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Physician Employment Contracts: An Investment in Your Career

Author Evan Winter
physician employment contract

At the beginning of 2024, 77.6% of U.S. physicians were employed by corporate entities. As acquisitions of private practices continue trending upward, and many physicians choose to enter employment on their own accord, physician employment contracts are more prominent than ever.

An employment contract can be worth millions of dollars and affect how you can negotiate raises or earn income from outside sources. 

With your contract determining your current income and what you can earn in the future, signing the right contract is one of the most important career investments you can make.

Earn What You Deserve

It is no secret that physicians are high-income earners, and many will immediately begin earning over $200k following training.

While it may seem like a lot, particularly to trainees who were previously earning less than half that amount. You could still be underpaid relative to what your peers are earning in the same specialty and location.

Employers expect that you will see high base salary or bonus numbers and sign as soon as possible. Therefore, they often offer less than the compensation you truly deserve.

It is up to you to check their work and negotiate for a fair level of pay. Start by accessing reputable compensation data for your specialty, location, experience level, and other factors so you know what you should be earning. 

Then you can confidently make the ask for higher compensation without requesting too much or too little.

Maximize Your Compensation Early

In the world of investing, you will often hear the phrase, “Time in the market beats timing the market.” That same logic can be applied to physician compensation.

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Securing a fair level of pay early in your career has compounding effects.

Since many raises are percentage-based, starting your career with higher compensation can equal larger raises in the future. You will also simply be earning a higher income for a longer period of time, resulting in greater lifetime earnings.

Beware Of Contract Terms That Can Hold You Back

Agreeing to restrictive contract terms can keep you from making future career decisions and changes that contribute to your overall earning potential. A few of these restrictive terms to consider include restrictive covenants, termination language, outside activities restrictions, and personal property rights.

Restrictive covenants (non-competes)

Restrictive covenants, such as non-compete clauses, can prevent you from leaving an employer for a better opportunity.

Non-competes prohibit you from working within a specified radius of your employer for a certain length of time after leaving your current job. If you should want to change jobs in the future but remain in the general area, a non-compete could keep you from making that move.

Non-competes often undermine your leverage when negotiating raises. If you do not have the option to leave due to a non-compete, your employer has little reason to hand you a raise.

Even if another employer is offering higher compensation, you may be unable to work for them if they are located within the radius of your non-compete clause.

In these ways, restrictive covenants, or non-competes, can keep your earnings stagnant while available pay increases elsewhere.

The FTC recently passed a rule which will ban most non-competes nationwide. 

However, it has yet to take effect, and there are multiple pending legal challenges to the rule. It is recommended to still be wary of a non-compete clause in your contract, at least until the FTC rule is further ironed out or fully implemented.

Termination language and related terms

Whether you are subject to a non-compete or not, some employment contracts make it inherently difficult to leave a job, no matter where you are going next.

Your contract will include language specifying how, when, and why you or your employer can terminate the agreement. As with many contract terms, this language should be as specific as possible so nothing is left up to interpretation.

Pay attention to how much advance notice you must give, as well as any obligations you have upon leaving. You might be required to repay the remaining amount of a signing bonus, residency stipend, or something else.

These obligations can catch you off guard, and if you have not been at your job for long, you might need to repay a large sum all at once.

Knowing how you must terminate your contract, and your obligations upon termination, will allow you to plan your exit and leave when necessary.

You do not want to be stuck in a job that no longer treats you fairly when you could be compensated more appropriately somewhere else.

Outside activities restrictions and personal property rights

Outside activities restrictions and contract language concerning personal property rights will determine the ways you can earn income from sources other than your day job.

Your employment contract will likely require some sort of prior approval from your employer for you to have a side gig, start a business, or moonlight at another practice.

The contract may also include terms giving your employer personal property rights over things you author, invent, or otherwise create – especially using any of your employer’s resources.

It is crucial to review and understand all these terms in full, even if you think it is unlikely that you will have a business on the side or create profitable personal property.

It is much easier to negotiate these contract terms upfront rather than run into problems when you want to create alternative income streams in the future.

Managing Your Investment

Your employment contract not only affects your current income but is a long-term investment in your career.

Even if you change jobs multiple times, contracts will determine your freedom to do so and how your earnings fluctuate along the way.

Being able to successfully negotiate raises when necessary or take advantage of other opportunities will maximize the time, effort, and funds you have already invested.

To get the most out of your contract, and therefore your entire career, make sure you understand the agreement fully and negotiate for what you need as soon as possible.

If you need to access compensation data for your specialty and location, or you want an expert to look over your contract, Resolve has you covered. Get connected with a specialized attorney who will provide the data, review your contract in full, offer suggestions, and even help you negotiate for changes. Physician on FIRE readers receive 10% off any Resolve services with code PF10.

 

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