Transition from Resident to Attending

Why you need an exit plan in your physician employment contract

Timothy M. Smith , Contributing News Writer

When negotiating an employment contract with a hospital, it can be easy to get caught up in the numbers and lose sight of other details that could be a make or break to your career. Among them: What happens when the job comes to an end.

“A termination clause is usually the last thing that a prospective employee is looking at when she's signing a contract—because she wants the job,” said 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. “She’s not thinking: How will I get out of this?” 

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

One reason for this oversight may be not knowing how hospital employment differs from private practice employment, Snelson said.

“What makes it different is that a hospital is required to report to the federal government’s National Practitioner Data Bank if a physician’s hospital privileges or medical staff membership terminate while she is under investigation. Private practices are not,” she said. “But the physician might not even know she is under investigation. And that record is permanent.”

Physicians have countless reasons for resigning from a job or going on a leave of absence—getting another job, having an emergency surgery, taking a bucket-list vacation, having a baby, caring for a parent.

“If a physician terminates her employment or has her employment terminated by the hospital during the time that she is under investigation—even if the investigation hasn't concluded anything—the fact that there's this coincidence of investigation and termination of employment means she's going to be reported to the feds,” Snelson said.

The National Practitioner Data Bank, operated by the U.S. Department of Health and Human Services, tracks medical malpractice payment and adverse-action reports on physicians and some other health care professionals. It is checked by every hospital prior to hiring a doctor.

But while hospitals are required to report when a physician’s employment was terminated during an investigation, they are not required to update that record at the close of the investigation.

“They're encouraged to do so, but is there’s no incentive for them to do it,” Snelson said. “They would have to write another report. It’s not a complicated thing to file a revision, but it's just another step, another thing they would have to pay somebody to do.”

Learn more with the AMA about understanding physician employment contracts.

“Given the ramifications of National Practitioner Data Bank and other government reports, physicians should affirmatively ensure they are given review and consensus rights,” the AMA Physicians’ Guide to Hospital Employment Contracts notes.

It includes a sample provision for due process:

In the event of termination of this Agreement by Employer [for any reason] [for cause related, directly or indirectly, to Physician’s professional competence or conduct] [for economic reasons], Physician shall have the right to notice and a fair hearing before a hearing body and otherwise afforded meaningful due process protections [in accordance with the hospital medical staff fair hearing plan as proscribed in its Medical Staff Bylaws or related Medical Staff documents]. Physician has the right to review and reach consensus with hospital regarding the filing and wording of any report to the National Practitioner Data Bank or any government agency regarding termination, peer review actions or other reportable events involving Physician.

“Never try to do this on your own,” Snelson noted. “Hire a lawyer, and make sure he or she specializes in physician employment contracts.”

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) and featuring experts’ perspective on collective bargaining for physicians.