What happens if you are a physician and you’ve been fired? There are obvious ramifications that come with that. The situation is probably not as bad as most people think. Still, the most important thing is maybe the reason behind the firing. Defining firing is undoubtedly important. In any physician contract, there are two main ways the contract can be terminated. Either with-cause or without-cause. In the case of cause termination, it simply means one of the parties breached the contract. Then the other party decided to exercise their rights to terminate the agreement. Usually, immediately if a breach isn’t fixed. If there is a breach of contract, let’s take this from the employer’s perspective since this video is about what happens if a physician is fired.
Let’s say the physician is refusing to take a call, and it was in the contract that they’d take one in five calls or something like that. Well, the employer would send a letter to the physician stating you’re in breach of contract. And then there’ll be a cure period. A cure period usually means somewhere between 15 to 30 days. The physician can fix the breach and cure it. And then, at that point, the employer would no longer be able to fire them for-cause termination. The only difference between for-cause and without-cause is that for-cause they can usually terminate the contract immediately without any notice. Whereas without-cause termination, either party can terminate the agreement at any time, for any reason, with a certain amount of notice, and as I said before, usually 60 to 90 days.
What If a Physician Was Fired for Cause Termination?
Let’s say a physician was fired for-cause. What do they have to think about? Well, depending upon where they are in the contract, maybe within the initial one or two years, there may be repayment obligations. Regarding the signing bonus, relocation assistance, credentialing fees, or licensing. Some of that money may be recouped by the employer. If you are fired for-cause, it probably depends on what it is. Most of the time, none of that is reported to the medical board. The only real employment consideration if you are fired for-cause is that when you try to find a new job, they will certainly want to know what happened at your old job. And if you were fired for-cause, then it’s probably going to talk about what led to that.
And it could cause some difficulty in finding a new position. However, I find physicians are in high demand. Suppose the reason behind a termination didn’t involve peer review, clinical issue, or some major behavioral concern. In that case, it’s usually just a personality clash, and most new employers aren’t honestly that concerned about that. Having to repay a signing bonus, relocation assistance, or whatever that’s one thing to think about when you’ve been terminated.
What If a Physician Was Fired for Without Cause Termination?
Now, suppose you’ve been terminated without-cause. In that case, as I said before, either party can terminate it for any reason at any time with a certain amount of notice. The physician can do this as well. They can give notice to the employer and leave. I don’t think, in that case, you’re not firing the employer. I don’t see it as a physician getting fired if the employer uses without-cause termination.
Several reasons an employer could terminate a physician without-cause are not negative at all. Maybe they’re just simply closing a location. They could be bad at business or marketing, and the volume isn’t there to support another physician.
Maybe they’ve sold the practice to a new organization, and that organization is restructuring. Or also, if a new organization comes in, they almost always require that the physician sign a new agreement. If the physician is unhappy with the terms of the new agreement, the employer usually will terminate the contract.
So, just because the contract is terminated without-cause doesn’t mean the physician did anything wrong. It means that the employer no longer needs the physician for whatever reason. Some negative things may be that the physician didn’t breach the contract. Still, I guess the most likely situation would be if their physician has very low productivity or if they see patients very slowly. They’re not even close to reaching the volume expectations of the employer. That would be one reason the employer would terminate them without-cause, but they’re not in breach of contract; they’re just not meeting the expectations.
Just Fired: Medical Doctors’ Considerations About Patient Care
When you are fired for-cause, the biggest things to think about are the ones that could happen immediately. So, the transition in patient care is something to keep in mind. Continuity of care is important. And if you are in a specialty like psychiatrists or people with mental health issues, make certain there are bridge scripts so that they can find new providers. That is something the physician wants to think about. Now, the patients are always the patients of the employer, even though they are the patients of the physician.
So, if a physician is terminated for cause, they’re not necessarily responsible for the patients anymore. It’s the employer’s responsibility to take care of them, although continuity of care is important. And certainly, if you want to avoid board complaints. Board complaints are often filed because the patient will say, oh, my doctor abandoned me, or they abruptly left. Many times, it’s not the physician’s fault at all.
So, in summary, if you’ve been fired, think about what you may have to repay. And maybe you have to pay tail insurance, think about the restrictive covenants that would apply, the non-compete, the non-solicit, and then think about the continuity of care issues. Look, things happen in employment. Just because you’re terminated doesn’t mean you necessarily do anything wrong. This is just business; things happen.
Other Blogs of Interest
- Hospitalist Contract Negotiation Tips
- What is Without Cause Termination in a Physician Contract?
- How do you Terminate a Physician’s Contract Without Cause?
- What is the Best Without Cause Termination Length in a Physician Contract? Dismissal
- How Can a Physician be Terminated for Cause?
- How to Terminate a Physician Contract with Cause?
What is Without Cause Termination in a Physician Contract?
What is without-cause termination in a physician contract? Essentially it allows either party to terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. This is so important because if a physician enters a job, I mean, everyone expects a job to be great, right? You don’t take a job expecting you to 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 it’s not a good cultural fit, or maybe they’re on productivity compensation, and the volume isn’t there. Perhaps they don’t like working with the management or the other physicians. Whatever their decision, 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 length 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 bad blood as well. And so, a shorter period to work out whatever is advantageous. It’s just better. If you had a 180-day notice, you’d be there for six months dealing with a potentially awkward environment.
Another thing to consider is that 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 the employers understand this, and there’s a rhythm when they offer jobs. And start onboarding and all that type of thing. 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 sooner than six months.
And so, they’re going to find somebody and leave you in the dust.
How Much Lead Time Do You Need to Terminate an Agreement?
Two main reasons: don’t put yourself in a toxic environment for a long time, and then two, help shorten it down so that you can find a new job more efficiently. In the physician’s contract, it’s going to state how much notice you must give. And let’s say it’s 60 days; in this example, it 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 like without-cause termination or for no good reason or something like that. And then it’ll just state that either party can terminate the agreement with a certain amount of notice to the other party, as I said before, in 60 days.
There’s another section in your physician contract called either notice or notices, which will state exactly how you can provide notice to the employer. It’ll state whether it needs to be certified mail or hand-delivered. Most physician contracts don’t have email. Indeed, there’s no verbal acknowledgment, no fax. Suppose you were to tell your boss, hey. In that case, I’m leaving in 90 days. Still, suppose you do not give them a letter stating you’re leaving. In that case, they could force you to work for another 60 days until you give them effective notice. So, those two sections. Look into the without-cause termination section to see how long or how much notice you must provide. Look in the notices section and ensure that you can provide effective notice.
What Happens if a Doctor Does Not Give Effective 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 on purpose just to kind of screw with the physician. But if you don’t give effective notice, it doesn’t count. Ensure you’re following both of those things: giving the proper notice 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. Whatever their average daily rate is for every day that they didn’t give enough notice. Suppose it was 60 days, and they only gave 30 days. In that case, they’d owe 30 days of their average pay to the employer, which 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. I guess, theoretically, they 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. Still, you are opening yourself up to liability if you fail to give them the specified amount of notice in your physician contract.
What Can You Negotiate in a Physician Contract?
What can a physician negotiate in an employment contract? The short answer is everything. It ultimately depends upon the willingness of the employer of whether they’re willing to negotiate terms or not. Extensive hospital networks are less likely to make major changes in an employment agreement. Unlike if a physician is looking into a physician with a smaller physician-owned practice, there’s much more leeway for significant changes. What are the things that are important to the physician, and then what are the things they can get changed? In my mind, when I’m talking to a physician, the things that stick out as the most important would be the signing bonus, relocation assistance, how to terminate the agreement, making certain there’s without-cause termination that’s a reasonable length, compensation, productivity bonuses, non-compete, and then tail insurance as well. Also, who pays for tail insurance if it’s a claims-made policy.
Physician Contract Negotiations
Let’s go through each of those and come up with some tips on negotiating. First, as far as compensation goes, the physician needs to know the value and their specialty’s value. Getting the MGMA data is helpful. It is helpful to talk to colleagues about what they’re being offered or what they’re currently making in different organizations. Sometimes, the associations for each specialty can provide information on your specialty’s average salary. That’s one way to look at it. As far as productivity goes, this is a little more difficult. It’s going to be completely based upon, I guess, the arrangement. Is it kind of a hybrid of a base salary and RVU production? Is it a base salary and net-collections? Could it be all RVU? Is it all net-collections?
This one is dependent upon what’s the type of structure. You’re getting a base plus a certain amount if it’s net-collections or a hybrid model. Let’s say. For instance, the expectation was 20,000. Anything collected is over 20,000 by the practice, and the physician will get 15 to 25% of that. That would be a normal percentage. If the physician is purely on net-collections, around 40 to 45% is standard. As far as RVUs go, there are two things you can negotiate: the threshold, meaning how many RVUs you must generate to get a certain amount, and then the compensation factor, which is the monetary value associated with the RVUs. That has some leeway as well. Regarding signing bonuses and relocation assistance, the main things are the actual number, obviously, but more importantly, what’s the repayment schedule?
Forgiveness Period in Physician Contract
Almost every contract is going to have a forgiveness period. Let’s say the physician gets a $20,000 signing bonus, and the initial term of the agreement is two years. Usually, they’ll have to stay for that initial two-year term to have the entire 20,000 amount forgiven, so they don’t have to pay anything back. The same goes for relocation assistance. Relocation assistance should be somewhere between 10,000 to 15,000. The signing bonus can vary widely from 10 up to 75. That one is specialty-dependent. As far as non-compete goes, this does vary state by state on what’s considered reasonable. There are a few states where it’s completely unenforceable, California and Mexico, for instance. Normally, the non-compete shouldn’t be any longer than a year, and the geographic restrictions should be somewhere between 5 to 15 miles from your primary practice location. Where to negotiate with this?
Terms That Matter for Physician Contracts
You want to keep the length one year or shorter. You want the non-compete to only apply to a few locations. Some employers will say the non-compete attaches to every facility we own in the city. Instead of having one office within 10 miles, you could have 30. So, that’s very important. And then specialty as well. Some specialties can do multiple things. Let’s say you are internal medicine. You can be a hospitalist, and you can go to family practice. You can do urgent care. If the non-compete states that you can’t practice medicine within that geographic restriction, you’re out of luck. Whereas if you keep it to the specialty of what you’re providing to that employer. Specifically, in this case, let’s say you are a hospitalist.
You could go to family practice or urgent care for a year, and then when the non-compete ends, go back to being a hospitalist. That’s something to think about. And then malpractice insurance is always a big discussion with the physicians I’m working with. First, you need to identify whether it is a claims-based or occurrence-based policy. If it’s a big hospital, they might be self-insured. And after you determine what type it is, if it is a claims-made policy, tail insurance will need to be purchased after the contract terminates. And then who pays for that? Most of the time, if you’re in a small private physician-owned practice, the physician must pay for tail insurance when they leave. You rarely have to pay for tail insurance with a big hospital network. Now, tail insurance usually costs about twice what your annual premium is.
Physician Employment Contracts Negotiation Tips
Your family practice’s annual malpractice premium is somewhere between $6,000 to $8,000. If you had to pay for tail insurance, it’s somewhere between 12,000 to 16,000. One thing you can negotiate is who pays for tail insurance coverage. Sometimes an employer will put if you’ve been with us for one year, we’ll pay for a quarter and then two years, half, and then three years, 75%. Some ways of getting out of having to pay the entire amount depending on the situation. Now, the first thing I talked about was whether the employer was willing to negotiate or not. Some employers will say this is a take-it or leave-it deal. I don’t think those employers will be great to work with. If an employer is unwilling to budge on anything, they will likely be difficult to work with.
It means they’re not going to accommodate the physician somehow. So, I caution any physician who has been given a job offer. We ask for some clarification or certain concessions, and they say no. This is it. That’s usually a red flag. And I tell the physician that you may want to continue looking for a job because this might not be a good fit for you. Anything in the contract is negotiable. You need to figure out what’s most important to you. Sometimes, the non-compete is absolutely the number one thing. For others, it’s the compensation. For others, they do not have to pay tail insurance. It depends upon the physician’s wants and needs and then tailoring the negotiations to get them to that point.
How to Negotiate a Fair Salary Contract for Physicians
How to negotiate a physician’s salary? As an initial matter, I don’t personally believe that the salary should be the driving factor in a decision for a physician. Now, if there’s an enormous gap, a hundred thousand dollars, maybe 50, but if it’s $10,000, go with the job that offers the most when the benefits are different. The work environment is different; the ability to learn, have a good mentor, and a good teacher. I think all those things are probably more important than just the absolute base salary amount, but it certainly is important. And so, when someone asks me, all right, well, what do I do?
How do I get a better salary? There are a couple of ways of doing it. One, you need to know your worth. How does a physician find out what’s a reasonable salary? Well, there’s data. The MGMA (Medical Group Management Association) is probably the industry standard regarding compensation numbers. Still, it is not the be-all and end-all of whether something is fair or not. They break it down into regions: West, East, Midwest, and Southwest, and those kinds of quadrants have different salary numbers associated with them. But the base salary could be great or not be great depending upon if there’s productivity compensation in the agreement or if there’s potential for partnership.
Physician Potential Partnership
So, there are many scenarios where a physician is out of training, and they’ve given a two-year, three-year agreement. That’s probably below what’s a reasonable or average amount for someone just coming out of training. With the carrot on the stick of, well, if you take below market for these two or three years, you’ll get away above-market. Once you become a partner, be careful of the situation.
Do you need to find out how many people are partners? How many people have they not offered partnership to? And then what will you make once you’ve become a partner? That’s certainly important. Now, as far as the MGMA numbers go, they are hard to find. I mean, you can Google around and find, I would say, data from maybe a year or two old. I found that people are relying on 2020 numbers. They’re completely screwed up due to COVID. Some of the RVU compensation factor numbers are way out of whack. Some of the comps are just way out of whack. I would not use 2020 data. 2019 is probably the safest and most reliable number we have right now. 2021 hasn’t been released yet while I’m making this video.
So, Google around. You can try and find some numbers, but I’d say the best way to do this is to go out there and find multiple job offers and see what you’re being offered initially. And then also, anyone in training has other people in their specialty that are also looking for jobs. Talk to your colleagues and the people you’re training with. What have you been offered? Where have you been offered this? One difficult thing is that some people automatically think that they’re in a high-cost city and that they’ll make more.
Why Should a Medical Doctor Consider the Cost of Living in a Specific Area?
And that’s not the case. It’s almost the opposite. If you’re looking for a job in a city that’s a desirable location, usually the salaries, or at least sometimes the wages, will be depressed. I live in Scottsdale, Arizona, which is a great place to live. And when I speak to physicians who are moving into the area, they’re surprised sometimes because the salaries may not be adjusted to the area’s cost of living, including California. Suppose you’re in San Diego or LA or even in San Francisco. In that case, the cost of living and housing is very high, but the salaries are not commensurate. You need to be aware that just because you’re in a bigger city with a higher cost of living doesn’t mean you’ll be making more; it’s the opposite.
If you’re in a rural location that’s hard to recruit, you will almost always make more money in those scenarios. So, if money is the bottom line you’re looking for, you need to look in the smaller cities that are difficult to recruit. On average, you will make more money if you go to a small rural community. That’s a fact. Once you have a number in mind, what do you do with the employer? You ask them for more.
If you’re being offered 300 and you want 325, you don’t ask for 325; you ask for more than that. So, if they offer 300 and you want 325, then ask for 350, just kind of easy arithmetic, try to meet in the middle. Now there is a point where you will look either greedy or potentially just dumb if you’re asking. If you’re offered 300 and ask for 450, they will say, “Well, that’s ridiculous.” It may even yank the offer.
Doctors Leveraged Negotiation Contracts
You need to know your value, and then specialty is also a big part of what kind of leverage you have. Any negotiation of contracts is based on leverage. Do you have it, or do you not? You have more leverage if you’re in a specialty that’s hard to recruit for or is in high demand. If you’re in a specialty that is plentiful or saturated in the market that you’re looking in, your leverage is less. So, you need to take that into account as well.
Suppose you’re switching jobs in the community and bringing your patients with you. In that case, you’re worth more than someone coming into the community, like peds or primary care, that must build up a patient base that takes time. Those are tips on getting a better salary and where to start. Contacting an attorney and getting a feel for the area might be helpful.
It’s fairly specialized in people that focus on physician contracts. It’s possible that you won’t find anybody in the area you’re looking at, so maybe do a broader search for that. But anyway, the last point is that some employers will not negotiate. They’ll say it’s a “take it or leave it” offer.
You’ll then have to be willing to walk if you’re unhappy with your salary, but there are simple people out there who say, “No, we’re not negotiating.” This is what we’re offering, and I wouldn’t be offended by that. That’s just kind of the tech that they’re taking as far as employing somebody. So, don’t be surprised if you have an employer that says no, but if you’re unhappy with an offer, you need to be willing to walk as well. Accepting a deal that you think is well below your value is never a good feeling. Don’t just accept that because you need a job. Find the right job.
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Contract Review, Termination Issues and more!