7 Things to Review Before Signing a Physician Employment Agreement

HomeHealthcare & Medical Practice7 Things to Review Before Signing a Physician Employment Agreement

Seven Critical Issues Every Physician Should Review Before Signing an Employment Agreement

By St. Johns Law Group

After years of education, residency, and training, receiving a physician employment offer is an exciting milestone. Whether you are joining a private practice, hospital system, specialty group, or healthcare organization, your employment agreement will shape your compensation, career opportunities, and professional flexibility for years to come.

14 Attorneys and 300+ Years of Combined Experience

Douglas N. Burnett is a former Executive Attorney for a National Medical Provider with Multiple Practices and over 200 Locations

Unfortunately, many physicians focus primarily on salary while overlooking contract provisions that may have a much greater long-term financial impact. A well-drafted agreement should clearly define expectations, protect both parties, and reduce the likelihood of future disputes.

Before signing your next physician employment agreement, consider these seven key issues.

1. Understand How You Will Be Paid

Base salary is only one part of the compensation package.

Your agreement should clearly explain:

  • Guaranteed salary periods
  • Productivity-based compensation
  • Relative Value Unit (RVU) calculations
  • Collections-based compensation
  • Quality or performance incentives
  • Signing bonuses
  • Retention bonuses
  • Relocation assistance
  • Annual compensation reviews

Ask questions if compensation formulas are unclear. Small differences in how productivity is measured can significantly affect your long-term earnings.

2. Review RVU and Bonus Provisions Carefully

Many physician contracts include RVU-based compensation or productivity bonuses.

Your agreement should identify:

  • How RVUs are calculated
  • The conversion factor used
  • When productivity is measured
  • Bonus eligibility requirements
  • Reporting and audit rights
  • Whether compensation formulas can be changed

Understanding these provisions before signing can help avoid misunderstandings after you begin practicing.

3. Know Your Call Coverage Responsibilities

Call coverage affects both your professional and personal life.

Your agreement should address:

  • Weekday call
  • Weekend call
  • Holiday call
  • Hospital call
  • Backup coverage
  • Compensation for additional call responsibilities
  • How schedules are assigned

Clearly defined expectations help promote fairness and reduce future conflicts.

4. Evaluate Restrictive Covenants

Many physician employment agreements include restrictive covenants that may limit where and when you can practice after your employment ends.

Common restrictions include:

  • Geographic limitations
  • Time restrictions
  • Patient solicitation
  • Employee recruitment
  • Confidential information
  • Referral relationships

These provisions deserve careful review because they may affect future employment opportunities and practice options.

5. Understand Malpractice Coverage and Tail Insurance

Professional liability coverage is an essential part of every physician employment agreement.

Review who is responsible for:

  • Malpractice insurance premiums
  • Claims-made versus occurrence policies
  • Tail insurance
  • Coverage after termination
  • Allocation of tail insurance costs

Tail insurance can represent a significant financial obligation if responsibility is not clearly addressed in the contract.

6. Look Beyond Employment to Future Ownership Opportunities

Many physicians join practices with the goal of becoming owners.

If partnership or ownership is discussed, your agreement should clarify:

  • Eligibility requirements
  • Timeline for consideration
  • Buy-in methodology
  • Ownership percentages
  • Voting rights
  • Profit distributions
  • Buyout provisions
  • Retirement and succession planning

A verbal promise of future partnership is rarely a substitute for clearly documented terms.

7. Understand Related Healthcare Business Agreements

Modern healthcare organizations frequently rely on more than traditional employment contracts.

Depending on the practice structure, you may also encounter:

Management Services Agreements (MSAs)

Management Services Agreements establish the relationship between a healthcare practice and a Management Services Organization (MSO). These agreements often address administrative services such as billing, human resources, technology, marketing, accounting, facilities management, and other business operations.

Professional Services Agreements (PSAs)

Professional Services Agreements define the clinical services provided by physicians or other licensed healthcare professionals. They commonly address compensation, scheduling, quality standards, compliance obligations, professional liability coverage, and termination rights.

Whether you are joining a physician-owned practice, a multi-specialty group, a dental practice, or a private equity-backed healthcare organization, understanding how these agreements interact with your employment contract is an important part of protecting your professional interests.

Why Legal Review Matters

Every physician’s career is different, and no employment agreement should be treated as a standard form.

An experienced healthcare business attorney can help identify potential risks, explain complex provisions, and negotiate revisions that better reflect your professional goals. Likewise, healthcare employers benefit from carefully drafted agreements that clearly establish expectations and support long-term physician retention.

How St. Johns Law Group Can Help

St. Johns Law Group represents physicians, medical practices, physician groups, dentists, ambulatory surgery centers, medical spas, and other healthcare businesses throughout Northeast Florida.

Our multidisciplinary attorneys advise clients on:

Whether you are negotiating your first employment agreement or restructuring an established medical practice, our team can provide practical legal guidance tailored to your business and professional objectives.

Protect Your Career Before You Sign

An employment agreement can influence your compensation, career mobility, ownership opportunities, and long-term financial success. Taking the time to understand the terms—and seeking experienced legal counsel before signing—can help you avoid costly surprises in the future.

If you are a physician, healthcare employer, or medical practice owner seeking guidance on employment agreements or healthcare business contracts, contact St. Johns Law Group to schedule a consultation.

📞 Call us today at (904) 495-0400 or email Douglas N. Burnett directly.

At St. Johns Law Group, we are committed to delivering the Dedicated & Responsive Service® you can count on.