree to a flat fee for review of a basic contract, which is often what these employment contracts are.  For instance, Tredway, Lumsdaine & Doyle, LLP, will agree to a flat fee for both reviewing and negotiating the contract on your behalf.
2.  Attorneys can be sued for bad advice.  If the agreement does not work out like it should, a call to the lawyer that gave you the opinion may give you some relief.
3.  Such a review (and the resulting discussion that takes place in the course of the review) takes the surprise out of the process.  Hear exactly what you are getting into from experienced counsel.
4.  Any qualified attorney can spot areas where changes may be requested and the contract can be rewritten in your favor.

Before changing the way you practice and work for a corporate entity, a physician should have the agreement carefully vetted before proceeding.  Make sure you know what you are getting into before you sign.

Written by Matthew L. Kinley.