The keys to physician employment contracts for a midcareer switch

AMA News Wire

The keys to physician employment contracts for a midcareer switch

Jun 6, 2024

Most physicians in the U.S. are now employed, with employment by a hospital or health system among the common arrangements. But it remains a new frontier for many of them, and one place this is exceedingly evident is in the area of employment contracts, where hospitals frequently insert or omit provisions that can have profound effects on a physician’s professional satisfaction and personal well-being.

Elizabeth A. Snelson is an attorney and president of Legal Counsel for the Medical Staff PLLC, which specializes in working with medical staffs, medical societies and medical staff professionals on employment issues. She is also 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.

Whether you are considering leaving another setting for physician employment setting or are considering jumping ship from one physician employer to another, here are seven key insights from Snelson that could save you lots of professional heartache down the road.

1. 1. It is essential that physicians considering this arrangement understand what is at stake. Hospital employment contracts can determine not only one’s day-to-day responsibilities, but also whether doctors feel they have fulfilled the dreams that drove them to the profession. 
   2. “Hospital employment is a very different animal because hospitals can have doctors do things differently,” Snelson said, noting that an everyday employment lawyer will not have the expertise needed. “This is a new age in the practice of medicine.”
2. 1. Doctors need to be aware that hospital employment has its own potential downsides—not just conceptually but also contractually.
   2. “Physicians usually look first at the zeros in the compensation section of their employment contract,” she said. “I’d like them to focus instead on the below-the-radar issues, because those are super important when you’re working for a hospital.”
3. 1. “In my experience, almost all doctors in hospital contract negotiations … focus on the money to the exclusion of a lot of other really big issues,” she said. “I want physicians to appreciate how much those other issues can be make or break to their personal and professional goals.”
4. 1. 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. 
   2. “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,” Snelson said. “She’s not thinking: How will I get out of this?”
5. 1. As employees, physicians are sometimes put in uncomfortable positions as advocates for their patients. 
   2. “It comes down to money,” Snelson said. “In the hospital setting, almost always the person who hires the doctor is an administrator—not a doctor. … Administrators are wonderful—they keep the doors open. But they shouldn’t be allowed to tell doctors how to treat patients.”
6. 1. Hospital employment contracts are difficult enough for physicians to understand on their own, but there is a second document that should always accompany a draft contract for review: the medical staff bylaws. Otherwise, the contract might not be what it seems. 
   2. “It’s important for young physicians—particularly those completing residency—to know that even though they’ve gotten hired by a hospital, that doesn’t necessarily mean they’re on the medical staff,” Snelson said. “The hospital administrator doesn’t make that decision—you have to apply to the medical staff.”
7. 1. Many hospitals these days are staffed by employed physicians and independent doctors, but that doesn’t mean they all enjoy the same protections from hospital manipulation and termination.
   2. “One of the major concerns of hospital employment is that the hospital may have a lot of influence over the doctor because they can fire her,” she said. “They can’t fire the independent surgeon. They can go after her, sure—they can abuse peer review to limit her privileges, and they can direct referrals to their employed surgeon instead. But an employee can get fired on Tuesday just because it’s Tuesday.”
   3. All of which points to a crucial step in the hospital employment contracting process: If you’re considering hospital employment, you need to see the medical staff bylaws.

The AMA has assembled a variety of resources to help physicians flourish in the employment setting. They include the Annotated Model Physician-Group Practice Employment Agreement (PDF).

Also, learn more about the experts’ perspective on collective bargaining for physicians.