How to accept a physician job offer. Kind of a simple topic, but it does come up occasionally. Someone says, alright, how am I officially attached to this job? There are two documents that matter in this scenario for a physician. Many times, the physician will receive an offer letter or a letter of intent, which kind of describes the basic structure of the contract. In the offer letter, it will usually state: this is your salary, here’s how your bonus, some of the benefits that the physician will receive, how long the contract lasts, maybe some basic terms for the non-compete the non-solicit, signing bonus relocation assistance. Just the basic terms without any kind of structured language.
Just, this is your salary, this is how long the contract is, that type of thing. Those are the things that are in the offer letter. And in that case, the lawyer will then say, alright, we need to agree on the essential basic terms of the agreement, you sign the offer letter, and then, at that point, we will draft the employment contract and send it to you for review. Is the offer letter binding? No, it’s not. In some very limited circumstances, if there is language in the offer letter, it could be Bonnie, but for the most part, no, not, it’s not there. There are many times where the basic terms of the offer letter are the same in the contract but there is language in the contract that makes that contract terrible for the physician.
For instance, maybe the non-compete is not listed in the offer letter, read the contract, and it’s a restrictive non-compete that may force someone to move out of a city that they cannot move out of. In that case, if the physician reviews the employment contract, and they decide that this is not something they’re interested in, or they can start negotiating with the employer, and it’s clear that the employer isn’t going to make the changes that are necessary for the physician to be comfortable in that position. The physician can say, okay, I know I signed the offer letter, I understand that, but after reviewing this employment agreement, this is not something I’m comfortable with or willing to move forward on. And in that case, the physician would just simply say, I’m not signing the employment agreement unless changes are made. Other blogs of interest include:
If the employer says we’re not making the changes, then the parties can just agree to disagree and move on. And the physician is not bound to any of the terms of the contract because they’ve only signed the offer letter. So, how to accept the job? You sign the agreement. That’s simple. Once again, if you’ve provided the offer letter and you may be hackle over some terms, and then they offer the physician the actual employment agreement, the physician is not necessarily bound to the terms of the offer letter. As I said before, things can change that, maybe the offer letter job looks great, but when you get into the minutia of the details of the contract, it’s not so great. You can still negotiate terms for the employment agreement, even if some of the terms have been agreed to in the offer letter. But let’s say, they get the employment agreement, maybe the physician and the employer go back and forth, and they come to decision where they’re both happy.
The way to accept the job offer is simply to sign the agreement. I had a scenario recently where a physician was offered a job, went in, interviewed, saw the clinic, saw the hospital, everyone involved, everybody was happy, he made plans, his wife had accepted a job in the city as well. They gave him an employment contract to review, and then out of the blue, took away the offer. In that scenario, it’s a tough place. It does not happen very often. But in that case, the physician was out of luck. There could be claims for what we’d call promissory estoppel, or they relied upon the acceptance of the agreement or the offer like their wife got a job, they were planning on moving. Things happen, but unfortunately, the business climate can affect things. And then the employer can simply take the offer away at some point. Even if the employer has verbally said, we are offering you this job, and the physician says, yes, I accept this job, but they haven’t signed any employment agreement. It’s just not going to hold any water. So, to accept a physician job formally, you need to execute the employment agreement, both parties, the physician, and the employer. And then at that point, the parties are bound to the terms of the agreement.
Physician Employment Contracts
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.
Signing Bonuses for Physicians
Do physicians get signing bonuses? And the answer is yes. And we’ll kind of get into who gives signing bonuses, what’s an average value of a signing bonus and then do you have to pay it back ever? First, who gets signing bonuses? Any physician could give a signing bonus if they’re coming out of training or just switching jobs. Does everyone give a signing bonus? No.
Most places will at least give relocation assistance, usually between 5,000 to 15,000 and many of those will pay it directly to the moving company, but that’s not the same thing as a signing bonus. There are some places that will then kind of combine it to call it commencement bonus, and then it’s up to the physician how they want to use it. They could use it for relocation assistance, for a down payment, for whatever they want. But let’s just talk purely about signing bonuses right now. How does it work? Well, I would say now this is specialty-dependent but normally, signing bonuses are somewhere between 10,000 to 50,000 and then when it’s paid is an important part of that as well. Some employers will pay it upon signing the agreement. I would say most employers won’t pay until usually the first pay period after the physician actually starts practicing with that employer.
The reason why the timing of that is important, sometimes people just coming out of training, either residency or fellowship simply don’t have a ton of money. You don’t get paid a lot in either of those scenarios. And if you must move to a city and put a down payment in a house or security deposit, having some of that money upfront certainly can help the physician to make things more comfortable. That’s one area that we can negotiate is when is the bonus paid? How much you get? Well, there is no hard and fast rule of like this specialty gets this amount. It is absolutely employer dependent. Some are willing to pay a decent amount and others are just saying, no, you’re not getting one, no matter what, and this goes for any kind of contract negotiation.
If you’re in a specialty that’s in high demand and has kind of a not many out there, certainly have more leverage. If you’re going to a town that’s harder to recruit to, you certainly have more leverage in that scenario as well. I would ask classmates, others in your residency, what are you looking at as far as what your bonuses are? You could ask some of the attendings and say, what are you hearing about what’s a normal amount? Certainly, an attorney who deals with physician contracts all the time can probably give you a decent idea, but I’m telling you, it really can vary wildly between cities and states and different employers. Another thing to think about is almost every signing bonus is going to have repayment obligation attached to it.
If the physician leaves within a certain period, normally the initial term of an agreement, I mean, how long it lasts, it’s going to be somewhere between one to three years. Many employers will tie whether the signing bonus must be paid back to that initial term, and then they’ll have forgiveness associated with it. So, I’ll just use a couple of examples. Let’s say a physician joins the practice, its three-year initial term, then the employer could say, for every month that you’re here, 1/36 of that signing bonus is forgiven. So, you stay for those three years. You don’t have to pay anything back. Others can do it quarterly; some will do it yearly. And then maybe it’s only a year, could be two, kinds of depends, but it’s rare that you would get a signing bonus.
Then if you left in the first year, you wouldn’t have to pay something back. That’s something to think about when you’re accepting a job is, how much am I getting upfront, and what am I going to have to pay back if I decide to leave the job before the initial term ends. In addition to assigning bonus, some places, I would say under 10% could also offer student loan forgiveness. That’s another thing to investigate. It would be extremely rare for a physician-owned practice to offer student loan assistance just doesn’t happen. It would have to be at the hospital or healthcare network. I would say the vast majority would be through a hospital or healthcare network that would be willing to offer student loan assistance.
And in that case, there’s usually no repayment obligation. It’s just the employer would say, we’re going to give you a hundred thousand for student loan forgiveness and then we’re just going to pay a certain amount of that a hundred thousand over the course of three, five years, whatever it is. And then they’ll just pay it at the end of the month and that’s kind of the forgiveness. The physician would never have to pay anything back. It certainly is worth negotiating signing bonus. It needs to be reasonable. The worst thing a physician can do is ask for something that’s just like completely unreasonable that either makes them look like they have no idea what’s going on or greedy. That’s kind of you got to like thread the needle.
Well, this is a normal amount to ask for, or it needs to be a little bit over what they’re offering. So, do physicians get signing bonuses? Absolutely. The amount just kind of depends upon the situation, but I would say almost any physician should get at least some kind of signing bonus when they’re either coming out trading or moving.
Employment Contract Questions?
Contract Review, Termination Issues, and more!