How To Handle Employment Agreements - DoctorsManagement How To Handle Employment Agreements - DoctorsManagement
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How To Handle Employment Agreements for Physicians and Practice Managers

Employment agreements can be a major thorn in the side for physician owners and their practice administrators if they aren’t keenly aware of what these documents contain. They seem simple, and are often set aside after being signed, gathering dust until a question arises around pay, working hours, or termination. This is when problems can occur, because the language they contain often describes arrangements that are very different from what employees, owners, or administrators think they signed up for.

In this article, we’ll discuss how to draft these documents, why all parties must clearly negotiate their contents, and the process of reviewing and updating them.

First, who in a medical staff should have a written employment agreement? Many times, clinicians who are employees are the only individuals who physically sign a formal document. However, practice administrators and managers, provider-owners, “specialty” staff such as billers/coders, auditors, specialized techs/clinicians, and independent contractors all need written employment agreements with the practice. Talk to your practice’s attorney or a healthcare attorney for more information.

Second, if you are hiring an employee who needs an employment agreement, be proactive and do your research as early as possible. Owners and administrators should have access to all of the practice’s employment agreements and know the range of salaries historically offered. Do not try to interpret complicated provisions of old agreements on your own; know when to ask for help so you do not get trapped in a bad situation.

When you feel like you have a grip on what your practice’s agreements typically contain, you’re ready to start negotiating. As Donald Trump has said, “everything is negotiable.” That’s true, except for the items that are not negotiable. Healthcare employment agreements cannot limit a provider’s independent medical judgment. You cannot negotiate provisions contained in the Americans with Disabilities Act, anti-discrimination provisions, or HIPAA/HITECH requirements. Otherwise, almost everything else is negotiable.

Key provisions in employment contracts include the following:

  • Ÿ  Preconditions of employment. This describes the terms that must be satisfied before the start of actual employment.
  • Ÿ  Description of the job and obligations. This includes whether the job is full-time or part-time (and make sure those terms are well defined).
  • Ÿ  Term of the agreement. Whether the agreement has a specific term and is finite, or is self-perpetuating.
  • Ÿ  Termination provisions. Typically whether termination can occur without cause by mutual written consent, or on written notice of either party with plenty of time built in.
  • Ÿ  Cause for termination. Good reasons include death, extended disability, if the provider becomes or is uninsurable, criminal conviction, etc.
  • Ÿ  Exclusivity. Especially important for providers, clinicians, and specialty staff.
  • Ÿ  Non-compete clauses & liquidating damages provisions. These are complex and would require a separate article, but they should be considered for inclusion into any employment agreement.
  • Ÿ  Compensation, benefits, and incentive/bonus structure. These will differ for staff and clinical providers.

When you are working to negotiate and finalize the employment agreement, treat the other party with respect, know your priorities, and follow your strategy. If you get stuck on a certain issue (or issues), move on and return to it after bargaining on the other issues are done. Most importantly, get everything agreed upon in writing. Neither side should ever rely on verbal agreements only.

Finally, when both sides are in agreement and the document is signed, do not just file it away and forget about it. Employment agreements should be updated as the practice changes. That includes updating if the description of the job changes, pay or benefits need to be adjusted, or if the job needs to change because the practice is merging, downsizing, or being acquired.

Do not be afraid to ask for help and do not try to go it alone. Seek legal counsel or advice early and often from a reputable health law attorney. Many states and jurisdictions have specific laws or guidelines for employee agreements so do not rely on templates.

This article is intended to convey general information only and not to provide legal advice or opinions. The contents of this article should not be construed as, and should not be relied upon for, legal advice in any particular circumstance or fact situation. The information presented may not reflect the most current legal developments. No action should be taken in reliance on this article and we disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this article to the fullest extent permitted by law. An attorney should be contacted for advice on specific legal issues. This article is not intended as a solicitation.

Jesse Overbay, JD (joverbay@drsmgmt.com).
The author is a Senior Management Consultant and Associate General Counsel at DoctorsManagement.

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