In the world of physician Employment Agreements, there are many aspects that are the same or similar across the board – regardless of the Employer’s location or entity type – but there can also be a great deal of variation. The length and complexity the Agreement is one factor, which coincides with how comprehensive it is, but there are also many aspects to consider in terms of which terms and provisions the Agreement contains, what aspects of the employment relationship are assumed or incorporated by reference, and finally – the overarching consideration – of whether the Agreement is “negotiable.” This blog will break down what exists out there, on all points of the spectrum, and what I often observe as a physician contract attorney.
In a Twitter poll conducted by Joe Wolf, a partner in the healthcare division of Hall Render, physician respondents replied to his poll question regarding the length of their Employment Agreements. That poll found that approximately 40% of physicians have an Employment Agreement that is between 11 – 20 pages long. Another 25% said their Agreement was more than 20 pages, and the remaining respondents had an Agreement of five pages or less. While these responses were similar to what I see in my practice, I would note that a larger majority of my clients (about 60%) have an Agreement in the 15-20 page range. Regardless of the specifics, the point is obvious – physician Employment Agreements are not brief. They are not term sheets with certain aspects of employment relationship bullet-pointed. On the contrary, they are fairly long and long-winded, containing a great deal of complex language and details concerning both parties’ obligations and responsibilities pursuant to the employment relationship. And more, they are of course legally binding documents and must contain certain pieces of language and provisions in order to exist as a valid and enforceable contract.
On one end of the spectrum are the most robust of Employment Agreements, often used by large health care systems, which contain almost every provision imaginable and aim to embody every conceivable aspect of the employment relationship. On the other end of the spectrum are Employment Agreements that contain only the most straight-forward and important of employment details, such as the termination provisions and compensation method, while merely referencing other policies and procedures, which are intended to be incorporated by reference. For instance, such an Agreement might make reference to the Employer’s benefits policies, its Intellectual Property Policy, the entities’ Rules, Regulations and Bylaws, and/or the Call Responsibilities and Schedule. In these instances of incorporation by reference, it is important to remember that the entirety of the employment relationship will be made up of all applicable terms and policies, whether or not they are actually contained within the pages of the Employment Agreement.
In serving physician clients, I often hear, “My Employer already told me that my contract isn’t negotiable.” So, is that case? Are Employment Agreements negotiable and subject to revision based on the physician’s requests? The answer, of course, is that it depends. Very broadly, I will say that in my experience, most Agreements are negotiable in at least some ways. By that I mean that in even the strictest of settings, such as an academic institution, it may be possible or even likely to successfully negotiate a couple aspects of your employment, while leaving the content of the Agreement uniform. For example, clients are often able to successfully negotiate adjustments to items like their Compensation or their Signing Bonus, despite being told the Agreement was “non-negotiable.” In those instances, what the Employer likely really means is that they will not adjust the language of the Agreement itself, or amend the scope of their Non-Compete, for instance.
As mentioned above, this strict approach and need to have their Employment Agreements very static and uniform for all physician-employees is most common in the academic setting. This is also frequently the case with large hospital systems that desire uniformity and stand by their efforts to not make any adjustments “for any one employee.” However, as with most rules in life, there are always exceptions. For instance, I recently worked with a physician who was re-negotiating a renewal to his contract with a large health system. He works in a highly specialized field and is revered for his immense experience and long-term success. In that scenario, he was able to dictate a number of adjustments to his contract, to both the content of the contract itself as well as his compensation method, because the hospital was not willing to lose him. In other words, he had very strong bargaining power.
Another frequent question I get relates to who will do the negotiating on a physician Employment Agreement. Most commonly and most appropriately, it is usually the entity’s legal counsel that engages in the negotiating process. However, in some situations it is a practice manager or CEO who negotiates directly with the potential physician-employee. And often, it is a combination of both. In these instances, it may be a practice manager who is the decision-maker regarding a physician’s specific duties and which location(s) they serve, and then it is the attorney who has to make the call regarding whether the Non-Compete or Termination provisions can be adjusted. In either case, it is important for physicians to understand their right - and arguably their duty - to be represented by counsel in the negotiating process. Not only should physicians exercise due diligence in ensuring they are making informed decisions in the process, they should seek representation in order to level the playing field. Employers invariably have more power in the employment relationship, and the fact that they (or their attorneys) are the ones that drafted the Employment Agreement means that the playing field is inequitable from the get go. The only way to make a fair and informed decision about entering into a contractual relationship is to be appropriately represented by legal counsel.
The attorneys of Lauth O’Neill Physician Agency are experienced and able to guide you through this process.