A physician was coming out of training and asked, can a physician sign multiple letters of intent? Let’s break down what a letter of intent is. A letter of intent, also known as an offer letter, is simply a document provided to a physician that kind of basic terms are reached. And then after that, the employer would provide them with an employment agreement.
I find most smaller physician practices skip the letter of intent or offer letter and just go straight to sending the physician an employment contract. But some of the hospitals and healthcare networks require a signed letter of intent prior to giving the physician the employment agreement. In this case, when a physician is in training, that’s normally either coming out of residency or fellowship, that’s the time where they’re kind of entertaining multiple opportunities. They’re just in a unique position where many employers are coming to them either through job fairs, recruiters, or general advertisements. And that’s when in their career, they are kind of weighing multiple job opportunities. Normally, if a physician has been out for 10 years, if they’re going to leave an employer, they’re leaving for a specific opportunity in mind. They’re not kind of entertaining four or five separate offers.
In this case, let’s say we have physicians in training, they’re going to have a ton of different opportunities available to them. And the timing of it is what’s important here. Many people in training obviously want to sign with an employer in advance of when they’re done. It’s not uncommon to have a contract a year, sometimes even two years in advance of the physician completing their training. When I have a physician come to me and say, hey, I have one offer, kind of want to sign the letter of intent, but not a hundred percent sure if I want to follow through with the employment agreement. If I have multiple opportunities, is it okay to sign multiple letters of intent without signing the employment agreement? Well, for the most part, a letter of intent is not binding. Other blogs of interest include:
The only time the letter of intent may be binding is in academia. Some of the universities will use a letter of intent kind of as the employment agreement as well, then it refers to dozens of different documents. If you’re just signing with a network hospital, physician-owned practice, things like that, the letter of intent is very likely not going to be binding. If you sign a letter of intent and then sign another letter of intent, are you stuck to both jobs? No, obviously not. Until you execute, meaning sign the employment agreement, generally, it is not binding. Is it a good idea to sign multiple letters of intent? Well, I guess that depends on whether the physician cares about burning bridges or not. If a physician signs to an employer, and when I say signs, I mean, signs the letter of intent with an employer, and then maybe the employer says, we’ll get you the employment agreement in a couple of months when you get closer to when you’re going to graduate. Well, they are going to stop recruiting at that point.
If they have a physician with a signed offer letter, they’re not going to continue looking to fill that position. Maybe they’ll tell that if they are, let’s say they hired a physician recruiter, go out and try to find a candidate, those recruiting activities will stop. It’s possible that the employer will have already started credentialing with the insurance companies, which can take some time depending upon what state you’re in. They’ve already expended some resources. They’ve paid some money expecting the physician to come in. And so, doing that and then having a physician contact them and say, you know what? I appreciate it but I decided to go in a different direction. That employer is going to be most likely upset, right? They spent some time and money because they have the agreement that the physician is going to come.
And then that physician backs out. And then not only have they paid out those costs that I just talked about, but now they are going to restart everything and find somebody else. So, that physician will likely be mad that you’re backing out. And it’s very unlikely in the future if you wanted to go back to them that that would be an opportunity. Now, if you have family circumstance, health issue, something that just completely prohibits you from moving forward with that job at that time, most employers will totally understand. Maybe something happened to someone’s family member, and they just can’t move away. Or some change in where they want to practice due to a family concern.
There is a dozen of things it could be why someone doesn’t want to move forward with the job, but if it’s completely kind of money-based, meaning, well, I signed with you, but then this employer is going to give me $50,000 more. So, I’m going to go with them. If it’s more personal, most employers are completely understanding and there’s not going to be a problem. But if it’s not, then yes, a bridge will likely be burned. I don’t tell any of my physicians that I’m working with to sign multiple letters of intent and then let it shake out once they get the employment agreement. I think that’s just bad practice. And let’s say you have signed two letters of intent in the same city, then you back out on one, move forward with the other. Most communities are small, especially in a specialty, and most everyone knows other people.
I mean, obviously, if it’s primary care, you’re not going to know every person in this city, but then some of the smaller specialties know everyone in the city. Bad blood can spill over, and no physician wants to deal with that just starting out their career. So, yes, you can sign multiple letters of intent. Shouldn’t do it. It’s a bad idea in my opinion and it can cause some friction that’s just completely unnecessary. Unless you are a hundred percent sure that you want to move forward with the job, I would not sign the letter of intent. Now, there are situations where you sign the letter of intent, then you get the employment contract and the language in the employment contract makes the job opportunity much less desirable. In those circumstances, feel free to back out of the offer letter. Many times, the basic terms in the offer letter look great. Get into the agreement. The language is very lopsided towards the employer and can make a job opportunity not worth it. In that scenario, it is completely fine. But if you’re just shopping for the best offer, sign a bunch of offer letters, don’t sign the agreements. I just think that’s a bad idea.
Signing a Physician Offer Letter
What happens if I sign an offer letter, but I don’t want to go through with signing the actual contract? Maybe due to a change in circumstances, family issue, maybe you got a better job offer somewhere else. Maybe you decided to move home instead of moving to a different city. Basically, the question is, can a physician back out after signing an offer letter? The short answer is yes, probably, unless there’s binding language in the offer letter, which there almost never would be. The physician can back out. The offer letter just has kind of basic terms.
Normally, it would be like, okay, here’s what your compensation is. Maybe a brief review of benefits, the term length, maybe how to terminate the contract, maybe a brief mention of a non-compete. It is normally like a one-page document that just kind of briefly goes over here’s what it’s going to look like for your employment. There are times when I’ll have a physician get an offer letter and just the kind of cursory terms look great. And then when we get the actual agreement, it could absolutely change whether it’s a good offer or not. And so, until the employee him an agreement is signed, it’s not going to be a binding document for that reason. Let me give some instances of maybe why the job opportunity looked okay with the offer letter, but once we got the actual employment agreement, it changed.
One thing could be how to terminate the agreement. I would say it’s probably rare to put into an offer letter but let’s say, normally a physician would have to provide either 60- or 90-days’ notice to terminate the contract without cause. Meaning, they can get out of the agreement for any reason with the amount of required notice. Let’s say the contract had a 12 month without cause termination notice. Well, nobody wants that, right? Once you give notice, relationships change within the organization, you’re on your way out, you’re no longer you’re building a practice. If someone had a 12-month requirement, there’d be an entire year of potential kind of awkward relationships, and I would never suggest that a physician would have to give a year’s notice.
On the back end of that, if you’re currently in practice and you must give 12 months’ notice, there are very few practices that are willing to wait 12 months for the physician to give notice and be able to leave. It just doesn’t happen that way. Sometimes, if the physician is in training, and an organization forecast that they will be needed a year or two down the line, that’s a different story. But if a physician is currently practicing and switching to a new job, they’re almost never going to wait two months. Another thing could be the terms in the non-compete. Maybe you’re expecting a reasonable non-compete like one year, 10 miles from your primary practice location. Non-competes kind of the reasonableness of non-competes varies state to state pretty much are like one of the only things that kind of varies in physician contracts, but let’s just say, for instance, it’s one year, 5 to 10 miles from your primary practice location.
That’s what you’re expecting. And then you get the contract and it’s a two-year non-compete and 25 miles from every location that you practice in while employed with the employer. That can change things substantially. If someone is absolutely married to a town, like they grew up there, the family’s there, they want to raise their kids there, and then they have some terrible non-compete, which would essentially force them to move for a period that can make a great offer a terrible offer. And that’s a term that could change. That’s not spelled out in the offer letter that could then make a great offer a bad offer. Benefits as well. Generally, there’s no specific recitation of all the benefits that are offered. What if the employer doesn’t offer health coverage, disability, or life or retirement, they won’t pay for your medical license and DEA registration, they won’t give you anything for continuing medical education. Perhaps the time off is bad. The average amount of total time off is 30 days. That would include sick days, holidays, vacation CME. Let’s say they offer you 15 total days. Almost no physician has that small amount of time off. And that could change substantially whether the offer is good or bad. So, in short, yes, you do not have to go forward, even if you’ve signed an offer letter because the terms of the employment agreement could change the offer substantially. It can start in awkward conversations.
And the sooner that you give notice to the employer that you are not going to start, the better. People also ask, what could be like the absolute worst-case scenario? In this case, if it’s just an offer letter, I would say it’s a low downside risk. Obviously, if you sign an employment agreement and then wait until a week before, you’re about to start and then say, hey, I don’t want to start the contract, the employer can certainly say that they’ve suffered some damages and potentially could come after you for that. If you’ve just signed the offer letter without even seeing employment agreement, I’d say that the physician is safe in backing out of it and looking elsewhere.
Can Physicians Sign a Contract and Back Out?
Can a physician pull out a signed contract? This is a big one. Many of my consults are about this issue. We’ll break down what it means when you sign a contract and then what are your options after the fact. Yes, you can pull out of a signed contract, however, there may be some repercussions involved with that. When you’re going through the job search process, maybe they’ll have you sign an offer letter, maybe they won’t. But at some point, you’re going to get an employment agreement, then smartly should get it reviewed by an attorney. And then after you’ve worked out the details of what you want in there and you signed the agreement, then obviously there’s an expectation that you’re going to start the job whenever the start date is. However, there are circumstances where a job opportunity and a signed agreement at one point made a ton of sense, and then maybe six months later, it doesn’t make any sense at all.
There are different things to think about when you want to break a contract. First, there may be language in the agreement that goes through exactly what happens if a physician doesn’t start in time. For instance, if the employer paid residency or fellowship stipend, there will be language in there about how that needs to be repaid if the physician doesn’t start in time. And then other contracts may have penalty associated with signing the agreement and then pulling out and not actually starting the job. I mean, I’ll be honest, it’s rare to see language like that. Most places do not put that language in the contract; however, some do. And then there will be a monetary amount set. When someone is in training, let’s just say, they’re PGY-3, they signed a contract at the beginning of the year.
Then they’re going to start in July, August, somewhere around there. Three months later, there’s a family emergency, not going to be able to start the job. And then the contract states, if you do not actually start providing care for us on the start date listed in the agreement, you owe us $10,000 or $20,000. In that case, you agreed to the contract and it’s clear what the repercussions of them not starting and so, you would owe them that amount. Now, unless this employer is a heartless bastard, if you have an actual family emergency or medical illness for yourself or a family member and it just absolutely can’t happen with you starting the job, I wouldn’t be surprised if the employer would actually go through with enforcing that penalty.
If you’re just breaking that contract because you have a better offer, they’re paying more, a higher bonus, or whatever. That’s why the provision is in there. And it’s in there for a couple of reasons. If a physician employer is hiring a recruiter, then they must pay for that. Once they have a signed contract by a physician, then they’ll probably start the credentialing process because that can take a decently long amount of time in some states. They’ve filled out those applications, paid for the application fee for the credentialing, maybe they have also started the privileging process if you’re having to get privileges at a hospital nearby, and then, more importantly, they’ve stopped recruiting for the position. If they absolutely need somebody in August, they have a position locked down, well, they’re not going to keep looking for another physician.
And so, if someone pulls out two months before the job is supposed to start that practice, that healthcare network, that hospital can be in a difficult position if they have a volume need or maybe they’re replacing a physician who is leaving and then that person who’s signed the contract just says, I’m not going to start, I’m moving on somewhere else. The employer could theoretically come after you for the recruitment fees, the credentialing fees, maybe some kind of damages for lost revenue. Maybe if you pull out the day before you’re supposed to start and they’re relying upon the collections that they would receive from your practice. Now, it would be very unlikely for a practice or an employer to come after the physician for those types of damages.
Honestly, it would be like one in 10,000 or probably just those people who broke the contract. It would not happen very often, but it could, so you need to know the repercussions. Can a physician break a signed contract? Absolutely they can, but there may be negative outcomes associated with that. I find that the best strategy in dealing with this is just being completely upfront with the employer and just saying, look, circumstances have changed, and these are the reasons why they’ve changed. And I really appreciate the interest that you showed me. I appreciate you providing me with a great contract. I understand that I signed it, but look, if I start this job, I’m just going to give notice as soon as possible, or maybe I’ll even give notice before the contract even commences, and then there’s nothing you can do about that.
Every contract is going to have without cause termination. That’s kind of the leverage point there. Nobody wants to bring in a physician who doesn’t want to be there. It’s a pain in the ass for everyone. As I said, every contract will usually be 60 to 90 days for without cost termination. And so, maybe if the employer is like, no, you absolutely must start. Then you just give notice on the first day you finish out your 60 to 90 days and then you leave. Nobody wants to go through the hassle of that. Most places will be willing to certainly let the physician move on. However, as I said, there may be a penalty associated with that.
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