Recent economic reorganization of health care is making more physicians into employees of medical groups, managed care organizations and hospitals. For both newly graduated and established physicians, there are a wide variety of legal and other considerations when physicians enter into employment agreements and recruitment agreements. A good employment agreement must be in writing. It should define the employment relationship, by spelling out expectations and obligations. Physician employment agreements are specialized employment agreements, containing terms specific to the practice of medicine. In addition to standard terms – such as term/termination, compensation and employer-paid benefits –  several unique items should be included in such an agreement.

Specialized Terms for Physician Employment Agreements

The specialized terms that should be included in a physician employment agreement include:

  • Physician duties, staffing and call requirements.
  • Licenses and certifications – who pays for these and what are the consequences of the physician’s failure to obtain them?
  • Reimbursement for dues and CME expenses.
  • Malpractice insurance – who is responsible for “tail” coverage?
  • Patient records – who owns them after the employment relationship ends?
  • Managed care contracts – membership/participation obligations of new physicians.
  • Student loans – although it is considered taxable income to the physician, it may be advantageous to provide for a schedule of payment by the employer of a portion of what is an increasingly large financial burden for newly graduated physician.
  • Shareholder/partner status – is there any expectation that the physician eventually will become a shareholder/partner? In physician-owned practices, there should be a statement regarding the intent to discuss at the appropriate time whether the physician will become a shareholder/partner of the employer.

Employment agreements help to manage the expectations and obligations of the parties. Where, as in the case of physicians, there are various specialized issues and terms relating to the practice of medicine, it makes good sense for the parties to avoid unpleasant surprises by discussing these matters in advance, in the context of an employment agreement.