What Should be in a Physician Contract Termination Letter? | Contracts

What should be in the termination letter? When a physician decides to leave a position, I find that many physicians feel like the termination letter would be a good place to air their grievances. These are why I’m leaving all the things that have happened to me that I don’t appreciate. These are the things that led to me deciding to terminate the agreement. The termination letter is not the place to do that. Suppose a physician believes that the employer is not following through on the terms of a contract. In that case, they should inform them in writing that the employer is in breach. Generally, most contracts will have a cure period, giving the party time to fix whatever the problems are.

Medical Contract Termination

So that would be the appropriate place to air the grievances. In the termination letter, there should only be two things. If the person terminates the agreement, it will likely be without-cause. That means nothing has happened that can give either party the ability to terminate the agreement immediately. Nearly every physician contract has without-cause termination. And that means either party can terminate the agreement with a certain amount of notice to the other party. 60, 90 days is the industry standard. Sometimes it can be as low as 30 and as high as 180, but 60 or 90 is the average amount. The physician in the termination letter should cite the contract’s specific section. 

I am giving you 90 days’ notice. My last date of employment should be on this date. And then, the physician must ensure that the termination letter follows what would be called a notices section. So, in any physician contract, there should be a section called either notice or notice. That states how the physician can give adequate notice, meaning who and how you properly send some notice. And in that section, it will say these are the ways that you can give proper notice. It could be certified mail, hand delivery, email, or fax; most places do not allow emails or faxes. It’s either some registered certified letter through the post office. Almost all of them accept hand delivery in some way. Then, they will list where and to whom to send the termination letter.

Physician Employment Contract Letter to Terminate

If it’s a small physician-owned practice, then it will likely be the owner of the practice. And then, the address would be the address of the practice. Suppose it’s a large corporation, hospital, health network, or something. In that case, you’ll have to send a copy to the CEO or COO and to whoever their general counsel is. I’ve had a couple of situations where I’ve had someone contact me after the fact that they failed to give proper notice. They either told their boss or sent an email and the employer sat on it for 30 days. They didn’t say anything to the physician. And then, they returned to them 30 days later and said, Dr. Smith, you did not give us proper notice. Therefore you owe us another 60, 90 days after you give us adequate notice.

Physician Contract Review for Agreements

They did that because they were mad at the physician. They knew it would likely screw his next job opportunity and the start date. So, the physician must ensure that they’re following: one, what’s in the without-cause termination section, and two, what’s in the notices section of the contract. To summarize, the termination letter is not a place to list all of the physician’s problems. You thank them for your time. You tell them the termination section you rely on to terminate the contract. Then you’ll send it to the place listed in the notices section. And that’s it. There’s absolutely no value in putting anything more than that.

Other Blogs of Interest

• How Do I Write a Notice of Termination of a Contract? | Example
• Can You Write an Email to Terminate a Contract? | Contract Termination Letter
• What is Without Cause Termination in a Physician Contract? | Physician Termination Agreement

What Should Be in a Termination Agreement Letter?

What needs to go in a termination letter from an employee? If employees decide they no longer want to work for the employer, what to put in that letter? First, we have a few things to discuss regarding terms and termination. The term is the length of the contract, and it should be specified. It could be one year, two years, or three years. Then there’s usually a language that would say it would automatically renew for one year after that. More and more, there are evergreen contracts, which means there’s no initial term specified. It just says the contract goes on forever until terminated by either party.

What Form Should a Contract Termination Letter Take?

After that, you need to identify how to terminate the contract. There are a couple of ways to terminate an employment contract. If it’s a fixed term, two years, no possibility of renewal, it ends, and that’s it. You don’t even need to send a letter. Then, mutual agreement. It isn’t working out if both parties approach the other. We don’t need to give notice. Let’s move forward. You don’t need a termination letter there. For-cause means someone is in breach of contract. The contract will usually require written notice saying, hey, you’re breaching the contract. And then there’ll be what’s called a cure period. It means there’s a period for the employer to fix the breach or the employee. And if able to fix the breach within that period, it’s usually somewhere between 15 to 30 days. The contract reverts, and the party couldn’t terminate for-cause.

Contract Termination Letter When a Breach Has Occurred

If there was a breach of contract, let’s do this from the employee’s perspective. They would first send a written letter stating you are in breach of contract. And then, if there’s a cure requirement, you have 15 days to fix this breach. If it fails to fix the breach, the employee’s option is to terminate immediately. In that scenario, the employee would send another letter stating he failed to fix the breach. I’m terminating the contract immediately. Thank you. And that’s it. Once again, in the initial letter, you need to state the reasons for the breach of contract. And then, in the second letter, if they failed to fix the breach. Just state, hey, you didn’t fix this. I’m moving forward. 

You don’t need to put a list of grievances or all of the problems with the employer. Just say you breached; you didn’t fix it. And give the details about the breach and then move on. Now, that’s rare. The most common way to terminate a contract is without-cause. Almost any employment contract has a statement saying. Suppose either party wants to terminate the agreement at any time. In that case, they can do so with a certain amount of notice to the other party. 30 to 90 days, anywhere between, is standard for without-cause termination notice. 

In that scenario, that’s where the termination letter would come into play. Let’s say the professional has a 60-day notice. They write the letter, they say per the agreement. I’m giving you 60 days’ notice. My last day of work will be X date. Thank you for the opportunity. I’m moving on. Once again, this letter is not the time for an airing of grievances or all the problems.

Keep Your Contract Termination Letter Short and Simple

Putting all of that down on paper is no benefit to the employee. It needs to be short and sweet. I’m exercising my right to terminate the agreement without-cause. I’m providing you with this amount of notice as required. My last date of work is this. Thank you for the opportunity. Good luck. That’s it. There are zero benefits to burning bridges to pointing out all the flaws in the employer. I know many employees feel like I just wanted to say my piece. It’s not a good idea for a couple of reasons. At that time, that job may stink because of management, mismanagement, the people you’re working with, the opportunity, whatever.

And if you sense some nuclear bomb letter and destroy the relationship, what if something happens down the road? What if the manager changes? What if they move into a new territory or someone buys them out? If you’ve nuked those relationships, that opportunity may be much better. Now, it’s a bad look, and you may have lost out on being able to go back. That’s one reason not to do it. And the second one is that there’s simply no benefit. If you’re moving on, move on. It feels good for the employee to get all that stuff out. But when it’s written, it’s forever. And so, they’re going to have that letter. They’ll probably show it to other employees or management if it’s terrible. And it just makes the employee look bad. 

So, keep it short and sweet. Say, this is the contract section, I’m exercising this without-cause termination, last day of work is this. Thank you. Move on. That’s it.

What Are Four Reasons that a Medical Employment Contract Can Be Terminated?

What are four reasons for a medical employment contract termination? Let’s discuss the differences between why a contract gets terminated and how contract termination works. The “why” doesn’t matter. The language in the agreement that tells the provider how to terminate the contract matters. There are four common ways of contract termination. 

Fixed Term Contract

First, in a contract, it’s going to list the terms of the agreement. The term simply means how long does the agreement last. Now, some contracts have a language that automatically renews after the initial term, usually for one year. Let’s say it’s an initial two-year term. It’ll continue for additional one-year terms unless terminated in one of the three ways. After this, we’ll talk about that next. Some contracts have no fixed term at all. It states that as soon as the contract is signed, it continues forever unless terminated. The first way to terminate the medical contract is for the initial term to end. There’s no renewal language, neither party wants to renew the contract, and that’s it. 

Mutual Agreement Termination

Next would be by mutual agreement. A medical contract termination can be by mutual agreement of both parties. Let’s say the provider starts, just not the right fit. The employer says you know what? It isn’t the right fit. We’re not going to require you to give us notice. We’re not going to require you to work anymore. Let’s wash our hands of the situation. And you both can leave. A mutual agreement is the second way you can terminate a medical contract. 

With Cause Termination in Medical Contracts

The third way is for-cause or with-cause termination. It means if a provider or the employer is in breach of contract. Then, there’ll be language that states one party has to give the other written notice. It’s telling that they’re in breach of contract and why. And then, typically, there would be a cure period. 

Cure Period

A cure period means how much time a party must fix or cure the breach. Let’s say a provider had productivity bonuses in their contract to get paid monthly. The employer is not paying it either on time or at all. In that situation, the provider would then send a written notice to the employer stating you’re in breach of contract.

You’re supposed to pay me a monthly bonus, and you’re not. Suppose you don’t fix this within whatever the allotment is, let’s say 15 days. In that case, the provider can terminate the contract immediately for-cause. The third way of terminating the medical agreement is for-cause or with-cause termination. With-Cause termination doesn’t happen very often. 

Usually, the parties would work out the differences in advance of that. But it does provide some leverage, I guess, to both sides if one of the parties isn’t holding up their end of the bargain. From the employer’s side, let’s say the contract states that the provider must take one in four calls and then refuses to take calls. Well, then they’re in breach of contract. The employer will then basically state that you’re not taking calls. You’re in breach. It would help if you started taking calls, or we will terminate the agreement immediately. So, it goes both ways. 

Without Cause Termination – A Physician Would Want This in a Contract

And then the last and the most common way to terminate a medical contract is through what’s called without-cause termination. Nearly any employment agreement is an At-will contract. And that means either party can terminate the agreement at any time. Still, it’s a certain amount of notice for a medical provider. Typically, 60 to 90 days is the industry standard for terminating an employment agreement without-cause in the healthcare industry. Now, why do you have to give this much notice? Let’s say you’re a provider, unhappy, want to leave, and have a better opportunity. The contract states that you have 60 days without-cause notice. You’d send them in writing saying I’m terminating the agreement using the without-cause termination section. Then you’d work out your 60 days, and then you’re free to move on.

Reasons Why Without-Cause Termination Is Important

It is essential and needs to be in the contract. Suppose a provider starts with somebody, and the practice improves it. The volume is much better, and your productivity incentives will be great. The hours will be reasonable, and it’s not. The contract has no language where the provider can terminate it without-cause. They could get stuck in that contract until the initial term ends. 

So, you always want to have without-cause termination. And as I said before, typically 60 to 90 days. If you have 180 days, you want to negotiate that down to a reasonable amount. Now, the reason why there are between 60 to 90 days in most contracts is for continuity of care purposes. Maybe if you’re in sales, you don’t need 90 days lead time to leave.

But suppose you’re a medical provider and have a patient base. In that case, there needs to be some time to transition them to a new provider, refer them to different providers, or provide bridge prescriptions. So, they don’t just go cold turkey until they find a new provider. That’s why there are 60 to 90 days. To allow enough lead time to make a smooth transition and provide continuity of care for the patients. So, those are the four reasons you can terminate a contract. Either the term ends, mutual agreement, for-cause termination, or without-cause termination.

Can You Break a Physician Contract? | Physician Contracts

So, can you break a physician’s contract? I daily deal with physicians with new employment agreements that need review. Or are on a current agreement that they need to analyze, usually due to wanting to terminate the agreement. Like the base level, one reasonably frequent question is whether you can break a physician’s contract. I think defining break is probably the essential part of that. So, can you break a physician’s contract? If breaking means breaching the contract, not following through on the terms of the contract? Sure, you can.

How to Terminate Physician Employment Agreement

But then you would open yourself up to liability. You could get sued, and litigation could begin. If there’s an arbitration clause, then it could go to arbitration. The employer could come after you for damages, recruitment fees for a new physician, and lost revenue from you, leaving extra admin fees if there’s no physician to support. Can you breach a contract? You can, but it’s certainly not a good idea. For this video, If we’re going to say, can I break a physician contract? I think the best way of handling that would be, can I terminate the contract? And indeed, yeah, you can. At least every physician employment contract will have a termination section. And in that section, it will dictate the terms of how the physician can terminate the agreement.

There are usually three ways: First, by mutual agreement. If you and the employer agree, the agreement may terminate. And maybe you can work out how long the physician will stay. That does not happen very often, to be honest. The second way to terminate a contract is with-cause. It goes both ways. For the most part, most of these employment contracts are highly slanted towards the employer, as far as what they can fire the physician for. And honestly, most contracts are completely silent on what the physician can do if the employer breaches the contract. Some normally think that the employer can terminate a physician immediately for-cause at their option. So, the physician loses the license, DEA registration, they’re running shareable, they’re on the OIG list, those types of like obvious, right?

Chelle Law

Chelle Law will provide a physician contract review to identify the areas that can improve. Also, assist you in negotiating the best contract possible.  

Breach of Physician Contracts

Like you can’t practice as a doctor, so you can’t fulfill the terms of the contract. The employer can fire the physician immediately for that. The most important section is, can a physician break a contract? If we’re assuming break means terminate, there should be a without-cause termination section. That section typically states that the other party can terminate the agreement with a certain amount of notice. I’d say the industry-standard amounts are between 60 to 90 days. So you would give the employer notice as it’s written. And there’s also a notice section that says how you can provide adequate notice. So you’d write them a letter and then go through the notice section properly, usually certified mail, hand delivery, and not very often, email.

If you verbally tell your boss, Hey, I’m leaving. That won’t be effective notice. So, if it’s 60 or 90 days, you give them 60 days’ notice. Now, there are some considerations. However, if you break the agreement, terminate the agreement. In this case, if you’re a new physician and received a signing bonus or relocation, there’d usually be some forgiveness in the first couple of years. If you leave before the initial term, you must pay back some of the signing bonus and relocation assistance. The second consideration is, will you have to pay for tail insurance? Most contracts, at least for the smaller physician-to-own groups, will have some clause. That states that if the physician terminates the agreement without-cause, they’ll be responsible for paying for tail insurance.

Legal Mistakes Physicians Make

If you don’t know what tail insurance is, I have some other videos that you can look at. The last consideration is the restrictive covenants that will apply if you terminate the contract without-cause. Those restrictive covenants are going to apply. Restrictive covenants would be the non-compete notes. It is non-disparagement, like everything you can’t do after the contract ends. Just because you terminate an agreement doesn’t mean you don’t have either responsibilities or obligations once the agreement ends.

In summary, yes, a physician can break a contract. Still, I would suggest doing it properly, how it’s written in the termination section. And then once you decide to terminate, you got to think about all the kinds of things that you’ll be responsible for. One more thing that just came to mind, the contract will also state the payment responsibilities after the contract ends.

I just had something like this come up yesterday. They were on a net-collections compensation structure. Meaning paid what was collected, but the contract stated that they would only get paid through the end of the termination date. With a standard 90-day accounts receivable cycle and getting reimbursed for claims, the physician missed out on essentially 90 days of collection. If you think of it this way, they almost worked for free for the last two or three months, which nobody wants to do. Physicians need to be cautious if they’re on a net-collections model. It states there’ll be some collection period after the contract terminates, so they don’t lose out on all that money. I mean, it’s sled towards the employer.

Physician Contract Review

It’s not fair, but many physicians don’t think about that when the contract gets terminated. Hopefully, this is helpful. If you’re a physician and have a question about your current contract or a new employment agreement, I’m happy to look at it. Take care.

How Can a Physician Be Terminated for Cause? | Physician Contract Termination

What are the ways for a termination with-cause for a physician? In any contract, there are several mechanisms to terminate a physician. One is without-cause, meaning either party can terminate the agreement with a certain amount of notice to the other party. Usually, that’s 60 or 90 days. That’s where most terminations will occur, and it’s almost always on the physician’s side. The physician, for whatever reason, is unhappy, has a better opportunity, or must move for the family. 

They give without-cause termination, work out the 60 days, and then move on. Also, in every physician contract, there’s going to be what’s called “with-cause termination.” There are two different parts. You’ll have a termination with-cause that can be an immediate termination, meaning the employer doesn’t have to provide any notice to the physician. It can be with-cause termination with the need to cure. 

Cure Period for Physician Employment Agreement

And so, in a contractual context, a cure period is simply a period where someone is alleging the other party in breach of contract. They usually get somewhere between 15 to 30 days to fix the breach. And then, if the breach gets cured, they move on. They can no longer terminate the contract for-cause. The usual things in people’s minds regarding with-cause termination are the following: I’ll go through what is on the list in nearly every physician contract.

The contract will say the employer can terminate this contract with-cause with no notice required, and it’s usually at their discretion. So, they don’t have to fire the physician immediately, but they can. 

Obvious Reasons for With Cause Termination for Physicians

If the physician loses their medical license, they can no longer practice as a physician, an apparent termination. They lose their DEA registration, so they can no longer prescribe drugs. That’s a problem for most physicians. And so, that would be immediate termination. They die, they are permanently disabled, and they are uninsurable. Suppose a physician continuously gets judgments due to medical malpractice at some point. In that case, the insurance companies will say, we’re not going to insure you anymore. And no employer will keep a physician that doesn’t have malpractice insurance. 

So, it’s another thing they can terminate immediately. Generally, a felony conviction is another thing. Sometimes, a state medical board will have laws that state that if the physician gets convicted of a felony, it’s an auto revocation of their license. In other states, it must go through an investigation for them to determine if that’s necessary. But for the most part, if you get convicted of a felony, that’s the employer’s reason to terminate you. In substance abuse, there might be either a moral clause or a clause about the impaired physician. I mean, for the most part, people think of impairment in substance abuse, drugs, alcohol, something like that. But like prescription drug abuse, it could also be psychological if someone has mental health issues and cannot practice safely. That could be an impairment.

And then, I said permanent disability before. If you’re in a specialty that requires, say, a surgeon needs your hands, and you have nerve damage, you can’t be a surgeon anymore. 

Other Reasons for With Cause Termination

Well, as I stated before, they can terminate the contract if there’s another breach. Let’s say a physician is refusing to take calls. Maybe they’re misbehaving towards staff. They’re not fulfilling the required days, hours, that type of thing. Suppose there’s volume expectation, which is far below that in those scenarios. In that case, the employer will usually give a written notice that they have a certain number of days to fix whatever the issue is. And then, once fixed, the employer could still terminate them, but they would likely do it without-cause since there are no workarounds to remove them. So, that’s a little breakdown of how physicians terminate with-cause, for-cause. However, you want to characterize it.