How long are most physician contracts? It varies greatly, but usually, somewhere between one to three years is a normal initial length of a physician contract. However, and this is the important part, is that nearly every physician contract, except for a J one agreement, can be terminated without cause which means either party can terminate the agreement with a certain amount of notice to the other. Kind of the entry standard is between 60 to 90 days. So, even if a physician has, let’s just take, for example, a two year contract, if it has a six-day without cause termination clause in it, it’s a 60-day contract effectively.
Average Physician Contract Length
There are also some considerations if the physician decides to terminate the agreement without cause. One, are there any repayment responsibilities? Let’s say a physician has a three-year initial term and they were given a signing bonus, relocation assistance, maybe student loan repayment. There usually would be some kind of language that states that if they terminate the contract before the end of the initial term, they would owe some kind of repayment on those bonuses. And usually, it’s prorated. It’s not an all-or-nothing thing. For instance, since we’re using a three-year term, they would say one third is forgiven each year. So, if you had a $30,000 signing bonus, $10,000 on year one would be given, then $10,000 on year two. And then let’s say you left sometime in between the second and third year. Then you would owe them back $10,000, who pays for malpractice insurance. Other blogs of interest include:
An Employment Agreement Term for Doctors
If the contract is terminated without cause, the restrictive covenants will apply. To be honest, the initial term is not that important. Most contracts also have language in them that states that the contract will automatically renew for one-year terms after the initial term expires. That’s pretty standard as well. Rarely would a contract just end. It would always automatically renew. If the contract just has a fixed term, meaning, it will not automatically renew. Then, usually somewhere between 60 to 90 days before the end of the term, the parties would meet and then discuss whether they want to continue on or not. Especially as a physician, continuity of care is important and that’s why they have notice termination provisions in the contract, so that a physician can’t one day state, Hey, I’m leaving.
Physician Employment Contracts
I won’t be in tomorrow. Obviously, if they have patients scheduled, or if they need to offload all of the patients, new providers, some kind of notice needs to be provided to make that a smooth transition and assure that continuity of care is being provided to the patients. So, as far as how long a contract is, as I said before, one to three years. However, almost any physician can get out of the contract with a certain amount of notice. If you have any questions about a physician contract, maybe you’re entering into a new agreement, you’re coming out of training, or perhaps you’re in a current agreement and you want us to take a look at the contract. We’re happy to do that.
Can You Break Physician Employment?
Every day, I deal with physicians who are either having new employment agreements that need to be reviewed or they’re on a current agreement that they need to analyze, usually due to wanting to terminate the agreement. One frequent question, and it’s kind of like the base level question, is whether you can break a physician contract. Well, obviously, I think defining break is probably the most important part of that. So, can you break a physician contract? If we’re meaning, can I breach a contract, not following through on the terms of the contract? Sure, you can.
But then you would open yourself up to liability. You could be sued, and litigation could begin. If there’s an arbitration clause, then it could go to arbitration. The employer could come after you for damages, for recruitment fees for a new physician, lost revenue from you, leaving extra admin fees if there’s no physician to support. Can you breach a contract? You can, but it’s certainly not a good idea. For the purposes of this video, if we’re going to say, can I break a physician contract? I think the best way of handling that would be, can I terminate the contract? And certainly, yes, you can. Every contract, at least every physician employment contract will have a section called termination. And in that section, it will dictate the terms of how the physician can terminate the agreement.
There are usually three ways: One, by mutual agreement. Meaning, if you and the employer can come to an agreement, then the contract can be terminated and then maybe you can work out how long the physician will stay. That does not happen very often, to be honest. The second way the contract can be terminated is with cause. And it goes both ways. For the most part, most of these employment contracts are highly slanted towards the employer, as far as what they can fire the physician for. And honestly, most contracts are completely silent on what the physician can do if the employer breaches the contract. Some normal things that the employer can terminate a physician for immediately, for cause at their option. So, the physician loses the license, DEA registration, they’re uninsurable, they’re on the OIG list, those types of like obvious, right?
Like you can’t practice as a doctor, so you can’t fulfill the terms of the contract. The employer can fire the physician immediately for that. Now, the most important section is, can a physician break a contract? If we’re assuming break means terminate, there should be a section that’s called without cause termination. In that section, it will state, normally either party can terminate the agreement with a certain amount of notice to the other. I’d say, the industry-standard amounts are between 60 to 90 days. So you would just give the employer notice as it’s written. And there’s also a notice section that says how you can give effective notice. So, you’d write them a letter and then note go through the notice section properly, usually a certified mail, hand delivery, or email which is not very often.
One of the Biggest Legal Mistakes a Doctor Can Make
If you just verbally tell your boss, hey, I’m leaving. That won’t be effective notice. So, if it’s 60 or 90 days, you give them 60 days’ notice. Wipe your hands of it, you’re gone. Now, there are some considerations, however, if you do break the agreement, terminate the agreement, in this case, if you’re kind of a new physician and you were given a signing bonus or relocation, usually there’d be forgiveness in the first couple years. Meaning, if you leave before the initial term, you will have to pay back amount of the signing bonus and relocation assistance. The second consideration is, are you going to have to pay for tail insurance? Most contracts, at least for the smaller physician owned groups, will have clause that states, if the physician terminates the agreement without cause, they’ll be responsible to pay for tail.
If you don’t know what tail insurance is, I have some other videos that kind of discuss that you can look at. The last consideration is all the restrictive covenants that will apply. If you terminate the contract without cause, those restrictive covenants are going to apply. Restrictive covenants would be the non-competes. It is non-disparagement like all the things you can’t do after the contract ends. Just because you terminate an agreement doesn’t mean that you don’t have either responsibilities or obligations once the agreement ends. In summary, yes, a physician can obviously break a contract, but I would suggest doing it properly, how it’s written in the termination section. And then once you decide to terminate, you got to think about all the things that you’ll be responsible for. One more thing that just came to mind, the contract will also state the payment responsibilities after the contract ends.
I just had something like this come up yesterday. They were on a net collections compensation structure. Meaning, they were only paid what was collected, but the contract stated that they would only be paid through the end of the date of termination. With a normal 90-day accounts receivable cycle and getting reimbursed for claims, the physician missed out on essentially 90 days of collection. If you think of it this way, they almost worked for free for the last two or three months, which nobody wants to do. Moving forward, physicians absolutely need to be certain that if they’re on a net collections model, it states that there’ll be a collection period after the contract terminates. So that they don’t lose out on all that money. I mean, it’s absolutely sled towards the employer. It’s not fair, but a lot of physicians simply don’t think about that when the contract is terminated.
Termination Letter Considerations
What should be in the termination letter when a physician decides to leave a position? I find that many physicians feel like the termination letter would be a good place to air their grievances. These are all the reasons why I’m leaving all the things that have happened to me, which I don’t appreciate. These are the things that led to me deciding to terminate the agreement. The termination letter is not the place to do that. If a physician believes that the employer is not following through, on the terms of a contract, they should let them know in writing that the employer is in breach and generally, most contracts will have what’s called a cure period, which will then give the party a certain amount of time to fix whatever the problems are.
So that would be the appropriate place to air the grievances, so to speak. In the termination letter, there should only be two things: If the person is terminating the agreement, it will likely be without cause. So that means, nothing has happened that can give either party the ability to terminate the agreement immediately. Nearly every physician contract has without cause termination and that just means, either party can terminate the agreement with a certain amount of notice to the other party. 60, 90 days is kind of the industry standard. Sometimes can be as low as 30, as high as 180, but 60 or 90 is kind of the normal amount. And the physician in the termination letter should just cite the specific section of the contract, which says,
I am giving you 90 days’ notice; my last date of employment should be on this date. And then, the physician needs to make certain that the termination letter follows what would be called a notices section. In any physician contract, there should be a section called either notice or notices, something like that, that states how the physician can give effective notice, meaning who and how do you properly send notice to. And in that section, it will state, these are the ways that you can give proper notice. It could be certified mail, hand delivery, email, fax overnight. Most places do not allow email or faxes. It’s registered certified letter through the post office. Almost all of them accept hand delivery in some way. And then they will list where and to whom the termination letter needs to be sent.
If it’s a small physician-owned practice, then it will likely be the owner of the practice. And then the address would simply be the address of the practice. If it’s a large corporation, hospital, health network, or something like that, then it’s likely you’ll have to send a copy to the CEO or COO, in addition to whoever their general counsel is as well. I’ve had a couple of situations where I’ve had someone contact me after the fact that they failed to give proper notice. They just either told their boss or sent an email and the employer sat on it for 30 days. They didn’t say anything to the physician. And then, they came back to them 30 days later and they said, Dr. Smith, you did not give us proper notice. Therefore, you owe us another 60, 90 days after you give us proper notice.
They did that because they were mad that the physician was leaving. They knew it would likely screw with his next job opportunity and the start date. So, it is highly important that the physician makes certain that they’re following, one, what’s in the without cause termination section and then two, what’s in the notices provision section of the contract as well. To summarize, the termination letter is not a place to list all the problems that the physician had. You thank them for your time. You tell them the termination section that you’re relying upon to terminate the contract and then you’re going to send it to the place that’s listed in the notices section. And that’s it. There’s absolutely no value in putting anything more than that.
Employment Contract Questions?
Contract Review, Termination Issues, and more!