Pick apart recruitment deals before you sign

Contract Language. By Steven M. Harris, AMNews contributor. Dec. 5, 2005.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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Hospitals, and the physician practices that refer to them, often seek to recruit physicians with certain specialties to their communities to treat underserved patient populations. In exchange for the physician's agreement to relocate or establish his practice to the community and provide services for a specific length of time, the hospital can provide the physician with guaranteed income, equipment, office space, and access to additional hospital resources and patients.

A physician completing residency might be interested in signing a recruitment agreement if the guaranteed income is not tied to too many restrictions and assists in establishing a practice in the community. If the hospital is recruiting a more experienced physician from another area, this physician might view the hospital as having greater resources to cover relocation expenses and enable the physician to reduce financial risk.

But physicians must exercise some caution in looking over, and signing, such agreements. Key issues you should consider before signing a recruitment agreement include payment structure, type of support, length of support, and anti-kickback and Stark II regulatory issues.

It is important that you know what type of support you will receive from the hospital pursuant to the recruitment agreement.

The support amounts paid by the hospital can be separated into different categories. They include financial support for relocation and recruitment expense. They also include start-up expenses related to setting up the practice, including expenditures for new equipment and supplies. And they include salary support, which is made when revenues fall short of the ongoing physician's employment expense.