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Understanding Employment Contracts

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Whether seeking employment with a group practice, hospital, academic medical center or other setting, a physician must understand employment contracts to be able to discuss options.

Tips to Understand Physician Employment Contracts

  1. Consult an expert. Don’t sign a contract you don’t understand. Make sure the language is clear and specific, and all details are covered. Employment contracts should be reviewed by legal counsel with experience in physician business transactions—your state medical society may be able to refer you to a trusted attorney to help review your contract. You may also wish to talk to a physician mentor about issues they might have encountered with their contract.
  2. Understand the compensation model. There are 2 types of compensation models a contract can have:
    Fixed compensation is a set salary not dependent upon a physician’s performance. This model is often used for new physicians.
    Variable compensation models use formulas to account for a physician’s performance when determining salary. More experienced physicians typically receive this type of compensation.
  3. Learn what your benefits are. There is more to compensation than your base salary. Additional benefits should be discussed to ensure you have a fair package. Be sure you understand what benefits you have and what they cover.

Important benefits to talk to your employer about include:

  • Liability insurance
  • Disability insurance
  • Licensure fee reimbursement
  • Payment of medical society dues
  • Time and reimbursement to complete CMEs
  • Student loan repayments

AMA’s Model Contract Resources

AMA offers 2 e-books to help understand what contracts look like, help define common terms, understand compensation and benefits, explain legal consequences, working conditions, liability, restrictive covenants and contract termination.

Each teaches you to:

  • Read and understand what contracts look like.
  • Define common contract terms.
  • Understand compensation models and benchmark data.
  • Recognize fair benefits and compensation packages.
  • Explain the business/legal consequences of contracts.
  • Discuss working conditions, liability insurance and restrictive covenants in your contract.
  • Understand what happens if the contract is terminated.

Annotated Model Physician-Group Practice Employment Agreement
List price: $149
Member price: Free
Download now

Annotated Model Physician-Hospital Employment Agreement
List price: $149
Member price: Free
Download now

Find more tips on how to approach employment contracts in the AMA Career Planning Resource guide.

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