When a patient needs specialized care, it makes sense for them to rely on physicians’ expert guidance. Similarly, when a resident or fellow physician has their first post-training job offer in hand, there are times when they need insights from those accustomed to avoiding the pitfalls often encountered in employment contracts.
The dynamic is “akin to being in a relationship and getting married,” said Ryan Mire, MD, MACP, in an AMA webinar on the topic. Dr. Mire is a physician educator for Resolve, a contract review and negotiation firm specializing in physician employment. “Yes, I’m excited about getting married, but I want to know as much about this person that I can know. And in case it doesn't work out, I want to make sure that I'm set up in a good way.”
While physicians have been well-prepared for the practice of medicine, less attention is paid in their training to the business aspects of their profession. Dr. Mire, an internist in private practice in Tennessee and an AMA member, said physicians are often unfamiliar with how to assess important contract provisions such as noncompete clauses, termination and exit provisions, and medical professional liability tail insurance.
A report on physician salary data (email registration required) recently released by Resolve draws from more than 4,000 physician contracts that their experts reviewed, coming from all 50 states and in 116 specialties and subspecialties. Physicians at any stage of their careers can leverage the data in the report to guide their job searches and determine what the trends are for their geographic area and specialty.
The report also provides advice, including cautions about when physicians may most need specialized help in assessing an employment contract before they sign on the dotted line.
The AMA has teamed up with Resolve to provide AMA members an exclusive discount on services that include custom contract review. Resolve offers personalized legal expertise to help physicians secure the best employment contract terms, no matter where they are in their careers. Ready to access your AMA-member Resolve discount? Learn more now.
Many tripped up by noncompetes
The Resolve report notes that despite the anticipation, a federal ban on noncompete clauses—also sometimes called “covenants not to compete” or “restrictive covenants”—by the U.S. Federal Trade Commission did not materialize. Instead, the rules around them have become more complicated, varying by state, specialty and geographic area.
“Noncompetes are neither disappearing nor static,” the report says. “They are becoming more targeted, more variable by jurisdiction and more negotiable at the individual contract level.”
Some states ban or restrict covenants not to compete, and others have a web of regulations that can be tough to untangle. The danger is high if a physician fails to understand not only the rules in the state where they will practice but also how their contract may limit them in case of departure.
“Where you get to go to work and how willing you’re going to be to renegotiate your contract later on because of those restrictions has tremendous impact” on your compensation and job satisfaction, Kyle Claussen, CEO of Resolve, said in another AMA webinar.
“A lot of physicians think that these [clauses] are not enforceable or they’ve heard on Reddit or some thread they’re in that they can’t be enforced,” which isn’t the case, he said, adding that the distance for some noncompete clauses is as far as 100 miles for some rural areas and “one mile or less in places like Manhattan. So, you’ve got to be very careful on location for your noncompete.”
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Physicians can be reluctant to talk exits
An early-career physician excited to begin their first role out of residency or fellowship training may not feel it’s important to plan for departing, Dr. Mire said, adding that it can be “most uncomfortable to talk about terminating that agreement even though you haven't actually started.”
But the statistics show that many physicians don’t stay long in their first roles—for a variety of reasons.
Yearly turnover for all physicians has been reported at a median rate of 7.3%. But those in their first positions after training are much more likely to leave. Reports have shown that nearly 60% of physicians leave their first post-training jobs within three years and more than one-quarter said they considered leaving within just one year.
In addition to noncompete clauses, other factors like notification requirements can be unwieldy and keep a physician in a role they would prefer to leave.
“Usually that notice period, as far as how long you have to give before you can get out of a contract, somewhere between 60 days and 6 months is most common,” Claussen said. “You do need to be careful, though, because we have seen in the last year some employers shifting to a lock-in, meaning you're stuck for three years, for example, without any ability to get out unless there's a for-cause event.”
The tough discussion of termination
That leads to the next category of difficult contract provisions: termination clauses.
“Be really, really careful on the termination provisions,” Claussen said. “A lot of times, the for-cause events are only one way,” meaning that they only apply to the physician. “It's not any type of breach by the employer.”
Not only can employment contracts set up an unequal landscape for termination, they might also include vague or overly broad definitions of what constitutes “cause.” And once an employer has decided to terminate an employee for cause, the contract can sometimes provide for the trigger of burdensome repayments of signing bonuses, relocation allowances or medical student loan repayment benefits.
Experts can explain how the contract terms will actually play out, pointing out concerning provisions physicians might miss.
And physician job seekers also should explore the JAMA Career Center®, which presents physician career opportunities, news and information relevant to the full spectrum of medical practice. Search for physician jobs by specialty and location or browse all of the physician jobs by specialty.
Tail coverage can be complex
Physicians in the transition to practice almost certainly realize that they need medical professional liability insurance, also called malpractice insurance or med-mal insurance. But the intricacies of the insurance they will require after graduating from residency or fellowship training may be tougher to tease out.
There are two main types of professional liability insurance that physicians may purchase or employers may provide: claims-made policies, which cover claims filed during the policy period, and occurrence policies, which cover claims related to an event that took place during the policy period, no matter when the claim is filed.
Once residents or fellows are no longer covered by their training program’s claims-made medical liability insurance program, they will need a stopgap coverage called “tail insurance.” An employment contract may say that “malpractice insurance is provided,” Resolve experts say, but that is not enough information to determine whether the physician will be completely covered.
Resolve data shows in the contracts they negotiated, employers paid for tail coverage in 44% of the cases. In more than half of the cases, the physician was at least partially responsible or the responsible party was not clearly delineated.
“If you have an occurrence-based policy as opposed to a claims-made policy, and you’re required to pay for tail [insurance], in some specialties like ob-gyn, that can be a six-figure number,” Claussen said.
Read more about what residents and fellows need to know about professional liability insurance in the transition to practice.
With so much of a physician’s compensation and earning potential tied up in factors that require careful negotiation, it’s more important than ever to have experienced professionals review any employment contract before you sign.
AMA members receive a 20% discount on all Resolve services. With Resolve, you get:
- Custom contract review for any type of employment contract.
- Access to experienced attorneys who can negotiate on your behalf.
- Real-time, comprehensive compensation data and benchmarks to help you understand your worth.
- An instant contract-review option, powered by Resolve’s attorney-trained AI model.
- Free tools such as a contract scorecard to give a quick overview of where your contract stands.
Ready to access your AMA-member Resolve discount? Learn more now.
And if you’re seeking your first physician job after residency, get your cheat sheet now from the AMA.
