Veterinarian Contract Red Flags

What are some veterinarian employment contract red flags?  Let’s say you are just coming out of training or maybe you’re even switching jobs and you have a new employment agreement. What are some things you need to think about as far as what could make an agreement maybe not such a great opportunity? First, compensation clearly is usually the number one thing in most people’s minds. With veterinarians, a lot of them will use the Pro Sal method which involves a percentage of the net collections that the practice receives based upon your personally produced services or there’s usually some kind of hybrid where you’ll get a base plus a percentage of what the net collections are.

But negative balances in that situation can be moved forward. Let’s kind of dive into that quickly. First, if you’re a veterinarian associate and you’re moving into practice, you need to think if it’s not just a straight based salary, which many times it is. And so, in that scenario, you get paid a base amount, a hundred thousand a year, you work your normal hours and that’s that. If it’s collections-based method, your volume and how many clients you see, and how much you do per day are going to directly affect how much money you make annually. And especially lately with kind of vet staffing at difficult levels for nearly anyone in the industry. Vet techs and front office staff are difficult to find at this point.

I know plenty of vets are struggling with volumes simply because they’re having to do things that a vet tech would do in addition to seeing all the normal patients that they would. So, looking at whether the practices staff appropriately and as efficiently which will allow you to be as efficient as possible and then be as productive as possible, monetarily is important. You need to ask those hard questions. Have you had any problems with staffing lately? If you have, what are you doing to correct those problems? What’s the average volume for the current veterinarians in the practice? Those questions are important and even ask hard numbers. What is the average net collection for a veterinarian in my specialty in this practice? That way you can kind of gauge what your ultimate compensation is going to be.

If you’re looking at an employer and they’re unwilling to even give you moderate data as far as that’s concerned, it’s a huge red flag. Because normally it means, one, either they’re so disorganized, they don’t know what the numbers are, or two they’re so bad, they don’t want the vet to know about them. So, the first red flag is making sure they’re staffed appropriately, which will make you more efficient, and will ultimately lead to more money for you. The second huge red flag is if there’s no without cause termination in the agreement. In almost any provider agreement across any industry, physicians, dentists, veterinarians, or whoever, there needs to be without cause termination. And what that means is that either party can terminate the agreement at any time with a certain amount of notice to the other party. If there is no without cause termination, let’s say a vet has a three-year contract and then there’s no way to terminate the contract early.

Well, I find that the contracts that have no ability to terminate the agreement without cause usually mean that that employer has had a very difficult time staffing and they’re wanting to lock in vets under any circumstances. And if they have high turnover, they have trouble holding onto vets, it usually means they’re kind of, I would say, bad business people, or maybe they treat the vets inappropriately or not with the professionalism that they deserve. So, you absolutely need without cause termination in the contract. Normally, it would be somewhere between 30 to 90 days. If it’s 180 days a whole year’s notice you can’t accept that. It needs to be shorter just for that situation. And especially if you’re being paid purely on production and you have no way of getting out of the agreement and your compensation is just completely nose-dived, you are stuck.

Unless you find some way that they’ve breached the contract, you need the ability to get out. And then the last major red flag would be the restrictive covenants. The non-solicit and then the non-compete more importantly. The non-competition clause is enforceable in most states, there are few where it’s not, but for the most part, non-competes are enforceable. And that basically says the vet can’t act in their specialty for a period within a certain geographic radius. Normally, a non-compete would be one to two years, somewhere around there, obviously one would be more favorable. And then as far as the geographic restriction kind of varies wildly amongst location and a rural environment.

It might knock the vet completely out of the town, whereas if you’re in a big metropolitan area, it could be five miles all the way up to 20. You want to make sure those are as tight as possible, meaning, you want it only from one location or your primary location for the smallest radius possible. That way, you don’t have to necessarily move. Now, if you get a non-compete, it’s five years long and knocks you out of the five contiguous counties that you’re in, that is not a reasonable non-compete and you absolutely should not sign that. Now, for some people, they may move for a job and then have absolutely no intention of staying there if the contract ends. So, for them, the non-compete doesn’t matter at all. But if you have ties to an area, you have family in the area, your kids are going to school, there’s like 0% chance you can move if the contract ends.

You absolutely need to make sure that you have a reasonable non-compete, so it doesn’t completely affect your lifestyle for a year or two or however long it is. So, those are three major red flags. Doesn’t have cause termination, are they staffed appropriately so that your compensation isn’t affected? And is the non-compete fair? There are several other red flags too, but I’m just going to focus on those three in this blog.