Contracting – Introduction (Part I)

Congratulations fellow physicians.  You’re about to enter the world of being a 1099, an independently contracted physician. You’re ready to proceed, and you’re handed a contract. “Sign here, its what our lawyer has recommended.” Sure, you think, but I’ll need to take a closer look. Perhaps you correctly identify the primal instinct to obtain your own attorney to review. Your next thought is who can I get to do this, and the very next thought is won’t this be expensive (yes, but worth it). Know this: Whatever is in writing is all that you will ever be entitled to, so it had better be right and hopefully somewhat favorable to you. And most importantly, in areas where it is not, be sure that you fully understand the contract’s risks and limitations. Meaning: no surprises, no “I didn’t know” in the future. Signer beware.

What though, might you do to assist yourself before contacting and paying for attorney review? Consider this.. There are really two major foundations to a contract: the business part, and the legal part. Each of these deserves its own lengthy exploration on our blog and in your studious analysis. After all, your lawyer is not your business agent, YOU are! You act as your own agent. But that’s for another article. Lets proceed for now with the contract language itself.


My experience with negotiating and modifying contracts is extensive. While I am not a lawyer, and I always obtain a final review with a highly experienced (and thus expensive) healthcare contract lawyer and insist that you do to, there is certainly much you can do initially. Not only will it save you cost, it will ensure you fully understand the limitations and risks to your future of what you are signing. You may save cost by handling the back and forth negotiations yourself prior to engaging your 500$ / hr attorney. However, I don’t advise this approach on your first rodeo unless you are willing to put the time and effort in to understanding contract law. Your counterparty (the entity hiring you) may have limited patience with the frequency of your requests, so its best to make them all at once. And, let them know that upon completion of your interaction, you’ll have one ‘final review’ by your attorney before signing.

Where to start? Well, to do a contract review there are some time honored steps.

#1: They need to send you a microsoft word document. Not a pdf, a word doc. If they send you a pdf document, it may be locked. However, you can unlock and convert it using a public utility (non secure), however sometimes you can just save into a word document without the need for an unlock. Of course, it may save a cosmetically unpleasing word document that will take some time to clean up. So back to step one.. get it in word format upfront.

Next, you’ll want to make your changes (and request they do the same) using word ‘track changes ON’ capability. It will show every edit you make (and every counter edit) so the changes are easy to follow. This is what every reputable exchange between lawyers consists of, and if your counterparty doesn’t want to do this it makes life needlessly difficult. It raises a red flag, for why not show each other what edits you agree or disagree with? And for those not familiar with word edit tracking.. google.

As you begin to review a contract its best to understand the big picture first. Think of a professional services contract as a series of chapters within a book. Each chapter could be something on the level of Biology, Physics, and Math. The chapter topic is instantly recognized, but the underlying importance and depth is massive and poorly understood.. except by those who do a lot of reading and of course.. those who have made it their profession, i.e. lawyers.

Contract law is a vital part of any transaction, and things as simple as a comma used errantly can cost one party or another an incredible amount of financial harm. You’re unlikely to become an expert, but there are some basic terms you can review and advocate for. Lets start with a simple premise though. If you are being handed a contract, do you think its drafted with your best interests in mind? You know it isn’t, so put the time into this that it deserves. Your pay, your benefits, and your family depend on it.

Each section of a healthcare contract needs to be understood within itself, as well as its relation to other sections. They often reference each other. If you are unclear how one impacts the other, you should ask for assistance. While many sections may be described as ‘boilerplate, don’t worry about it’ and to a great extent may be exactly that, it is important to keep in mind that there nonetheless may be something you need to request or modify to ensure you are properly set.

Since this is just an introductory post, lets talk about a popular one to set the table for further analysis. What happens if things don’t work out? Well it falls into two categories: termination for cause, and termination not for cause. The former are ‘automatic’ triggers that should be set to a very high level. Including things like felony conviction, disability preventing you from providing services permanently, or sanction against your medical license, or loss of hospital privileges. Many contracts will hedge and lower the bar ie. ‘charged with’ something serious, or pending action against your hospital privileges. In many hospitals, employed physicians control the peer review committee and.. well you can read the horror stories elsewhere. So its always best to set the bar to things a reasonable person would say should prevent you from practicing and result in a loss of your income (and be reported to the NPDB databank). But if the bar isn’t set high enough, it can wreak havoc on you both now and in the future. Hospitals are required to report to NPDB any punitive actions taken against a physician, but sometimes even lesser actions are reported for leverage.

As you’re beginning to realize, even this simplest of terms can somehow become finely granulated with profound implications for your future should things go awry. And what about the other part, the not for cause terms of termination? Its everything else not explicitly defined as for cause. Well, this is your economic safety net — how much cushion do you need to keep your family safe? Did you buy a big home in anticipation of the new job working out? Surprise.. all you have now is what you negotiated within your contract. Most contracts for physicians are 90 days, but I’ve seen shorter. However, there is nothing to stop one from negotiating 6 months, a year or even longer. “This is our standard contract… ” — maybe they won’t budge. Maybe they will. How badly do they need you? How badly do you want that job? Only you can answer this question, not your attorney during review. Just know that this is the only part that is legally guaranteed, and thus enforceable. Everything else is good will, but legally worthless, until put into writing and signed by everyone. Imagine the child saying “I promise to clean my room” and the parent returns hours later to check, only to find nothing done. Upon the parent making a frustrated inquiry, the child replies “but I didn’t specify when!”

Are we done yet? Not quite. If you’re being told you’re terminated for any reason you had better make sure of two things. First, that you’re given notice properly. Notice is return receipt certified mail, without exception. And second, if you’re terminated not for cause, that any payments due you ‘shall be paid’ no later than whatever timeline you are comfortable with, and that no punitive action will be taken. And one more thing: that last paycheck isn’t just in the mail, its absolutely required to be sent to you by your negotiated timeframe, or ‘interest/fee shall accrue at a rate of’ whatever is negotiated.

As the seriousness, and complexity, of this dawn upon you just remember – its like a prenup. If you stay married happily forever, you’ll never need this piece of paper. Reasonable parties can always work out the right thing to do between themselves and be fair with each other. But if not, the words upon which all have signed will be THE ONLY thing that you have to go on. Better to know for sure where you stand beforehand.

In coming posts, we’ll address the other vital components of the agreement and the potential risks therein. For example, is it advisable for you to sign a contract with an arbitration clause? (No, no and heck no). Lots more to discuss.. Stay tuned!