Before You Sign a Physician Contract, Know What You’re Agreeing To
You finish your residency or fellowship and accept a position you’re excited about. The contract looks routine, so you sign without paying much attention to the non-compete clause. Years later, you’re ready to move practices or start your own, only to discover you’re restricted from practicing in the area where you’ve built your career.
Situations like this are common, and they often stem from contract provisions that seemed insignificant at the time of signing. Physician contracts frequently contain terms that affect compensation, malpractice obligations, termination rights, and future employment opportunities.
At Jackson LLP, we help physicians and healthcare professionals understand the agreements they are asked to sign. A contract review can identify potential risks, clarify your obligations, and help you determine which provisions may be worth negotiating before you commit.
What a Physician Contract Review Covers
Jackson LLP routinely reviews physician and healthcare provider agreements as part of our broader employment law services and contract drafting and review services. Depending on your needs, we may review:
Employment Agreements
Employment contracts often contain provisions governing compensation, productivity bonuses, benefits, call responsibilities, malpractice insurance, termination rights, and restrictive covenants. We identify provisions that may limit your future opportunities or create unnecessary risk.
Partnership Agreements
Partnership agreements should clearly define ownership interests, voting rights, compensation structures, profit distributions, and responsibilities among partners. We help identify provisions that may create unequal obligations or expose you to unexpected liabilities.
Independent Contractor Agreements
Independent contractor agreements frequently contain restrictions that blur the line between employee and contractor status. We review compensation terms, termination provisions, autonomy requirements, and liability allocations to ensure the arrangement aligns with your expectations.
Medical Director Agreements
Medical directors often assume significant supervisory and compliance responsibilities. We evaluate whether compensation appropriately reflects those duties and whether responsibilities are clearly defined to protect your professional license and reputation.
Buy-In and Buy-Out Agreements
Practice ownership opportunities can be valuable, but they may also create long-term financial obligations. We review valuation methods, payment terms, ownership rights, and exit provisions to help you understand the full scope of the transaction.
Following our review, you will have a clearer understanding of your obligations, potential risks, and the provisions that may require negotiation before signing.
Common Red Flags We Find in Physician Contracts
Every agreement is different, but certain provisions frequently create challenges for physicians and other healthcare professionals.
Non-Compete Clauses
Restrictive covenants can limit where and when you may practice after leaving an employer. Even when a non-compete appears reasonable, its geographic scope, duration, and restrictions should be carefully evaluated to ensure they do not unnecessarily limit future career opportunities.
Tail Coverage Obligations
Many malpractice policies are written on a claims-made basis. When coverage ends, physicians may need tail coverage to protect against future claims arising from past patient care. Some contracts place the entire cost of tail coverage on the physician, potentially creating a significant financial obligation when leaving the practice.
Compensation Clawback Provisions
Certain agreements allow employers to recover signing bonuses, relocation assistance, productivity incentives, or other compensation under specific circumstances. These provisions can create unexpected repayment obligations if employment ends sooner than anticipated.
Restrictive Referral Arrangements
Contracts occasionally contain referral requirements or financial arrangements that may raise compliance concerns. Physicians should understand how these provisions interact with applicable healthcare regulations and whether they could create legal or operational risks.
Termination Without Cause Provisions
Many agreements permit either party to terminate the relationship without cause upon advance notice. However, notice periods vary significantly. Short notice requirements can leave physicians scrambling to secure new employment, arrange patient transitions, and address credentialing issues.
Identifying these issues before signing can help protect your income, professional flexibility, and long-term career goals.
Non-Compete Agreements for Physicians Vary by State
The enforceability of a physician non-compete depends on state law. Some states impose detailed legal requirements, while others restrict or prohibit physician non-competes altogether.
Illinois illustrates how these requirements work. Under the Illinois Freedom to Work Act, several factors may affect whether a non-compete is enforceable, including compensation thresholds, review periods, consideration requirements, and the overall reasonableness of the restriction.
In Illinois, an enforceable non-compete generally requires all of the following:
- Compensation that exceeds applicable statutory thresholds
- An opportunity to review the agreement before employment begins and consult with counsel
- Adequate consideration, such as continued employment or other professional benefits
- Reasonable restrictions regarding geographic scope and duration
Even when a non-compete may be enforceable, physicians can often negotiate the terms before signing. Unfortunately, many healthcare professionals do not realize these provisions are negotiable until they are preparing to leave an employer.
What to Expect From the Contract Review Process
Our goal is to provide practical guidance that helps you make informed decisions. You can expect us to review your contract in three steps:
- Initial Consultation: We begin by learning about your position, career goals, and any concerns you have about the agreement.
- Attorney Review and Written Summary: Our attorneys review the contract and provide a written summary identifying key provisions, potential risks, and areas that may warrant further discussion or negotiation.
- Negotiation Guidance: If you choose to negotiate with the employer or contracting entity, we can advise you on which provisions may be negotiable and how to approach those discussions effectively.
Throughout the process, we remain available to answer questions and help you understand the implications of the agreement.
Physicians and Healthcare Professionals We Help
We review contracts for physicians and healthcare professionals at every stage of their careers. Whether you are a resident signing your first employment agreement, an established physician evaluating a partnership opportunity, or a practice owner considering a buy-in arrangement, our attorneys can help you understand the legal and business implications of the agreement.
We also assist advanced practice providers in reviewing employment agreements, collaborative agreements, supervision provisions, and other contracts that affect their practice rights and responsibilities.
In addition, our team works with healthcare professionals throughout Illinois, California, New York, Texas, and Wisconsin, and we can provide guidance on agreements involving hospitals, physician groups, private practices, management organizations, and healthcare companies.
Schedule a Physician Contract Review
If you have a contract in hand and a signing deadline approaching, schedule a free consultation with Jackson LLP. During the 15-minute consultation, you will speak directly with an attorney who will discuss your situation, identify key provisions that warrant closer review, and explain the next steps in the contract review process.
Understanding the terms of your agreement before you sign can help you protect your career, income, and future opportunities.
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Frequently Asked Questions About Physician Contract Reviews
Is attorney review of a physician contract worth it?
Yes. A physician contract can affect your compensation, future employment opportunities, malpractice obligations, and professional autonomy. Identifying problematic provisions before signing is generally easier and less expensive than resolving disputes later.
Can I negotiate a physician employment agreement?
Yes. Many employers are willing to negotiate certain provisions, including compensation terms, notice requirements, non-compete restrictions, call schedules, relocation benefits, and malpractice insurance obligations.
How long does a physician contract review take?
The timeline depends on the complexity of the agreement and the scope of the review. During your consultation, we can provide a more specific estimate based on your circumstances.
Are physician non-compete agreements enforceable?
It depends on the state. Some states enforce reasonable physician non-competes subject to legal requirements, including compensation of the employee and the reasonableness of the restrictions. Other states restrict or prohibit them outright.
What should I look for before signing a physician contract?
Pay close attention to compensation structures, restrictive covenants, malpractice coverage, termination provisions, productivity requirements, partnership opportunities, and any repayment obligations tied to bonuses or benefits.