What should—and shouldn’t—be in a hospital employment contract

Timothy M. Smith , Contributing News Writer

Whether you are considering going to work for a hospital for the first time or you have years of experience in that employment setting, your employment contract can be make or break your working relationship and career goals. There is no substituting an attorney’s expertise when evaluating and negotiating your contract, but knowing which terms should—and should not—be included will help ensure you get what you want and need from hospital employment. 

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The AMA Physicians’ Guide to Hospital Employment Contracts (PDF) is free to AMA members and provides expert guidance to physicians contemplating, entering into, or working under, employment contracts with hospitals or related entities.

“The purpose of this model employment guide is to provide a discussion of issues and sample language that benefits a physician entering into an employment agreement with a hospital,” the guide says. It was written by Elizabeth A. Snelson, president of Legal Counsel for the Medical Staff PLLC, which specializes in working with medical staffs, medical societies and medical staff professionals.

“Unfortunately, the reality may be that the physician may not be presented with or be able to negotiate a contract that completely favors the physician-employee,” says the guide, which “identifies language that may be included in the contract presented by the hospital but is detrimental to the physician and, as such, merits evaluation and often modification or deletion.”

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The 83-page guide provides sample language in the following contract areas:

  • Preliminary considerations and basic agreements.
  • Term.
  • Physician duties.
  • Equipment, facilities and personnel.
  • Physician compensation.
  • Reimbursement of expenses.
  • Employer-paid benefits and time off.
  • Physician’s unfettered right to exercise personal and professional judgment.
  • Noncompete provisions or restrictive covenants.
  • Patient records.
  • Access to, and confidentiality of, patient information.
  • Nondisclosure.
  • Intellectual property.
  • Peer review.
  • Indemnification.
  • Termination.
  • Disability or death.
  • Remedies.

Many sample provisions use brackets to call out optional language or indicate a subject of negotiation between the parties where either “employer" or “physician” could be chosen. In addition, relevant corresponding cautions to physicians are each identified by a bolded “Note” followed by comments highlighting examples or breaking down the problematic language.

For example, Chapter 2, "Term,” Subchapter 2.2, “Extension of term,” features the following sample provision for automatic renewals and a corresponding note:

Following the initial Term, this Agreement shall renew automatically for succeeding terms of __________ [years or months] unless sooner terminated pursuant to [any of Sections __________ through __________ ] this Agreement. Any renewal of this Agreement shall be on the same terms and conditions as set forth herein, subject to any Amendment in writing and signed by both parties per Section __________ below.

Note: Physicians should be cautious of language that gives the employer control over the extension of the agreement.

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The sample language provided is not intended to be used verbatim, the guide notes: “The language in an actual contract should be the product of negotiations between the parties and will reflect the specific employment situation. Some of the model provisions may be inapplicable, inappropriate or not sufficiently detailed.”

In addition, the guide notes that the importance of retaining an attorney who has experience representing physicians’ interests and evaluating and negotiating hospital employment contracts cannot be overstated.

“Not only can the contract involve complex legal issues centered around health care regulatory, contract, employment, tax and other applicable federal and state laws, but the contract can also go to the heart of the physician-hospital working relationship and the day-to-day operational and clinical practice of medicine,” it says.

In fact, besides establishing expectations for the relationship, the employment contract also governs the relationship’s tone.

“A lawyer’s experience in working with physicians on these practical issues can be very important to the success of the overall arrangement,” the guide says.

The AMA has assembled a variety of resources to help physicians flourish in the employment setting. That includes developing the Annotated Model Physician-Group Practice Employment Agreement (PDF) as well as experts’ perspective on collective bargaining for physicians.

At the 2023 AMA Annual Meeting, the House of Delegates adopted policy backing efforts to ban many physician noncompete provisions.