Physician Center > Legal Issues > Physician Employment Contracts
Physician Employment Contracts
Christopher L. Nuland, Esq.
Traditionally, both established physicians and their younger associates have solidified their employment relationship with a firm handshake. In today's increasingly complex, competitive, and litigious health care market, however, a simple unwritten understanding is no longer sufficient to cover all of the possible points of contention that can emerge between members of the same practice. For this reason, written employment contracts are not essential to protect both the employer and employee in any practice environment.
Duties and Compensation
The two most essential elements of any employment contract, regardless of whether physicians are involved are the duties expected of the employee and the compensation that the employee can expect for performing those duties. With regard to the duties, the agreement should specifically state what type of medicine the employed physician is expected to practice, as many young endocrinologists have been disillusioned to find that they ultimately are forced to practice general internal medicine when they had thought that they would be focusing on endocrinology. In addition, the expected hours should be included in the agreement, along with the provisions for vacation, sick leave, and CME leave. With regard to compensation, the agreement should specifically state not only the salary that the associate might expect, but also the details of any incentive program that might be in place.
Termination and Amendment
At the beginning of any relationship both the employer and employee usually are wishing for and expecting a mutually beneficial long-term relationship, but studies have shown that business relationships in all fields have tended to decrease in duration over the last generation. For this reason, the term of the contract should be explicit, as should the terms by which the agreement should be amended (which should always require the written consent of both parties).
In addition, the agreement should state the reasons for which an agreement may be terminated. For instance, the employer may wish to be able to terminate the employment of a physician whose license has been suspended or revoked, or who fails after a certain number of attempts to become board certified. On the other hand, the employee may wish to be able to leave the employ of a physician who becomes bankrupt or fails t honor the terms of the employment contract.
Unfortunately, Dermastology is an expensive business, and expenses continue to escalate even when reimbursements do not. Therefore, it is essential that the employment contract establish which party is to pay for the various expenses of operating the practice. Although responsibility for the various items may change depending on the contract, most practices will pay for office space, support personnel, equipment, and all state and federal fees (e.g., DEA registration, Board of Medicine licensing fees) and the fees associated with hospital staff privileges. Most employers also pay the full cost of malpractice insurance, although contracts differ greatly as to which party is to pay for "tail insurance" (which covers the departing physician for acts committed while he was employed but are reported after the period of employment). Again, these issues are best discussed at the commencement of the relationship, as opposed to the time in which they appear.
As mentioned above, statistically most of today's employment relationships end with the departure of the employee physician. Whereas physicians historically allowed departing physicians to continue their practice anywhere, today's increasingly competitive health care market has forced many employers to insert restrictive covenants (also known as "non-compete clauses") into their standard contracts. Although the American Medical Association Council on Ethical and Judicial Affairs has frowned upon such provisions, which prohibit a departing physician from competing with his former employer within a specific geographic areas for a specified period of time, Florida law explicitly allows for such provisions. Most of these covenants also prohibit the departing physician from soliciting existing patients of the practice for the same period of time during which the departing physician is proscribed from competing with the existing practice.
The issue of the ownership of the medical records also is likely to emerge upon termination of the business relationship, as the owner of the records is in a preferable position to retain the loyalty of patients. Both Florida Statue 456.057 and Florida Administrative Code 64B8-11.001 place the burden upon the treating physician to maintain the records; therefore, if the existing practice is to retain ownership of all patient records, which is customary, the departing physician should insist that the practice assume all legal responsibility for maintaining the records adequately.
The goal of virtually every new associate is to become a partner in the practice (if the practice is a partnership), a shareholder (if the business is a corporation) or a member (if the business is a limited liability company). Yet the promise of obtaining an equity position can become a cause for resentment when the expectations of parties do not coincide. Because of this very real possibility, it is best upon commencement of the relationship to details the conditions upon which the an associate may acquire an equity interest in the practice. This portion of the contract should state with specificity when an invitation may be made and whether such an invitation is automatic or at the discretion of the current principals. While it may not be feasible to establish a "buy-in" price at the time the employment contract is signed, the method for calculating the amount should always be listed.
This brief article certainly has not described each and every provision that can or should be included in a physician employment agreement, but it has been designed to demonstrate the need to place such provisions in writing at the start of any such relationship. Friction is likely to develop during the course of even the best relationships, but such friction can be minimized if the resolution can be determined by reference to preset agreements as to how the relationship is to function.
Congratulations are in order for our fellow physician and colleague, Dr. Ralph Massullo. Dr. Massullo, an active member of the a past president of the Florida Society of Dermatology and Dermatologic Surgery and past president of the Florida Society of Dermatologic Surgeons, was successfully election to the Florida House of Representatives in November and will serve in House District 34. This district includes all of Citrus County and a portion of Hernando County.