Moonlighting Physician (What Does it MEAN for a Doctor)

Today, I’m going to talk about some examples of moonlighting for a physician. There are two things to consider. When a physician signs an employment contract, a clause is included and listed as exclusivity or outside activities. This prohibits the physicians from doing any moonlighting, locums, or side work involving the practice of medicine without getting the employer’s written approval. We’re going to get into that in a second. 

What is Moonlighting?

Now, moonlighting as a physician means they are working for another employer outside of their main full-time job. Shift work and specialties are probably the ones that do this the most. So, suppose ED and hospitalists work seven-on/seven-off. In that case, it is a regular schedule for emergency medicine physicians or hospitalists. If they have that seven days off, then many times, they’ll want to pick up shifts elsewhere. And in that case, that would be considered moonlight. Now, if a physician is employed, let’s take a hospitalist employed by a hospital. 

Can a Physician Moonlight Work While Employed in a Hospital?

The physician is employed with a hospital and signs an employment agreement. The employment agreement will state that this is your exclusive full-time employment. And this is the only job you can have without getting our written approval to do something else. If the physicians wanted to work outside the organization, maybe doing some locums or picking up shifts at another local hospital. The employer would have to say, yes, we agree you’re allowed to do this.

And it’s okay. In that scenario, if an employer says the physician can moonlight, then usually, there will be a couple of things the physician must do. First, the employer will likely require that the physician provide proof of professional liability insurance and medical malpractice insurance to their employer. Suppose a physician is working outside of their full-time job. In that case, that employer will say, look, yes, you can work elsewhere. Still, it would help if you showed us that you have medical malpractice insurance for that job specifically. 

Malpractice Insurance Coverage and Non-Compete

Medical malpractice insurance is employer-specific for a medical physician. A physician doesn’t just have one medical malpractice policy that covers any practice of medicine anywhere at any time. That’s not how it works. It’s employer specific. So, the medical physician will have a medical malpractice insurance policy for their full-time employer. And then, if they’re going to moonlight, locums, whatever, they would also have another professional liability insurance policy that covered that employer. Many employers don’t want to deal with issues if that physician isn’t insured. Maybe the physician doesn’t even understand that they need insurance for that position. Whoever is hiring them to do moonlighting should also know that they need a different policy. 

But that’s one of the main concerns why employers don’t let people moonlight or do locums without having proof that they’re going to be insured in that position. Another consideration is competition. Many employment agreements will state that the employee cannot compete with the employer during the contract term and after the contract terminates. It can say expressly that no matter what, you cannot work with a competitor organization during the term of this agreement. And that could be different than the actual non-compete, which will take effect after the agreement ends. Let’s take the hospitalist as an example as well. The hospitalist works for one hospital. The employment agreement could state that you can’t work as a hospitalist within the county that the hospital is in, within 15 miles, or something like that.

Why Do Employers Not Like Moonlighting?

If you think about it, there’s no competition among shift work physicians and people that work in the ED or as hospitalists. It’s not like you’ll steal a patient base from a hospital or anything like that. The biggest concern would be, let’s say, someone was a primary care medical physician employed by a hospital. Their clinic is off campus somewhere. They wouldn’t want to have physicians work at another primary care practice in the area. Maybe on the weekends or something like that, build up at least some patient base. 

And then potentially terminate the contract with the employer, move over to whatever job they were moonlighting with, and maybe take the patients with them. Now, there will be other clauses in the contract that prohibit that. There will be a non-solicitation agreement. As I said before, there’ll be a non-compete. Still, in the non-shift work positions, the employer fears that they will establish a presence somewhere else if they moonlight, ultimately taking those patients with them when they leave the original employer.

When Is Moonlighting Generally Acceptable by Hospitals?

Moonlighting can also take the form of, once again, let’s say there’s a hospitalist that works at one hospital. However, they’re in a more extensive network. And then there are other hospitals within the network that they could also pick up shifts at. In that scenario, usually, you would not need written approval to do that. Most contracts will state that providers can pick up shifts within the network without needing approval. Because usually, the medical malpractice policy would cover all the networks, not just one hospital. 

And so, in that scenario, it would be acceptable that the only reason why, once again, let’s say it’s hospitalists, they would want to pick up shifts elsewhere, outside the network. Let’s say they have an opportunity to pick up additional shifts either at their hospital or maybe in other hospitals in the system. Why would they go outside? Well, it’s money. You’ll generally get paid more if you work in a locum tenant’s position. And maybe you’ll make 1500 a shift within the network, but then if you work a locums job, you’ll earn 2200 shifts, something like that. So, physicians would want to work outside the organization simply because they can make more. Anyway, that are some examples of moonlighting physicians.

Other Blogs of Interest

• Can a Resident Physician be Fired?
• Will I be Paid My Bonus if I Terminate the Physician Contract Early?
• Surgeon Contract Negotiation Tips

Are No Moonlighting Clauses Enforceable for a Physician?

When a physician is an employee or even an independent contractor associated with an employer, there will generally be language that prohibits or requires approval from the employer if the physician wants to do what we would call outside activities. Exclusivity is one way of referring to it. Outside activities are another way of referring to it: Physicians Moonlighting, locums, that type of thing. I’d say most contracts group into outdoor activities. 

And in that case, it means that the agreement would state that if the physician wants to work for any other employer when they’re providing the practice of medicine. They must get written approval from the employer for a couple of reasons. From the employer’s side, they don’t want their employee, the physician, to engage in medicine, which may interfere with their duties to the employer. This is also specialty-dependent. Let’s say a physician is a hospitalist or works in the ED or seven-on/seven-off. The employer generally doesn’t care what they do on their week off. So, if the physician wants to pick up extra shifts, there’s usually no problem. 

However, they must let the employer know that they will do that. And then the employer would have to approve in writing that they’re allowed to do those things. Most contracts will also state if the physician is going to work outside for someone else. They also must get their medical malpractice policy that covers their work with that employer. And then most places also want the physician to provide the employer with a copy of that medical malpractice policy to ensure that the physician is taking proper safeguards.

Who Covers Resident Physician’s Moonlighting Malpractice Insurance?

Now, if you are a physician and you are going to moonlight or do locums or whatever on the side, that employer would provide, or at least should, medical malpractice insurance for you. They would be the ones to cover the cost of that policy as well. You can get a copy of that policy and then provide that to the new employer. Most employers simply don’t have a problem if the physician is going to work outside, as I said before if it doesn’t interfere with their duties to that employer. 

Now, let’s say your primary care. Then you want to work on the weekends at another primary care office, potentially building up a patient base. Then your current employer may say, we don’t want you doing that because maybe if you leave, there would be anti-competitive behavior. And perhaps you could siphon patients away from our practice. So, no, we’re not giving you approval. You can’t do outside activities. 

But if maybe you’re a surgeon, let’s say you’re a pediatric plastic surgeon working for a children’s hospital. Still, you also want to do some general plastic surgery on the side, maybe at a surgery center for a different employer. Usually, in that scenario, the employer wouldn’t care that you’re doing things on the side if it doesn’t interfere with your general duties for your current employer.

Are Physician Moonlighting Clauses Enforceable?

Now, are these clauses enforceable? Yes, they are. Some states will prohibit wholly unenforceable non-compete clauses. I’m not going to go through every state. Still, California, New Mexico, and Massachusetts, these states prohibit the employer from putting a non-compete into the contract. However, that does not generally apply when people are employed in other jobs. It only stops having the non-compete, which always takes effect after the contract is terminated. 

But there will also generally be language that says, wow, the person is employed and working for us. They cannot compete with our employers. Or the easiest way to do it is to say. You must get written approval if you’re going to do any practice medicine anywhere while you’re employed with us. In that way, there’s no ambiguity about it. The employer then has complete control over the situation. 

Why Do Physicians Need to Disclose Outside Employment?

So, if you’re a physician and have every plan to do locums, moonlighting, whatever you want to do. At the same time, you are employed, and there’s a clause that says, either this is your only exclusive job, if you want to do anything else, you must get our approval. They absolutely can be enforced. They just can. So, in advance of signing the employment agreement, you need to know if you have a current job that you would like to continue, or maybe you have a job in mind that you’d like to pick while employed. I find going through that before signing the employment agreement is the best way. Many of the contracts will have an exhibit at the end, which lists all the outside activities pre-approved by the employer. I certainly would state that the physician should do that. They need to disclose. 

What happens if you don’t disclose outside employment? Well, you’re in breach of contract. Suppose you sign an agreement with the outside activities clause and start doing outside activities without getting approval. You are in breach of the contract, and they could potentially terminate the contract because of that. They can generally terminate it immediately in that type of situation, or maybe they would state, this is what your contract says. You can’t be doing these activities. We’re not going to terminate you; however, we will say that you need to stop those activities right now. So, that is moonlighting or at least a clause that states the physicians can’t moonlight. Enforceable? Yes, but generally, some ways of working with the employer would allow the physicians to do that.

When Is Moonlighting Prohibited?

Can a physician work locum with a full-time job? The answer to that is yes, but it will depend upon the contract wording. Most employment contracts will contain language about either exclusivity or, many times. It’s also called outside activities. And in those sections, it will state that the physician can only work for. And provide physician services to that employer unless the employer gives them specific written approval to pursue another job opportunity on their off time. This is specialty-dependent, but it is possible, but you can’t just do it on your own normally. 

Now, people who do shift work like ED, hospitalists, maybe some who are doing critical care and are only working a certain number of shifts per month. And then they have 12 to 16 shifts as a normal range for most people doing those shifts. So, they have plenty of time to do locum work. They could go to another hospital and staff that ED or do hospital work in the other hospital as well. Most employers don’t want them doing locum work for direct competitors. In any normal situation, the physician would then say to the employer.

 I have an opportunity to take a locum contract with this specific employer in this particular place. I want your written approval. And then, usually, the employer will not withhold that approval if it’s a reasonable request. As I said before, if it’s: hey, I want to work across the street with your direct competitor three times a month, it’s probably unlikely that the employer will be okay with that.

Can Physicians Moonlight With a Full-Time Job?

There are also some considerations in what’s the non-compete. Many contracts prohibit not only competition after the contract ends but also during the contract. 

So, can physicians work locums with a full-time job? Absolutely, but it’s specialty-dependent, and they need to get written approval. I have had people say, well, do I have to do this? And then what are the repercussions if I do this without seeking permission first? Well, if it’s in the contract and it states you need to do this, meaning, get approval to work in any outside employment, and you don’t do that, then it’s a breach of contract. The employer can say, look, you signed an agreement that said you had to do this, and you didn’t do it. You’re a breach of contract, and we will terminate you for the cause. That’s one repercussion. Why do employers do this? Well, beyond the competition portion of it, they will also generally require that the physicians provide proof of medical malpractice insurance. 

A medical malpractice policy only covers the physician’s services for a specific employer. Just because the physicians have a malpractice policy with their employer doesn’t mean it covers them for doing services for another employer. Usually, their current employer would state yes. You can do this job. But you must provide us with proof that you have a malpractice policy that covers your services provided for them for a period. So, yes, you can work as a locum, but you need approval for the most part.

Can Surgeons Moonlight? | Outside Activities and Exclusivity

Can surgeons moonlight? Simple question. And the answer is it depends. In the employment agreement, there will almost always be a section called outside activities. Sometimes, it’s called exclusivity. There will be something in there that states under what scenarios the surgeon can work for a different employer, even if it’s just part-time. Usually, it would state the surgeon must get written approval from the employer to practice medicine for any other organization while employed with the employer. 

Discuss the Scenario with the Employer Before Signing the Contract

Before signing the employment agreement, I find it helpful to talk about the scenarios where the surgeon would want to do other things. For instance, maybe it’s like a plastic pediatric hand specialist. Still, they also want to do general plastics on the side or something like that. You would like to run that by the organization in advance and say, these things I’d like to do while employed. These activities will have no interference with my duties to the employer. I’ll do them on the weekends. I’ll do it all my days out. 

But I would like the opportunity to keep my skills up in that area, and I won’t be able to do that like, say, the person is employed with a pediatric hospital network. I won’t have the opportunity to do that with adults, and I’d like to keep up my skills. Most of the time, the employer certainly would be okay with it. They would not be okay if the surgeon were interested in working for a competitor, even on a part-time, short-term basis.

Indeed, if a hospital network employs a surgeon and asks their employer if they can work for another hospital network part-time, the employer would usually be cool with that. Even maybe providing a call or something like that. They would be concerned that the surgeon would start to build relationships and maybe eventually want to give notice, leave and move over. That’s something that it generally would not allow. 

What Should Be Included in a Medical Contract?

The contract will dictate under what scenario the surgeon can moonlight or work elsewhere. Many of the contracts will also have a disclosure form that states what the things you’re currently doing are. Those are disclosed and then either approved or disapproved by the employer. For some people, it’s a big deal.

Because of the scenario I just listed, they want to keep up their skills. They don’t have the opportunity to do it with that employer. So, being able to do outside activities in moonlight is very important, which is understandable. If you bring some of these issues to the employer and they’re just, it’s a flat no, well, that might not be an employer you want to lend support. Suppose they’re so rigid that they’re unwilling to give the surgeon any opportunities elsewhere. In that case, I don’t think that’s reasonable. It also probably means that the employment relationship moving forward or on a day-to-day basis could be strained because they’re unwilling to bend the rules. I mean, it’s not even betting the regulations, just making accommodations for the surgeon.

In Summary

So, can surgeons moonlight? Indeed, they can. But the contract language is going to dictate whether they can or not. That kind of language may be completely absent from the agreement. In that scenario, unless there’s something in there that states you can only work for us. Or you can only work outside, under those scenarios, if it’s completely absent. Then, typically, it would be fine for the surgeon to do what they want, considering that it absolutely can’t interfere with their full-time job. I mean, you couldn’t certainly say to your employer, oh, I have another case somewhere else, so I can’t do that. That would be a breach of contract in some way.

Can You Moonlight in Residency?

Can residents moonlight during residency? The short answer is that it depends upon the program and the residency contract you signed. The assurance that most residents sign before starting into the residency program is not like an employment agreement that you will sign once you’re finished training and then get your first job offer. It’s usually much shorter and doesn’t cover the usual terms that an employment agreement will cover. However, there might be some language in that residency contract that states you cannot do outside activities without employer approval or program approval. 

What Are the Requirements Needed for Moonlighting?

If you have language in your contract that states you must get approval to do any outside employment, then that’s what you need to do. It would help if you had to get written authorization that says, yes, the program is okay with you doing this. And then you also consider several different things. 

One, your professional liability insurance is not specific to you. It’s particular to the employer. So, suppose you’re working in a residency program. In that case, any activities you do in that program are covered by that insurance policy. However, if you were to moonlight or work anywhere else, you would need a separate professional liability insurance policy that covers your activities for that new employer. 

One policy doesn’t cover you in whatever you do. It would be best if you had a specific procedure for each employer. Now, if you are moonlighting, whoever you’re moonlighting for will cover your professional liability insurance. And then you also need to consider whether, once you leave the moonlighting position, they will pay for your tail insurance if there’s a claims-made policy. I have several blogs about claims-made coverage and tail insurance.

Avenues for Moonlighting Based on Physician’s Position

I’m not going to get into it in this blog, but I would also take that into account. The specialty is also essential. You’ll usually have a lot if you’re in a shift work type position like ED, hospitalist, or any IM position. You could do urgent care. There are a lot of different avenues for you to moonlight. Same with surgeons as well. But most programs are okay if the resident does moonlight. If one, they ask for permission. Two, they ensure professional liability insurance at that new position. Then three, they don’t want any moonlighting to interfere with the resident’s schedule or duties with the program.

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 as to whether they’re willing to negotiate terms or not. Extensive hospital networks are less likely to change an employment contract agreement significantly. 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 that 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 contract agreement, 
• Making certain there’s without-cause termination that’s a reasonable length, 
• Compensation, 
• Productivity bonuses, 
• Non-compete, 
• Tail insurance and,
• Who pays for tail insurance if it’s a claims-made policy?

Physicians Contract Negotiations

Let’s go through each of those and come up with some tips on negotiating. First, as far as compensation goes, the physicians need to know their and their specialty’s value. Getting the MGMA data is helpful. It is beneficial 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 income. 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 between a base income and RVU production? A base salary and net-collections? Is it all RVU? Is it all net-collections?

This one is dependent upon 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 medical practice, and the physicians will get 15 to 25% of that. That would be a standard percentage. If the physicians are purely on net-collections, around 40 to 45% is average. 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 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’s 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 contract agreement is two years. Usually, they’ll have to stay for that initial two-year term to have the entire $20,000 forgiven, so they don’t have to pay anything back. The same goes for relocation assistance. Between $10,000 and $15,000 should be the cost of relocation assistance. The signing bonus can vary widely from 10 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 wholly unenforceable; California and Mexico, for instance. Usually, the non-compete shouldn’t be any longer than a year. The geographic restrictions should be 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 at one year or shorter. You want the non-compete to only apply to a few locations. Some employers will say the non-compete applies 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 in internal medicine. You can be a hospitalist, and you can go into 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 consider. And then medical malpractice insurance is always a considerable discussion with the physicians’ coworkers. First, you must 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 physicians must pay for tail insurance when they leave. You rarely have to pay for tail insurance with an extensive hospital network. Now, tail insurance usually costs about twice what your annual premium is.

Physician Employment Contracts & Negotiation Tips

Your family practice’s annual medical 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 say if you’ve been with us for one year, we’ll pay for a quarter, then two years, half, and then three years, 75%. Some ways of getting out of having to pay the entire amount depend 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 for getting together. If an employer is unwilling to budge on anything, it will likely be challenging to team up.

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, a 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.