In Transition: Contracts - Watch Out for These Red Flags

When I completed my residency training last year and accepted my first job, I quickly found out that the real world of the practicing emergency physician is much different than the academic environment of residency training. After three years as a resident, I thought I had a handle on the realities of emergency medicine. After all, I had been actively involved in the Emergency Medicine Residents' Association and had served as its president from 1997-98. I was familiar with the issues that confront our specialty and I had a good idea of what to expect as a physician transitioning from resident to attending. Or so I thought.

The reality, of course, was somewhere in between. Clinically, I was able to jump right in and I felt very comfortable in my busy ED. But in dealing with issues such as contracts, career planning, and others, I found myself unexpectedly unprepared.

I needed information on the fine points of negotiating contracts, being fiscally responsible, and planning my career. I wanted to know how to manage charts better and complete them faster. I needed information on lots of things that I did not learn during my residency training.

I realize that this is a common problem for transitioning physicians. We spend years training to be emergency physicians, but we spend only a few days or weeks learning how to deal with the myriad of emergency medicine practice issues that determine the quality of our practice and ultimately, the quality of our lives.

And that brings me to this new column in ACEP News. Starting this month, I will be providing information on the emergency medicine practice issues that are important to all physicians - but especially to those who have recently completed their residency training. My goal is to provide you with factual and truthful information so that you can make informed decisions on the significant issues that affect you.

I thought the best place to start is where most of us start our careers: with our first contract. We all know that contracts are binding legal documents. Sign a bad one, and you could be stuck for years in a situation that you find intolerable. Or just as bad, you may find that you like where you live and work, but you are dismissed without cause and the fine print says you can no longer practice in that community.

A good contract is fundamental to a good work situation. You must make sure that you get in writing what you need and want.

Two ACEP subcommittees are developing information papers on contracts and democratic groups. I recently spoke with Chris Rosko, MD, chair of the contracts subcommittee and Joe Calabro, DO, chair of the democratic group subcommittee about the things that make a good contract and a good democratic group.

This first article will deal with some red flags that you should look for while negotiating your contract. Next month we will look at starting a democratic group. If there are other topics that you would like to see addressed, or if you have comments about this article, please e-mail them to my attention at You can also fax them to me at 972-580-2816.

I hope to hear from you with questions and ideas and I hope you find this series of articles informative and enlightening.

Q and A on Contracts with Chris Rosko, MD

Question: Do you need a written, legally executed contract - why not just a handshake?

Dr. Rosko: You definitely need a written contract. It clarifies the duties and responsibilities between the two parties and is legally enforceable. Even if you are moonlighting, you should have a written contract. If the people you are negotiating with are not willing to document their offer in writing, you might want to look for another offer. Not being offered a contract is a huge red flag!

Question: What should the contract say about compensation?

Dr. Rosko: You can never say too much about compensation and the contract should be very specific. For example, it should say whether you are you being paid a straight hourly rate, a percentage of your charges, or a percentage of your collections. It should include the differentials for working day or night shifts and the amount your employer will reimburse you for CME. It should also include language about bonuses and profit sharing (if any). If you're offered $200,000 a year, your contract should be able to account for every one of those dollars. If the other party can't tell you how your total compensation breaks down between salary, benefits, etc. that's another red flag.

Question: Who should be responsible for paying for malpractice and health insurance?

Dr. Rosko: You should look at the total compensation offered in a contract, and that includes malpractice, health insurance, and in some instances retirement benefits. There are situations where the physician is responsible for malpractice and health insurance. There are others where all your benefits are included. If you pay for malpractice and health insurance, you should be paid a higher hourly or flat rate. You should also be aware of the cost of providing your own coverage and make sure the higher hourly rate will cover it. The contract must also include your employer's responsibilities (what he pays for) and the types of coverage you will receive (malpractice, health, etc.). You don't want any surprises when comes to compensation and these kinds of expenses can add up very quickly.

Question: What about different sites? Should your contract spell out where you are to work if a multi-site group employs you?

Dr. Rosko: There should be a clear understanding of where you will be working. And, if you will be working at different sites make sure that you know the following: pay differentials for each site (if any), how your time will be assigned to each site, and the individual responsible for making site assignments. Some groups are very specific and include in the contract the two or three hospitals where the physician will work. Others stipulate that you work wherever you are assigned. You have to decide which option is better for you. The key point is to know up front what is expected.

Question: Should the contract spell out the terms of termination?

Dr. Rosko: Absolutely! This is critical in any contract and protects both parties. Your contract must spell out who can terminate the contract and the reasons for termination. It must also say that you are to receive appropriate notification prior to any termination action (between 60 and 120 days notice), and your available recourse, or appeal. In other words, you need to know who can fire you, what they can fire you for, and your recourse for that action. Also, look for this information in the medical staff bylaws and make sure both documents mesh.

Question: What if the physician wants to terminate the contract?

Dr. Rosko: Make sure that you can terminate at your discretion, without cause, with appropriate notification, and without penalty. I've seen contracts without a physician termination clause that say you must work for the employer for a year, no matter what. If things don't work out, that could be a very long twelve months.

Question: There has been a lot of talk lately about restrictive covenants. What's your take on this area?

Dr. Rosko: ACEP has a policy opposing the use of restrictive covenants and there should not be one in your contract. They are a big negative for practicing physicians and you should consider them a deal breaker. If you have been offered a contract with a restrictive covenant and you do want to consider it, use extreme caution and get legal advice before signing.

Question: Now that you've brought it up, should a physician get legal advice before signing an employment contract?

Dr. Rosko: I've signed contracts without legal review, but only if they've been very straightforward. I think it's advisable for a physician just starting out to find a lawyer who understands employment contracts and who can explain what the contract says. Before you sign a legally enforceable contract you should understand the issues and do your homework. Once you understand the language and gain an understanding of the rights and responsibilities delineated in a contract, you may decide that you don't need a lawyer reviewing every contract you sign. But when you get that first offer and the group or hospital says, "Don't worry about it, all our doctors sign this contract," you should proceed very, very carefully. If you don't understand what you are signing, and you don't get a legal opinion, you could wind up in a difficult situation.


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