How to Terminate a Physician Contract with Cause? | Contract Termination

How can a physician terminate a contract with-cause? First, let’s talk about what is with-cause and without-cause. Without-cause means a physician or employer can terminate a contract for any reason with a certain amount of notice. Generally, it’s 60 to 90 days. Anything above that would be kind of a red flag to me. Still, without-cause means either party can get out of the agreement for any reason and with a certain amount of notice. With-cause termination means one of the parties, so the employer or the physician somehow breached the contract. And then, the other party decides that that breach is grounds to terminate the agreement immediately.

Termination of Physician Employment Agreement

Most physician contracts state that the employer can terminate the physician for these reasons, and they’ll list 20 different reasons. The practical ones are that they will lose their license and DEA registration, the physician is uninsurable, and they get a felony. There are some more kinds of nexus reasons like they don’t get along with their colleagues or are not following employer policies. Many of them will stick at the very end or other good cause reasons, just a broad amount. 

I don’t get too caught up on what is or isn’t there. You want to remove anything that’s completely unfair. But the section for the physician’s ability to terminate the contract with-cause is either very small or nonexistent. Suppose you have a physician contract with no power or language for the physician to end the contract with-cause. In that case, that is a red flag that needs to consider.

Physician Contract Cure Period

Another thing that needs to agree upon is a cure period. A cure period means if either party thinks the other party is in breach of contract, they must let them know formally. So, you have to send a written notice to the other party that you believe they’re in breach of the contract and then send it. There’ll be a notice section in every contract that says how and to whom you need to send any written notice, and you have to follow that. And then, at that point, there would be a cure period. Usually, it’s between 15 to 30 days. 

And that means that if one party breaches the contract, they have 15 to 30 days to fix whatever the breach is. And then, if that is set, the other party cannot terminate the contract for-cause.  What’s the benefit of terminating the contract for-cause? Well, one, it can be immediate termination. In this case, as I said before, if there was a 15-day cure period and the employer still hadn’t fixed whatever the breach was, the physician could terminate the contract immediately and move on. 

Complications to Consider Before Terminating a Contract

Now, there are some complications when you’re a physician that must be thought about before you terminate the contract with-cause and move on: one is specialty dependent. Still, there is some continuity of care issues that have to be taken into account in any physician setting. Suppose you’re just doing shift work, so if you’re in the ED, hospitalist, radiology, pathology, things like that where you don’t have an established patient base. 

In that case, it’s much easier to get out of the job quickly. Suppose you’re in primary care, cardiology, and dermatology, with an existing patient base. In that case, psychiatry is probably the absolute number one that must worry about this. If you have an established patient base, there needs to be a plan to move those patients to a new provider. If you leave practice abruptly, the patients would have no notice. Maybe there’s no one to replace the physician from the practice.

How to Terminate a Contract for Physicians

There must be a mechanism to move those patients onto a new provider. There needs to be some consideration, if it’s psychiatry, into some bridge scripts so that the patient doesn’t just have no ability to get their psychiatric medications. Generally, in that case, it’s a bad situation. It’s very uncommon for a physician’s contract to be terminated by either party for-cause. Most parties don’t want to deal with the legal complications that come with for-cause termination. If a contract is terminated, 95% of the time, it will be without-cause. Meaning, they’re just going to say, here’s your 60 days’ notice, I’m leaving after this, I’m moving on. And in that case, 60 days is plenty of time to develop a plan for continuity of care for the patients to move them on to someone else and get the prescriptions in place. It is just a better situation; if there’s an abrupt ending to an employment agreement with a physician, it can cause all those complications. 

One Situation That Comes Up Often with a Physician

One case that comes up often is when a physician calls me and says, ” Hey Rob, the employer’s not doing any of these things. They’re not paying me on time, not providing adequate support staff, and their volume expectations are crazy. It’s been going on like this for six months. My first question is, did you let them know? Have you given them notice that they’re not fulfilling their end of the contract? And most of the time, the answer is, well, I’ve talked to them. Well, okay. That’s great, but did you give them formal notice? Did you send them a written notice explaining that they’re in breach of the contract and need to fix it?

Most of the time, the answer to that is no. So, the first step is letting the employer know they’re in breach and then hoping to fix those issues. I say the trickiest situation is it could be a variety of things. Suppose the physician doesn’t feel safe practicing in that practice. In that case, they must consider, okay, well, what’s the liability of staying here versus leaving abruptly? It’s a terrible situation if a physician doesn’t feel safe to practice, which could be a lack of staffing. I’ve found many offices are having problems finding adequate support staff. So MAs, nurses, or even office managers and receptionists, all those things must work efficiently for a practice to work optimally.And if any of that breaks down, it can cause a problem for everybody because they have to do different jobs that they don’t prefer. 

Employment Review for Non-Renewal

And if a physician has no support staff or at least a lack of support staff and doesn’t feel safe practicing, it is a reason to terminate a contract for-cause. I think, yes, it could be, but I still have to go through the proper way, provide them notice, give them the cure period, and hopefully work out those problems in the interim. So, that’s the little simple discussion on how to terminate a physician’s contract for-cause.

What should a physician do if their contract is not renewed? This honestly doesn’t happen that often. We should probably define what is not renewed, or the contract is terminated. So, most physician contracts will have automatic renewal provisions. For instance, let’s say you sign a contract. It has an initial two-year term. There’s usually some language that states if it’s not terminated, the contract will automatically renew for another year. Then it would continue perpetually until one of the parties terminates the agreement.

Contracts Termination Provision

Any contract will also have a termination provision. So, either party can terminate the agreement for-cause. This means someone breached the agreement, and then either party can terminate it based upon who’s in breach. There’s another provision, without-cause termination, that states that either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other. Generally, that’s 60 or 90 days, I would say, that probably makes up 90% of all without-cause termination amounts. 

There will also be a notice requirement if either party does not plan to renew the agreement, which should match the amount of without-cause termination. It doesn’t make sense if either party must give 60 days’ notice to terminate the agreement. The notice requirement of not renewing the contract would be less or more than that. Hopefully, that makes sense. It should be the same. Let’s say you have a 60-day notice of intent not to renew the agreement. Well, it would be the same process of terminating the contract without-cause. 

One party would give written notice if they didn’t want to renew the agreement. And then that would be it. You’d work out the 60 days. If the employer didn’t like the physician to finish the 60 days for whatever reason, then the physician would still be paid for those 60 days. They wouldn’t have to work. I’ve had physicians come and say they don’t want to renew the agreement. What should I do? And this might be a stupid answer

What Should You Do if You Don’t Want to Renew your Agreement?

It’s to find a new job. They’re like, well, I want to fight for it. And that type of thing. If you’re in a position and the employer doesn’t want you, do not stay there. It makes zero sense. On a personal level, it will be very awkward. The employer will find ways to get out of the agreement, or they’ll give the without-cause notice and move on. We also do license board defense when an employee is either disciplined, or maybe the employer filed a board complaint. And that person says, well, I don’t want to leave.

I want to stay here, fight whatever they’re doing. The employer will find a way, one way or another, to get rid of that employee. And it will only cause more pain for the employee moving forward. So going back to the original topic of what to do if it’s not renewed, you find a new job. That’s it. It’s hard. Sometimes, it’s hard to say why they wouldn’t want to renew the contract. What did I do wrong? It’s probably we’re finding out why. Most of the time, it’s just production. The physician simply didn’t produce what the employer’s expectations were. Most of the time, the volume issue is not the physician’s fault. It’s a lack of marketing, a lack of referrals. 

Maybe the staff is poorly trained and doesn’t do an excellent job of providing solid patient care experience. There are several reasons why someone’s volume won’t hit expectations. But it’s not, or it’s usually not just because the physician is too slow. They don’t want to see the number of patients that are expected. So hopefully, that was helpful regarding what to do if your contract isn’t renewed. Find a new job!

Other Blogs of Interest

• What to Know Before Signing Your First Physician Contract
• What Can You Negotiate in a Physician Contract?
• Will I Be Paid My Bonus if I Terminate the Physician Contract Early?

What is Without Cause Termination in a Physician Contract? | Physician Termination Agreement

What is without-cause termination in a physician contract? Essentially, it allows either party to terminate the contract agreement at any time. For any reason, with a certain amount of notice to the other party. Without-cause termination is essential because if a physician enters a job, everyone expects a position to be great, right? You don’t take a job hoping you want to leave immediately, but things change, or it certainly can be different once you start. 

Let’s say a physician takes a job. After a few months, it’s clear that it’s not a good cultural fit, or maybe they’re on productivity compensation. Whatever the reason, they’ve decided. I do not want to stay here. And so, without-cause termination will allow that physician to give notice, work out a period, and then move on. 

Average Length of Without Cause Termination Notice

The average length, or at least the standard for most without-cause termination notice periods, is somewhere between 60 to 90 days. Anything higher than 90 days causes a couple of problems. Anytime somebody gives notice, the dynamics will change between the physician and the other physicians or the organization itself. You’re no longer in the long-term plans. Sometimes, there can be insufficient blood as well. And so a shorter period to have to work out whatever is advantageous. It’s just better. If you had a 180-day notice, you’re there for six months dealing with a potentially awkward environment.

Another thing to consider is the longer the lead time, the harder it is to find a new job. If you’re coming out of training, everyone comes out at the same time. So, all employers understand this. And there’s a rhythm to when they offer jobs and start onboarding and all that type. If you’re out, you’ve been out for a while. And then you decide to switch, it can be at any time, but most people don’t post for jobs six months in advance. They will say, we have a need now. If you have a six-month notice requirement for your job, you may lose out on job opportunities because they need someone much faster than six months. 

And so, they’re going to find somebody and leave you in the dust. Two main reasons: don’t put yourself in a toxic environment for an extended period, and then two, help shorten it down so that you can find a new job more efficiently. In the physician contract, it’s going to state how much notice you must give. 

How Much Notice Time Do You Need to Terminate an Agreement?

And let’s say it’s 60 days. This example will also state that it must be in writing. So, you need to find in the physician contract that it’ll be under the termination section. And it will say without-cause termination, for no good reason, or something like that. And then it’ll just state that either party can terminate the contract agreement with a certain amount of notice to the other, as I said before, in 60 days.

There’s another section in your physician contract called either notice or notice. And it will state exactly how you can provide notice to the employer. It’ll say whether it needs to be certified mail or hand delivery. Most physician contracts don’t have email. Indeed, there’s no verbal acknowledgment, no fax. If you were to tell your boss, hey, I’m leaving in 90 days, but not give them a written letter that states you’re going. As a result, they could potentially force you to work for another 60 days until you give them adequate notice. So, those two sections. 

Look into the without-cause termination section to see how long or how much notice you must give. And then, look in the notices section and ensure that you can provide adequate notice. I’ve had a couple of times where physicians have called me after the fact and said I emailed my boss. It was 60 days’ notice; they waited 45 days and then came back and told me I didn’t provide them effective notice. And now, they’re saying I must give them another 60 days. Well, it’s vindictive on the part of the employer. They were mad and did that just to kind of screw with the physician. 

What Happens if a Physician Do Not Give Effective Notice

 But if you don’t give adequate notice, it doesn’t count. Ensure you’re both offering the right message and following the notice section. Now, what happens if you decide to leave a job and don’t give the proper amount of notice? Well, many physician contracts will have penalties associated with that. For instance, a common way of doing it would be to penalize the physician. They didn’t give enough notice of whatever their average daily rate was for every day. If it was 60 days and they only gave 30 days, they’d owe 30 days of their average pay to the employer. Average pay could be a significant amount of money.

You want to ensure that you give as much notice as required in that without-cause section. Therefore, you can’t be penalized. Employers could come after you for recruitment costs, locums to cover your shifts, or if you’re an outpatient or something like that. It’d be rare for them to do that. However, you are opening yourself up to liability if you fail to give them the specified amount of notice in your physician contract.