You Can Handle Your First Physician Contract | MD&D #10

Evidence based insights into physician compensation, RVUs, contracts, healthcare economics, and personal finances. For residents, fellows, and early-career attendings.

Life and Finances, in Medicine.

Please do not fear dealing with a physician contract presented to you.

I know that one of the most stressful times in any physician’s life is the transition from resident or fellow to attending. Think about it. Very few professions go through such a drastic change, not only in income, but also in professional status and societal expectations in such a short period of time. From one month to the next. And it is a guaranteed change. This is not something you simply hope will happen. This is something you know will happen.

It is a time in our careers that we all look forward to with tremendous anticipation and eagerness after years of hard work. And understandably so. It is the moment when the chronic financial deprivation finally begins to end.

You spent years working incredibly hard while carrying information in your mind worth millions of dollars and performing a deeply altruistic task: helping human beings you most likely had never met before.

But during all those years of rigorous, detailed, and thorough training, no one trained you to examine the few pieces of paper that may eventually help guide your financial future, and that of your family. Those pages may even influence the quality of life you should expect for at least the next few years. That is your physician contract.

Let’s think about the process.

To get to that contract, you first had to make several important decisions. You chose the type of job you wanted. You chose the location where you wanted to work and live (I highly recommend living close to your job site. I once lived three hours away from where I worked, and believe me, there is material there for a whole other article), then you went through the complicated process of interviewing, showing your most professional and charming self, assessing how much they liked you against how much you liked them (a lot like going on a date) and asking yourself at the same time:

Can I work here? Do I like this practice? Do I like the people I will work with? Do I see myself in this organization for the long run?

And after this long process, you are finally presented with a document that is supposed to summarize the promises, expectations, and conditions discussed during all the encounters that led to this possible match.

The moment when the anticipation of a job match crystallizes into the form of a physician contract has eerie similarities to a marriage contract. You sign based on the evidence presented to you, but you often do not fully understand what you signed up for until you are already in the relationship. And in many jobs, you will probably spend more hours working within that organization than you spend with your actual partner.

That is why it is so important to educate yourself about what is being presented to you. 

Unlike a marriage, however, the relationship between you and your employer can be anticipated to a much greater degree. The terms can be discussed, clarified, and sometimes changed before you sign, decreasing the possibility of unpleasant surprises later. Of course, organizations are made up of human beings, just like you, and some surprises may be unavoidable.

Many websites recommend hiring an attorney to analyze your contract, and I agree. This is probably one of those times when paying an attorney to review a few pieces of paper can make your life much easier, not only financially, but emotionally.

But there is an important distinction to consider.

An attorney is a qualified professional who can explain the legal language of your contract, identify problematic provisions, and help you understand what each clause means. But even an attorney experienced in physician contracts does not live your professional life. They can explain what the contract says. But you still need to understand what each provision means to you specifically. Only you know the social, professional, and financial impact of being on call every fourth night at that particular hospital, with that particular call structure and workload. And while an attorney may be able to explain that your compensation is based entirely on RVUs, for example, you still need to understand at least the basics of RVU compensation yourself.

Let me use an example that I know you will understand. 

When you treat a patient with a condition like diabetes, it is much easier to be successful when the patient has at least a basic understanding of the condition you are trying to manage together. Apply that same concept to your contract.

Understanding the basics of a physician contract gives you a much better chance of creating a successful match between you and the organization you intend to join. The expert’s input is important. That might be you as the physician treating the patient with diabetes, or the attorney reviewing your physician contract. But expert advice alone is not enough without the active participation of the person who will ultimately live with the consequences. In the diabetes example, that is the patient. In the contract example, that is you.

But don’t worry. There is some good news in all of this. Although not all physician contracts are created equal, most follow similar patterns and contain many of the same essential components. Learning the basics of each of these areas can help you ask better questions and make much better decisions.

Basic Parts of a Physician Contract

In our new series, The Truth About Physician Contracts, we will tackle each of these provisions in detail.

Don’t be intimidated by all the complicated language in a contract. And don’t be afraid of making the wrong choice. When you educate yourself enough to understand what you are agreeing to, you can make the best decision possible based on the information available and your personal circumstances at that moment. Things may change in the future. The job may not turn out exactly as you expected. The organization may change. Your priorities may change. But if you understood the terms, asked the right questions, and made the decision based on your own goals and circumstances, then you made the best decision you could with the information you had.

So, don’t sweat it. You managed complicated textbooks, countless hours of studying, and the grueling labor of residency. You can handle a few days of learning about physician contracts.

You got this.

Your first physician contract may look intimidating, but it is not beyond your ability to understand. Get professional legal advice. Learn the fundamentals yourself. Ask questions about anything that affects your compensation, schedule, freedom, or future. You spent years learning how to make difficult medical decisions with incomplete information. You can learn how to make a good decision about your physician contract too.

✓ Your physician contract affects much more than your salary.Your schedule, call responsibilities, benefits, malpractice coverage, termination provisions, and restrictions after leaving the job can all have major effects on your professional and personal life.

✓ Hire an expert but understand the contract yourself. An experienced attorney can identify legal problems and explain contractual language, but you are the person who must understand how those provisions will affect your actual life as a physician.

✓ Most physician contracts become much less intimidating once you understand their basic structure. You do not need to become a contract attorney. You need enough knowledge to recognize the important provisions, ask questions, and know when something deserves further attention.

“The goal is not to become an expert in contracts. The goal is to understand enough to know what you are agreeing to”.

Next: Physician Compensation Models Explained:

Salary vs. RVUs vs. Collections

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Life and Finances, in Medicine.