Young Doctors Warned of Pitfalls in Employment Contracts


Physicians just out of residency, experiencing their first taste of independence, need to beware of traps in employment contracts, writes Philip Eskew, D.O., J.D., M.B.A., in the spring issue of the Journal of American Physicians and Surgeons:

Outside recruiters, he writes, are paid on the basis of whether a doctor signs a contract, not on retention, and thus have an interest in keeping candidates on the job treadmill, with relocation every two to three years. What they tell physicians may be in conflict with the contract that is ultimately signed.

Physician compensation is often tied to production, most often determined by relative value units or RVUs. It may be very difficult to reach RVU targets, which may require sacrificing time spent with patients. It might be easier to increase income by moonlighting, but the employment contract may forbid or restrict outside work. The physician’s duties may be vaguely defined and turn out to be far more demanding than expected, Dr. Eskew notes.

The employer covers professional liability (malpractice) insurance for its employed physicians, but if the physician leaves the job, he may have to buy expensive “tail” coverage for claims made after coverage lapses for events that occurred while the policy was in effect. This, together with other provisions such as non-compete clauses, may make it difficult to leave a position, Dr. Eskew warns.

If an employer or its billing service makes errors in submitting claims for the physician’s services—or deliberately “upcodes” to increase payment—the physician may be liable for draconian penalties under the False Claims Act. Dr. Eskew advises checking whether the professional liability policy provides any protection against this risk.

While a guaranteed salary and relief from practice-management tasks may look very desirable, Dr. Eskew recommends careful attention to the contractual obligations. New physicians should also consider independent practice options.

The Journal of American Physicians and Surgeons is published by the Association of American Physicians and Surgeons (AAPS), a national organization representing physicians in all specialties since 1943.