What Physician Business Expenses Should an Employer Pay For?
When a physician signs an employment contract the employer will reimburse the cost of many practice related expenses and offer professional benefits. The items that will be reimbursed by the employer will be listed in the employment agreement. Tax implications must also be assessed with any reimburse business expenses (a CPA can help with this). A signing bonus or relocation reimbursement from employers are customarily assessed income taxes and standard deductions by the employer.
Accountable Business Expenses
An employer should pay for the following:
Continuing Medical Education: Physicians are expected to keep up with the latest developments in their field. They do this by attending conferences, seminars and workshops that are relevant to their practice. In some cases, a physician might need CE hours for renewal of his license or certification credentialing requirements. An employer should give the physician between $3,000-$5,000 a year for CME expenses.
DEA Registration: Drug Enforcement Administration registration is required for all physicians who prescribe controlled substances. The costs of this can vary depending on whether a physician will write prescriptions only at his office and how often he plans to prescribe drugs from home with patients in need.
Licensing Board Fees: Your annual state licensing board fees should be covered by the employer. This is generally prorated depending upon the time of year you join the employer.
Professional Associations: A physician needs professional associations not only to maintain his skills, but also to communicate and collaborate with colleagues in other practices or institutions.
Health Care Tax Issues
Every physician contract is unique. However, nearly all contracts for health care providers should contain several essential terms. If these essential terms in the contract are not spelled out in contracts, disputes can arise when there is a disagreement between the parties as to the details of the specific term. For instance, if the doctor is expecting to work Monday through Thursday and the employer is expecting the provider to work Monday through Friday, but the specific workdays are absent from the Agreement; who prevails?
Spelling out the details of your job is crucial to avoid contract conflicts during the term of your employment. Below is a checklist of essential terms that contracts should contain (and a brief explanation of each term):
- Practice Services Offered: What are the clinical patient care duties? Are you given time for review of administrative tasks? How many patients are you expected to see (like in pediatrics)?
- Patient Care Schedule: What days and hours per week are you expected to provide patient care? What is the surgery schedule? Are you involved in the planning of your schedule?
- Locations: Which facilities will you be scheduled to provide care at (outpatient clinic, surgical sites, in-patient services, etc.)?
- Outside Activities: Are you permitted to pursue moonlighting or locum tenens opportunities? Do you need permission from the employer before you accept those practice of medicine related positions?
- Disability Insurance: Is disability provided (short-term and long-term)?
- License: Will the practice offer reimbursement for your license? Will an advisor be provided?
- Practice Call Schedule: How often are you on call (after hours office call, hospital call (if applicable))?
- Electronic Records (EMR): What EMR system is used in the practice of medicine? Will you receive training or time to review the system prior to providing care?
- Base Compensation: What is the annual base salary? What is the pay period frequency and standard federal deduction? Does the base compensation increase over the term of the Agreement? Is there an annual review or quarterly review of compensation?
- Productivity Compensation: If there is productivity compensation; how is it calculated (wRVU, net collections, patient encounters, etc.)? Is there an annual review?
- Practice Benefits Summary: Are standard benefits offered: health insurance, vision, dental, life, retirement, etc.? Who is the advisor of human resource benefits?
- Paid Time Off: How much time off does the job offer? What is the split between vacation, sick days, CME attendance and holidays? Is there a HR guide?
- Continuing Education (CME): What is the annual allowance for CME expenses and how much time off is offered?
- Dues and Fees: Which business financial expenses are covered (board licensing, DEA registration, privileging, AMA membership, Board review)?
- Relocation Assistance: Is relocation assistance offered? What are the repayment obligations if the Agreement is terminated prior to the expiration of the initial term?
- Signing Bonus: Is an employee signing bonus offered? When is it paid? Do you have to pay it back if you leave before the initial term is completed? Are student loans paid back? Is there a forgiveness period for student loans?
- Professional Liability Coverage: What type of malpractice coverage is offered: claims made, occurrence, self-insurance? What is the annual premium? Are there any reimbursements?
- Tail Coverage: If tail is necessary, who is responsible to pay for it when the Agreement is terminated?
- Term: What is the length of the initial term? Does the Agreement automatically renew after the initial term?
- For Cause Termination: What are the grounds for immediate termination for cause? Is a review provided to dispute the termination?
- Without Cause Termination: How much notice is required for either party to terminate the Agreement without case?
- Practice Post Termination Payment Obligations: Will you receive production bonuses after the Agreement is terminated?
- Non-Compete: How long does the non-compete last and what is the prohibited geographic scope?
- Financial Retirement: Is a financial retirement with savings plan offered?
- Non-Solicitation: How long does it last and does it cover employees, patients, and business associates?
- Notice: How is notice given? Via hand delivery, email, US mail, etc.? Does it have to be provided to the employer’s attorney?
- Practice Assignment: Can the Agreement be assigned by the employer?
- Alternative Dispute Resolution: If there is a conflict regarding the contract, will mediation or arbitration process be utilized? What is the standard attorney review process for conflict? Who decides which attorney oversees the process?
Contracts are a pervasive and obligatory part of nearly all business and legal transactions. Well-drafted contracts help to enumerate the responsibilities of the involved parties, divide liabilities, protect legal rights, and insure future relationship statuses. These touchstones are even more crucial when applying their roles to the case of a physician employed by a hospital, medical group, or other health care provider. While contract drafting and negotiation can be a long and arduous process, legal representation is a must in order to ensure that your rights are being protected.
The present-day conclusion is simple: A physician should not enter into any contract without having a physician contract review by legal counsel.
There is simply too much at risk for a physician to take contract matters into their own hands. In addition to the specific professional implications, contract terms can significantly impact a physician’s family, lifestyle, and future. There are many important contract terms and clauses which can present complex and diverse issues for any physician, including:
- Non-compete clauses
- Verbal guarantees
- Insurance statements
Additionally, often times the most influential terms and clauses in any employment contract are the ones that are not present. With the advent of productivity based employment agreements it is imperative that any physician have an employment agreement reviewed before it is executed. Chelle Law has practical experience drafting and reviewing physician contracts for nearly every specialty.
New residents, attending physicians, doctors entering into their first employment contract or established physicians looking for new employment can all benefit from a thorough contract review. By employing an experienced attorney for your representation, you can insure that you will be able to fully understand the extensive and complex wording included in your contract. By having a full and complete understanding of the contract, you will be in a better position to make your own decision on whether or not you want to enter into the agreement which will affect your career life for years to come.
The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney far outweigh the costs associated with a review. You are a valuable resource, and you should be treated and respected as such. Chelle Law will personally dedicate his time to make sure that your are fully protected and will assist you in the contract process so that your interests are fairly represented.
If you have questions about claims-made or occurrence coverage and your current malpractice insurance or are interested in having your employment agreement reviewed contact Chelle Law today.