How should a physician turn down a job offer? There’s no sneaky legal or technical way to do this, but there’s a right and wrong way. And the last thing a physician wants to do is burn bridges. There’s a professional way to turn down a job offer. And then there’s an unprofessional way to do it as well. Let’s first talk about how a physician is provided with a job offer and then maybe a short difference between an offer letter, letter of intent, and the actual employment agreement. A physician is finding a job. Either the physician will reach out to the practice knowing they have an opening, or a recruiter can reach out to the physician.
Many times, employers will hire physician recruiters to go out and bring them, candidates. You could also have word of mouth through other people that the physician trained within residency or fellowship. If the physician gets hooked up with a job, there’ll be an initial talk. Whoever the point person is, if it’s a smaller practice, it could be the physician who owns the practice. If a physician recruiter is involved, the point person, at least initially. The physician recruiter would set up a call with someone in practice. Most big ones employ their physician recruiters. If it’s a hospital or health network, that person would be the point person. At first, it’ll just be cursory, but here’s what we need.
And then, they probably won’t even go through basic things like salary, benefits, and compensation structure. There may be a mention of ‘this is the range.’ But before they get into the details, what will likely happen is there’ll be a couple of calls with multiple people.
How It Goes Before an Offer Letter
If it goes well, the physician will have an onsite visit to meet everyone involved. Maybe I wouldn’t consider it interviews, but more of a get to know you. You may go to dinner, you’ll kind of tour the facilities and see what they have to offer.
After those things have concluded, so they’ve had the calls, they’ve done a site visit. Then if the organization wants to extend an offer, they’ll do it verbally. I would say almost always with the big hospitals. They’ll always provide an offer letter first.
The offer letter will then go over the basics of what’s in the contract. How much will the physician be paid? What are some of the benefits? How long will the contract last? Maybe some of the restrictive covenants like the non-compete and non-solicit. What are bonuses? There could be a signing bonus, relocation assistance, and how much they provide for continuing medical education annually. The offer letter just goes through the quick and dirty details of the employment terms. At this point, the physician has the decision to make. Some places will not provide an employment agreement until the physician has signed the offer letter and then essentially committed to the job. Now, signing the offer letter is not a binding decision.
Declining the Job Offer Professionally
The terms in the offer letter often change slightly once given the employment agreement. Or there will be terms in the employment agreement that make jobs look great at the beginning, most likely a terrible decision. What are some things that make an offer letter okay and an employment agreement terrible? Well, the details of the non-compete, how long it lasts, and the restriction. Is it all practice of medicine or just the specialty of the physician? Many physicians can do multiple things. For instance, someone in family practice or internal medicine could do hospitalist, urgent care, and family practice. What are the specific terms of the non-compete? How does the compensation change over time? The employer will pay for the underlying medical malpractice insurance. Still, who pays for the tail insurance if it’s a claims-made policy? Usually, that’s not in the offer letter.
And depending upon specialty, that can be a huge decision point if there is no offer for a tail insurance. If the physician gets the offer and then they say, you know what, this is not for me. Or even after they do the onsite visit and the interviews, they get a bad vibe and say, you know what, this isn’t for me. Don’t just ghost the physician recruiter or whoever the director of the practice is, or just cut off communication and be silent. However, some people want to do it. They believe they’ll be in conflict when they say I’m not interested in the position. It’s not a professional way of acting.
Declining an Offer Letter Through Email
Nowadays, an email is sufficient just saying, hey, I appreciate your interest. Currently, I’m going in a different direction.
I’m not going to accept the offer. Just be cordial. Don’t go into why I don’t think this is the right fit. But just give the employer a definitive answer. Like I’m moving on, I appreciate the interest. Maybe we can revisit employment in the future. You must be professional when you’re turning a job offer down because circumstances may change. The job wasn’t great at the time, but maybe in six months to a year, it looks attractive. Suppose there’s an open position and just completely not responding to any communications from that employer, we’ll burn that bridge. They most likely would never go forward with the physician. So, suppose you want to turn a job offer down. In that case, you just send an email and say warmly, I appreciate the interest, and I’m moving on.
Maybe someday, we can revisit it and leave it at that. Suppose the physician has signed an offer letter. After reviewing the employment agreement, you know what? I’m not going to sign this. You need to do the same thing. You must say in writing that I understand I signed the offer letter. This employment agreement is either different or contains some terms. I’m simply not comfortable with it. Therefore I’m going to withdraw my acceptance of the job offer. I appreciate your interest in that type of thing.
Considerations Before Pursuing an Employment Contract
From experience, I can tell you that a physician has signed an offer letter and backed out of a job. There usually will be some hurt feelings. It’s unlikely that the physician will have that opportunity available in the future. But just because you’ve signed an offer letter doesn’t mean you have to go through it. You need to make the best decision for yourself. This is a business. Although I’m a lawyer, it is a business as well. We need to make business decisions for my law firm, not just for ourselves, but for instance.
And in a business environment, you must take care of yourself first. And so, if a job is not a right fit, even if you verbally accept it. If you sign the offer letter, don’t go through with the jobs you’re uncomfortable doing.
Should a Physician Sign a Letter of Intent?
Should a physician sign a letter of intent? A letter of intent is also known as an offer letter. Employers use a different name for it, but it’s the same thing. Let’s go through the process, and once it gets to the offer letter/letter of intent stage, whether the physician should sign it or not. When a physician is looking for a new job or potentially if an employer reaches out to a physician, they can do it through word of mouth from other physicians. Suppose it’s a hospital or healthcare network. In that case, most of them employ physician recruiters. Who then actively search for candidates for open physician positions or independent physician recruiters are brokers.
They will find candidates for open positions. They’ll bring those candidates to an employer. Then they’ll get a fee, either a flat fee or sometimes a percentage of the first-year physician compensation. In this case, let’s say a physician is interested in a job. There’ll be an initial discussion with the recruiter, the practice owner, and a director. That is to get an initial feel for whether the physician will have an interest. And then, if that goes well, it’ll likely end up in some site visitors. The physician will travel to wherever the location is. He’ll meet with other physicians, the administration, and other facilities and discuss basic employment structures. If the employer is still interested, one step would be offering you to sign the offer letter. That is before moving forward with an employment contract.
Should You Accept a Letter of Intent?
They do this for a couple of reasons. It takes time to prepare a contract, which most smart physicians do. Certainly, any big healthcare network or hospital has its legal counsel. It takes a little time to draft an employment contract for a physician. Most employers don’t want to go through the time and cost of paying an attorney to draft those contracts. Unless they have at least some kind of commitment from the physician. That commitment takes effect through signing the letter of intent. Now, should a physician sign a letter of intent? The answer is yes. The employer will require a signed letter of intent before starting an employment contract. If the physician is interested in a job and the employer requires them to sign an offer letter, then sign it.
The next question for most physicians is, am I bound to this employer if I sign the offer letter? Can I back out, or is it a binding contract? Well, in short, no, you can back out.
The terms of the offer letter are very basic.
- Contract length
- Some benefits
- Basic signing bonus
- Relocation assistance
- Compensation productivity
Maybe getting into the restrictive covenants:
That would be a lot for an offer letter, but those are its basic terms. However, once an offer letter is signed and then an employment agreement is reviewed by a physician. Some terms can change, or the offer letter’s basic information can completely change. That is when provided more context in the employment agreement.
If You Decline a Job Offer Will it Hurt Your Career?
If it gets to the point where the physician has signed the letter of intent, they think and review the employment agreement. They say you know what. This isn’t for me. This is substantially different. I don’t want to go through with it. Then don’t go through with it, don’t sign the employment agreement. Cordially, let the employer know if these are substantially different or not what I expected. And I’m not going to go through with the contract. In that case, you just wash your hands in the situation to move on. I’ve seen almost no scenario where an offer letter would be binding or enforceable. Suppose a language states there would be a penalty for backing out of the offer letter. Sometimes they would want to recoup the costs of employing a physician recruiter. The travel costs of bringing the physician to do a site visit.
That’s very rare. For the most part, these are just cursory documents. You’ve come to terms with the big stuff, and then the details are in the employment agreement. It’s fine to sign an offer letter or a letter of intent from a physician if they’re interested in continuing with the job. A scenario where they absolutely should not is if they’re just fishing for different offers. They say you know what, I’ll sign multiple letters of intent, and then once I review the agreements, I’ll decide. If you sign a letter of intent and back out, you have burned a bridge. That’s just the reality of the situation. It is very unlikely you will ever have a chance of getting a job with that employer again.
Do Not Sign a Letter of Intent If Uninterested With the Job
And it frustrates any employer when they’re expecting a physician to come. They’ve stopped recruiting the activities. Then the physician comes back and says, you know what? I’m not interested in this. Therefore, most employers will put deadlines. This is the deadline to sign the letter of intent. And then, once the physician receives the employment agreement, this is the deadline where we want you to either negotiate or sign the agreement. If you don’t do it, we’re re-sending the offer.
So, signing the offer letter is fine if you are truly interested in a job. If you’re not certain, don’t sign it. But it is not a binding document, and you can move forward. Don’t worry that you’re stuck with the job you’re not happy with or the terms of a job you’re not happy with.
In the employment arena, these letters of intent go far. We’d have an employment agreement if you signed the letter of intent. That would start with a new job. Briefly, in general, is a letter of intent binding? No. The only way a letter of intent would be binding is if there is a language that states this letter of intent is binding. I don’t recall seeing something like that before. The reason why it’s essential for the physician not to sign a letter of intent that states binding. Because in the employment agreement, the actual long contract that the physician gets sometimes can be substantially different. Maybe the context provided by the employment agreement can do a job—a job at the basic level seemed great. Then once you read the fine print, it’s not so great.
Before You Sign an Offer Letter
So, it’s always important for the physician to know. It is Even if you come to terms on the letter of intent like compensation, benefits, bonuses, termination notice, or non-compete. Even if you agree to all those things, getting the employment agreement is different. Either the terms are substantially different, or perhaps the way they worded them made them substantially different. In that scenario, don’t sign the employment agreement. Due to those factors, you can always negotiate, even after you sign a letter of intent. Maybe the letter of intent states yes. A non-compete lasts one year but doesn’t list the geographic limitation. You get the contract, saying it’s a one-year non-compete. Okay, great. And then it says, but it’s 50 miles from every location the employer has in the state or something crazy like that.
Well, no physician will sign, or at least they shouldn’t, a non-compete like that. Although the letter of intent is okay at first glance, this is a one-year non-compete. That seems fair. But it’s not so fair when you get into the details of it. Or perhaps there’s language about productivity. In this case, maybe you get 25% of net-collections over a certain amount you collect in a month. Okay, well, that sounds great.
And then you talked to the employer about the volume, meaning. What’s the average a physician makes in my specialty here? And they say no one’s ever got the productivity bonus. Okay, that looks great on 11 and 10, but in practice, not so great. Or maybe in the agreement, they say it’s an initial one-year term. But then, when you investigate the agreement’s language, it automatically renews.
Is It Yet a Binding Employment Contract?
There’s no ability to terminate the contract without cause. Then the physician theoretically could just be stuck in a loop without the ability to get out of the contract. That’s just something that physicians must work out in advance. So, is a letter of intent binding for a physician? Typically, no, it’s not.
If there is a language that states it is binding, run the other way and get a new job that isn’t trying to take advantage of you. Someone would rarely put language in there without in-depth understanding. Most business owners are at least savvy enough. To understand that forcing someone to sign a binding letter of intent without seeing the actual employment contract is terrible. So, anyway, keep that in mind before you sign anything.
Is a Letter of Intent for Employment Binding?
The short answer is probably not. It is how the process would work when a professional is looking for a new position. The employer may state before they give you an employment contract. They’d like you to sign a letter of intent, also referred to as an offer letter. And then, that letter of intent will outline the main points of the employment relationship. Normally, in a letter of intent, you’d have the term of the contract. So, how long does it last? Maybe how can it be terminated? If it has without cause termination, what’s the length of notice needed? Certainly, it’s going to have compensation details. These include base salary, productivity bonuses, and commission percentage, which will also be listed.
What to Look on Sample Physician Letter of Intent
Maybe a brief description of the benefits. And then if there’s a non-compete involved if it’s a healthcare contract. Perhaps some details about malpractice insurance. Kind of quick bullet points of, alright, this is what we expect the employment relationship to be. And at that point, there may be some negotiation between the professional and the employer. For instance, if the professional wants a higher base salary or a higher percentage of collections, or whatever it is, that’s the time to negotiate. And then, once it reaches an agreement, the professional signs the offer letter. Generally, the company will as well. And then, at that point, the company will usually prepare an actual employment agreement with the binding terms. What are some reasons why someone would back out after signing an offer letter?
Well, providing more context, a contract’s details can significantly change. For instance, if the offer letter states, let’s discuss the non-compete. It may state, oh, it’s two years and 10 miles from your primary practice location. In sales, from your sales territory, something like that. And then, when you investigate the agreement. It may be much more prohibitive in that you can’t. Not only work in your specialty, but you can’t work in sales in this area if you’re selling software or something like that. Typically, non-competes would apply only to software. So, you could switch industries for a brief period and then come back if you wanted to.
Other Blogs of Interest
- What to Know Before Signing Your First Physician Contract
- Is a Physician Letter of Intent Binding?
- Can a Physician Negotiate After Signing a Letter of Intent?
How Long to Respond to a Physician Job Offer?
How long should a physician take to respond to a job offer? As always, it depends. Let’s go through the job interview process, and then maybe we’ll discuss when would be the right time. Suppose a physician is either out of training or in a current job. And he is looking for a better opportunity. In that case, there are several ways you can find a new job. There could be advertisements. There are recruiters who will actively reach out to physicians and see if they’re interested in a new position if you have a colleague saying, hey, we have an opportunity. Are you interested? That type of thing. There are two ways it can go from there.
There’ll be a discussion with the point person. For a hospital or healthcare network, it’ll be a physician recruiter. Maybe if it’s like a smaller physician-owned practice, it’d be the owner of the practice. They probably have a recruiter on staff if it’s a semi-large physician group. And you’ll talk with them and discuss the position. Then it’ll get a little more serious at some point, and many organizations will send you an offer letter. And so, in the offer letter, there will be basic terms. The term of the agreement include:
- How long it’ll take for you to terminate the agreement without-cause compensation
- Maybe a signing bonus
- Relocation assistance
Some basic terms as far as the restrictive covenants:
- Any bonus opportunity
- Probably some brief mention of benefits.
Those are what will be in the offer letter. Some employers require the physician to sign the offer letter before presenting them with an employment contract.
What Does Sense of Urgency Imply?
Any physician outside of academia will have to sign an employment contract. And then, the employment contract gets into the specific terms of the employment relationship. The offer letters, think of them like bullet points. The agreement, maybe an offer letter, is a page or two. The contract could be anywhere from 15 to 50 pages long. Usually, the recruiter, or whoever you’re discussing the position with, will tell you we need this back by this date if you’d like to move forward. The offer letter often states that it needs to be signed by this date.
And then let’s say you signed the offer letter, and they present you with an employment agreement. They may say to you. We need you to decide by X date. So, if you have a solid date and they say you need to respond to us by this date, then those are the times that you need to respond to them. They’re certainly not hard and fast deadlines for the most part. For instance, if you were thinking over an opportunity. And you were a few days late in providing them with a signed agreement or offer letter. It’d be unusual for the employer to say, no, you missed the deadline. We’re Yankee in the offer. That is not something that would normally happen. The employer wants to create a sense of urgency to get a yes from the physician. So they don’t have to keep recruiting for the position.
Why Do Employers Prefer Negotiating Directly With Physicians?
It is somewhat expensive for a firm to recruit a physician using an actual recruiting firm. They want to lock down a position as soon as possible, not have to worry about it. Then can move on to other physicians or, if they have no more opportunities. They don’t have to think about one more thing. There will be cases, especially for physicians in training, where a job will reach out to them. Maybe they’ll sign an offer letter. Maybe not; not everybody offers offer letters. They may present an employment agreement to the physician and then just leave it open and say, get back to us when you can, or reach out to us if you have questions.
In that scenario, this strategy is directed toward people in training. If you lock into a job early, you miss out on any opportunities that may come after that. So, suppose you were to sign an employment agreement and had five more offers that were much better. In that case, you must consider breaking the contract before you start or forgo all those great opportunities. I mean, there’s like a sweet spot. Some people crave security. When I say some people, I mean those in training who crave the security of having a job, lockdown, don’t have to worry about it, can start prepping for a move, that type of thing. There are considerations involved. Let’s say someone has a family or they’re moving to an area to be near family.
The Need for Immediate Signing
They want to get that locked down as soon as possible. And others are just open to the best opportunity. And so they may want to last a little bit longer. At some point, the employer will give you a drop-dead date, and that’s when you need to give them your decision. There’s no reason to wait if you have a job you love, and it’s a no-brainer. They may move on to someone else, or maybe they’re interviewing multiple candidates and waiting to see who will accept the job first. So, in that scenario, there is no reason to mess around if you have your dream job. Review the contract and offer letter, work out the details, and sign the agreement. Move on with your life to a better life as a practicing physician out in the world instead of training.
How to Accept a Physician Job Offer
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. Often, the physician will receive an offer letter or a letter of intent, which 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 does the contract last
Maybe some basic terms for the non-compete:
- The non-solicit
- Signing bonus
- Relocation assistance
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 says, we need to agree on the essential basic terms of the agreement. You sign the offer letter, then we’ll 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 when the basic terms of the offer letter are the same in the contract. Still, the language in the contract makes that contract terrible for the physician.
What Happens When There’s No Non-Compete in the Offer Letter?
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 they cannot. In that case, if the physician reviews the employment contract and decides that this is not something they’re interested in. They can start negotiating with the employer. The employer won’t make the necessary changes for the physician to be comfortable in that position. The physician can say, okay, I know I signed the offer letter. I understand that. Still, 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 say, I’m not signing the employment agreement unless you make changes.
When the Employer Refuses to Make Changes
Chelle Law will provide a physician contract review. This is to identify the areas that are possible to improve. Also, to assist you in negotiating the best contract possible.
If the employer says we’re not making the changes, the parties can agree to disagree and move on. And the physician is not bound to contract terms 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, you get hacked over some terms. 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, things can change that. Maybe the offer letter job looks great. But when you get into the minutia of the contract details, it’s not so great. You can still negotiate terms for the employment agreement. That is even if you agreed to some of the terms 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 decide where they’re both happy.
Can an Employer Take Away an Offer Letter?
The way to accept the job offer is to sign the agreement. I had a recent scenario where a physician got a job offer. I went in, interviewed, saw the clinic, the hospital, and everyone involved, and everybody was happy. He made plans, and his wife accepted a job in the city. They gave him an employment contract to review. Then out of the blue, they 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 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. Still, 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 between 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 don’t want to go through with signing the actual contract? Maybe due to a change in circumstances or family issues, you got a better job offer somewhere else. Maybe you decided to move home instead of moving to a different city. The question is, can a physician back out after signing an offer letter? The short answer is yes. That’s unless there’s binding language in the offer letter, which there seldom would be. The physician can back out. The offer letter has some basic terms.
Normally, it would be like, okay, here’s what your compensation is. Maybe a brief review of benefits, the term length, how to terminate the contract, and a brief mention of a non-compete. It is normally like a one-page document that briefly describes what it’ll 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 change whether it’s a good offer or not. And so, until the employee signs an agreement, it will not be a binding document. Let me give some instances of maybe why the job opportunity looked okay with the offer letter. Still, 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. Normally, a physician would have to provide either 60- or 90-days’ notice to terminate the contract without-cause. This means that 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.
Probable Consequences of a Notice
Once you give notice, relationships change within the organization. You’re on your way out. You’re no longer building a practice. If someone had a 12-month requirement, there’d be an entire year of potentially awkward relationships. I would never suggest that a physician would have to give a year’s notice.
On the back end, you must give 12 months’ notice if you’re currently in practice. Very few practices 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, suppose the physician is in training. In that case, an organization forecasts they need the physician 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 seldom 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. The reasonableness of non-competes varies among states. Pretty much is one of the only things that vary in physician contracts.
Red Flags Changes in an Employment Contract
Let’s 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, a two-year non-compete and 25 miles from every location. You practice while employed with the employer. That can change things substantially. Suppose someone is married to a town where they grew up there. In that case, the family’s there, they want to raise their kids there, and then they have some terrible non-compete. That would essentially force them to move for a period that can make a great offer a terrible one. And that’s a term that could change. That’s not explicit in the offer letter that could make a great offer a bad one and benefits as well.
Generally, there’s no specific recitation of all the benefits 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, and 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, yes, you do not have to go forward. That is even if you’ve signed an offer letter because the employment agreement terms could change the offer substantially. It can start in awkward conversations.
And the sooner you give notice to the employer that you are not going to start, the better. People also ask, what could be the absolute worst-case scenario? In this case, if it’s just an offer letter, I would say it’s a low downside risk. Suppose 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 could come after you. Suppose you just signed the offer letter without seeing the employment agreement. In that case, I’d say 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 get into who gives signing bonuses, the average value of a signing bonus, and then do you have to pay it back? 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. Many will pay it directly to the moving company, but that’s not the same as a signing bonus. Some places will combine it to call it a commencement bonus. Then it’s up to the physician how they want to use it. They could use it for relocation assistance, down payment, or whatever they want. But let’s talk purely about signing bonuses right now. How does it work? Well, I would say this is specialty-dependent but normally, signing bonuses are somewhere between 10,000 to 50,000. Then the payment cycle is an important part of that. 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 starts practicing with that employer.
The timing of that is important. Sometimes people are just coming out of training, either residency or fellowship. I 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 money upfront can help the physician make things more comfortable. That’s one area we can negotiate. When is the bonus paid? How much do you get?
Soliciting Opinions Regarding Bonuses
Well, there is no hard and fast rule that this specialty gets this amount. It is employer-dependent. Some are willing to pay a decent amount, and others just say, no, you’re not getting one, no matter what. This goes for any contract negotiation.
If you’re in a specialty that’s in high demand and has few out there, you certainly have more leverage. If you’re going to a town that’s harder to recruit, you certainly have more leverage in that scenario. I would ask classmates and others in your residency what you are looking at regarding your bonuses. 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 can always give you a decent idea. Still, I’m telling you, it can vary wildly between cities and states and different employers. Another thing to think about is that almost every signing bonus has a repayment obligation.
Suppose the physician leaves within a certain time, normally the initial term of an agreement. I mean, how long it lasts, it will be somewhere between one to three years. Many employers will determine whether the signing bonus must get paid back to that initial term. Then they’ll have forgiveness associated with it. So, I’ll use a couple of examples. Let’s say a physician joins the practice. The employer could say it’s a three-year initial term for every month 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, depends, but you would rarely get a signing bonus.
Then if you left in the first year, you wouldn’t have to pay anything back. That’s something to think about when you’re accepting a job. How much am I getting upfront? What will I have to pay back if I decide to leave the job before the initial term ends? In addition to assigning bonuses, some places 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 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. The employer would say, we’ll give you a hundred thousand for student loan forgiveness. Then, we’ll pay a certain amount of that a hundred thousand over three or five years, whatever it is. And then they’ll pay it at the end of the month, and that’s the forgiveness. The physician would never have to pay anything back. It certainly is worth negotiating a signing bonus. It needs to be reasonable. The worst thing a physician can do is ask for something completely unreasonable. It makes them look like they have no idea what’s going on or are greedy. That’s kind of like threading the needle.
This is a normal amount to ask for, or it needs to be slightly over what they’re offering. So, do physicians get signing bonuses? Absolutely. The amount depends on the situation. Almost any physician should get at least some signing bonus when coming out, trading or moving.
Red Flags in a Physician Assistant Employment Contract? | Medical Employment Contract Red Flags
What are some red flags in physician assistant contracts? Sometimes the red flags are the words on the page. Other times they’re missing. I’m going to go over the most common red flags that I see in a physician assistant employment agreement. The first one would probably be unreasonable non-compete clauses. Depending on your state, most states’ non-compete clauses for healthcare providers are enforceable. But you want to check your state law. If they are enforceable, you want to check if it is reasonable. I mean that usually, a non-compete clause will be anywhere from one to two years. I always try to advocate for at least one year only, not over a year.
One year, it should be, or less. It could be six months, that would be great. And then you want to look at the restricted area. Typically, it goes by miles, and it depends. It would help if you considered where you’re located and what your makeup looks like. Like, are you in a rural area? Are you in a city? And then you want to see, okay, is this mileage unreasonable? Anything over 30 miles is going to be, in my opinion, unreasonable. And I would try to negotiate that down. We’ve talked about how long they’re for and how much-restricted area includes competing with your employer.
Number of Locations Restricted Radius Apply
The other thing you want to look for is how many locations does that restricted radius apply to? This is a little tricky, and employers often try slipping this in. They may have language that states any location of the practice with the company or any site you provide services. That means if you fill in for a provider on vacation. You’re a non-compete clause now attached to that location. Let’s say you have 10 miles from your primary site. But now, you could have 10 miles attached to multiple other locations. This is significantly dangerous if the company expands while you work for them. And it could knock out a massive chunk of the state. You may have to move if you decide to end your employment. So, an overly restrictive non-compete is a red flag.
The other thing you want to look for in a non-compete is what will be your restricted services. Suppose you’re PA offering services for a general practitioner. The employer shouldn’t exclude you from providing services for general surgery, psychiatric care, or a completely different specialty. They should not restrict you from doing that. And it depends on the state if you’re allowed to switch specialties. You want to know what your restrictions are in terms of services. Those are the red flags that kind of go with the non-compete clause. The next major red flag I see in contracts is something missing. There should always, and I mean, always, be a without-cause termination clause in your contract. And without-cause termination means either party can terminate the agreement or your employment for any reason or not. You don’t even have to give one.
Ways of Terminating a Contract
Typically, you must provide a certain amount of notice. And that notice period is typically anywhere from 60 to 90 days. If you’re in a rural or high-need area, sometimes I see it go up to 120, but I would probably ask to have that limited to 90 days. You give your notice, and then your agreement has terminated at the end, and you guys can go your separate ways. Sometimes contracts don’t have that language in there. They’ll say you have a contract to work for your employer anywhere, usually, two to three years. And the only way to get out of it is to ask them to be released. This is a dangerous spot because they might not want to remove you. Then, you have to make a difficult decision if you’re going to breach your contract.
And that gets into a whole other mess. So, always look for a without-cause termination. Okay, so we’ve gone through non-compete clauses. Without-cause termination should always be there. You should always have your benefits. If you’re getting health benefits, retirement, disability, and life insurance, the employer should outline all those in your agreement. They won’t detail how much you’re paying in premiums, but they should mention that you’ll receive the offer. So, that should also be in there.
Compensation’s Red Flag
Then let’s talk about your compensation. Compensation obviously should be in there.
A red flag is if you can’t determine how you’re getting paid. And I have seen this before. Many physician assistants get settled with a flat base, hourly or per shift. But you’re easily able to calculate how much you will be making. But when you have patient quotas and weird metrics, RVUs are typically not used in a physician assistant contract. Still, if there are RVUs, you want to ensure you know how much you’re getting per RVU. The calculation and when received the payment for those.
Be Careful on Accepting Large Amounts of Bonuses
If anything is on the collection, you want to know what percentage you’re getting and when you get paid. You want to be able to figure out what you’re making and its computation. The other red flag in the compensation range is whenever you get a sign-on bonus, relocation bonus, or relocation expenses. Normally, you’ll get a bonus which is a large amount of money that you’re going to get upfront upon signing this agreement. You want to be careful because there are sometimes red flags in those. There are typically strings attached. That means you agree to stay employed with your employer for two to three years by accepting that money.
And suppose you terminate your agreement for any reason, even without-cause. In that case, you will have to return that entire bonus, or you’ll have to return a prorated amount. There’ll always be some payback provision. The red flag is when you have to pay back the entire amount because it’s under income tax when you receive that money. And so, therefore, let’s say the bonus is 10,000. When you get that bonus, you’ll not receive the entire 10,000 because of the tax deduction off the top. So, it’s best if prorated, which means that every month you’re employed, a portion of that amount you must pay back is forgiven. So, that’s important as well. And then lastly, other red flags might be no CME allowance and continuing medical education.
You need to practice this and provide services for your employer. So, they should reimburse you for that or give you an annual allowance. And that can be anywhere from 3,000 to 5,000, usually.
Breaking an Employment Contract with Red Flags
Can a physician assistant break their contract? The answer is yes. They can. However, breaking their contract means that they’re breaching it. They’re not adhering to the terms that they agreed upon with this job. They may have some legal or financial consequences you want to consider before making that decision. So, before you break the contract, there are normally many different ways to lead out of your contract. You always want to go to your employment agreement and read it very carefully. There usually are many clauses on termination. Your employer can terminate your agreement for-cause if you have violated some policies, lost your practice license, or received a conviction for a crime. They typically enumerate the list there.
And if any of that happens, your employer will terminate the agreement. Another way you can move out of your employment agreement is without-cause termination. Most employment contracts you want to read carefully will have a clause that says you may terminate your employment without-cause. It can be for any reason or no reason after giving a certain amount of notice. The range can be anywhere from 60 to 90 days. Occasionally, if you’re in a rural or high-need area, it can sometimes go up to 120 days. You must give written notice correctly if you want out of your contract. Again, this can be a little unique to each situation, so you want to look at the employment agreement, and it will state how you need to give proper notice.
Proper Handling of Notice
It’s usually always in writing. It can be hand-delivered to specific personnel. Sometimes, it must go through certified mail. Other times, you’re able to email it to certain personnel. So, make sure you give your notice correctly, and you give your notice at the appropriate time. As we discussed, it’s typically 60 to 90 days, and you are free from your agreement. That’s the best way to do it. However, even if you do it this way, there still might be some financial consequences. Suppose you received any sign-on bonus or relocation bonus, or reimbursement. Those bonuses are when given a lump sum upfront when starting your employment. Usually have some sort of requirement that you must complete a certain period with the company. This usually is anywhere from one to three years.
An Employee of a Practice Seeking a New Job
Suppose you terminate your employment for any reason within that time. You may have to pay back that entire bonus, or you may have to pay back the bonus at a prorated amount. That means a portion of that amount is forgiven for the many months you’ve been there. You always want to be careful that you’re not just breaching the contract. Again, even if you breach the agreement, there may be something in your contract called liquidated damages or something about damages. If you break this agreement and don’t give proper notice, you will have to pay your employer tens of thousands of dollars.
So, this is something you always want to look out for. I see this in about 50% of all the contracts I review, so you want to be careful. Breaking a contract is serious. So, I always recommend consulting an attorney. We do that at our firm to ensure that you terminate your contract properly.
Physician Contract Questions?
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