Jun 19, 2024

Physicians, PAs, and Medical Professionals: Contact Your Lawyer Before You Sign That Contract!


So you are excited about the fact that your hospital, or practice, has been sold or that the system is merging into a larger system. Perhaps you are an employee, or maybe your group has a contract with the current healthcare system. You might currently have a medical director’s contract, an administrative position by contract, or some other agreement that gives you authority, exclusivity and/or compensation. There are lots of contractual intersections between healthcare providers, healthcare companies, and other individuals who work with hospitals, health systems, and practices. The original agreements you have with the current employer or contractor may all be changing, as you will now have a relationship with a new entity – someone with whom you have no experience, no track record, and no understanding of their policies and procedures. So what do you do?

Before you sign any contract, personally or professionally, it is imperative that you understand the rights and obligations the contract imposes on you and on the other party. Of course you should attempt to negotiate fair contract terms and understand the risks of entering into the contract. But how do you do it and what does that even mean? It can be fraught with issues, especially if you are now entering into a contract with a company that you did not select, and with whom you have had little or no personal experience.

There are many things to think about as you are presented with a new contract – what are your obligations, is that section vague or specific, do you understand the full scope of the language and how it might change what you are already doing. Your duties could involve, on-call hours, the location of where you actually work, outpatient duties, in-patient duties, administrative duties, teaching responsibilities, any number of things. Do you have to participate in work outside of your normal hours and outside of your normal responsibilities if the health system tells you to? Do you have to cover at another facility not in your current coverage responsibilities? Often the full scope of your responsibilities are couched in some general language that might require you to do whatever the health system asks you to do, wherever and whenever they ask. What are the consequences if you refuse? How and why could the new contract be terminated and how does it specifically work for you in terms of compensation, bonuses that are due, etc.

The compensation section is also crucial and must be detailed, and it might not be in the contract presented to you. You need details about fixed compensation, variable compensation models (which may be significantly different than your current situation) and how and when the variable compensation will be determined and paid. What benchmarks are they using and how do they compare to your current employer’s benchmarks and what does all that actually mean?

Of course benefits, restrictive covenants and termination clauses are all critical items that should be negotiated, or at least, thoroughly understood by you before you sign any new agreement. Insurance is also an issue, especially if you conduct outside activities that are not required by your current employer. Conflict of interest policies, social media polices, and many, many other policies, generally become part of your agreement by reference and need to be reviewed and understood by you, prior to signing anything.

In other words, if you are presented with a contract, including a letter of intent to sign a contract, in a healthcare setting, it is important to speak to an attorney who knows healthcare law. The contracts are written, as you would expect, from the point of view, and needs of the healthcare system. Your needs might differ, and you should try to negotiate in favor of your needs right from the beginning, including at the time of signing a Letter of Intent.

Eastburn and Gray P.C.’s Business and Employment Law groups regularly advises employers and employees regarding contract review and are prepared to provide specific guidance about a the legal topics that impact employment contracts and other similar arrangements. The group also has experienced healthcare contract expertise and can help you understand the documents you receive and help negotiate changes that you feel are necessary. An attorney that practices in business, employment and healthcare law can help you accomplish this by reviewing any proposed contract on your behalf. If you, or someone you know, may be affected by the information in this legal alert, please contact Jean Keeler at Eastburn and Gray. To learn more about Ms. Keeler or Eastburn and Gray, please visit the firm’s website, www.eastburngray.com.

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