Doctors’ Contracts a Minefield for New Grads

Legal Review Essential for Early-Career Physicians

Freshly trained doctors are walking into employment agreements riddled with hidden pitfalls, a situation that can derail their careers before they even begin. Many are blindsided by terms that limit their flexibility and earning potential.

The Allure and the Trap

Physicians like **Tung Giep**, MD, have observed firsthand how eager new doctors, exhausted by years of debt and demanding training, can overlook critical contract clauses. **Dr. Giep** recounted an interview with a young neonatologist whose contract mandated a six-month notice period, effectively ending his candidacy due to the urgency of his practice’s needs.

“Young doctors have no clue about what’s out there, especially in the contract arena,” **Dr. Giep** stated. He explained that seemingly standard hospital contracts often contain unfavorable terms such as noncompete agreements, vague job descriptions, and a lack of overtime pay.

Navigating Employment Hurdles

**Elizabeth Snelson**, Esq., an attorney and president of the Legal Counsel for the Medical Staff, PLLC, notes that the medical landscape has shifted dramatically. “The overwhelming majority of physicians are employed now, which is different than what it was pre-COVID,” she remarked.

A 2024 analysis by the Physicians Advocacy Institute revealed that over 77% of doctors now work for hospitals, health systems, or corporate entities. **Snelson**, who also authored the American Medical Association’s *Physicians’ Guide to Hospital Employment Contracts*, highlights the abrupt transition for physicians moving from academic settings to hospital employment.

“They are coming at it, in my experience, very trusting and very eager,” **Snelson** said of new doctors. She described residents and fellows as often being “dazzled by the zeros in the offer…they’ve never had cash flow like this.”

However, lucrative salaries and benefits can mask problematic clauses. These include requiring physicians to pay for “tail insurance”—coverage for services rendered before a contract ends—potentially costing tens of thousands of dollars. Ambiguous language, such as “at least 7 days per month on call,” can allow employers to require significantly more. Furthermore, a contract listing a general term like “pediatrician” could force a specialist, like a neonatologist, into broader pediatric hospitalist duties.

Common Contractual Traps

New physicians frequently encounter several common contract issues:

• Lack of compensation for additional on-call duties.
• Assignment to work outside their subspecialty or designated hospital location.
• Lengthy termination notice periods, sometimes up to 18 months.
• Payback clauses for signing and relocation bonuses if employment terminates early.
• Absence of tail insurance, leaving doctors responsible for substantial future coverage costs.
• Broad noncompete clauses restricting practice within wide geographical areas.
• No protections if hospital privileges are delayed after hiring.

Negotiation is Key

Dennis Hursh, a healthcare employment attorney specializing in physician contracts, emphasizes that most contract terms are negotiable, despite what new hires are told. “The recruiter isn’t lying; they can’t change it,” Hursh explained, “But someone can.” He has observed employers rarely refuse modifications in his experience negotiating thousands of contracts.

“A contract is like a prenuptial agreement; you want to make sure everything is thought of.”

—Tung Giep, MD, author of “The Business of Medicine”

Many physicians discover their colleagues secured better terms only after starting their jobs, leading to them seeking different deals or second contracts. This underscores the importance of proactive legal review.

Investing in Your Future

Relying on a general family lawyer is insufficient; physicians need counsel specialized in healthcare employment law. **Dr. Giep** likened this to seeing a specialist for specific medical issues. “You wouldn’t see a dermatologist for an ob/gyn issue,” he stated.

**Snelson** notes that hiring an attorney is a sign of professionalism, not distrust, especially considering employers invariably have legal representation. **Hursh** added that it shows physicians are serious about the opportunity.

While contract reviews can cost around $1000, experts view it as a necessary investment for future quality of life. An attorney can clarify termination notice periods, potential bonus clawbacks, and the implications of tail insurance. They can also help minimize the impact of noncompete clauses, advocating for agreements tied to a physician’s actual patient service areas rather than arbitrary distances.

For specialties like anesthesiology, radiology, pathology, or emergency medicine, where patient-poaching is not a risk, **Hursh** argues noncompete clauses are entirely inappropriate.

“The healthcare attorney you hire will help you tighten it up,” **Dr. Giep** advised, referring to vague contractual language. Both **Snelson** and **Hursh** agree that an employer’s reluctance to have a physician’s lawyer involved is a significant red flag.

A recent report by the Association of American Medical Colleges found that the physician workforce is projected to face shortages in the coming years, highlighting the demand for medical professionals. AAMC Physician Shortage Fact Sheet (2023). This growing demand makes understanding and negotiating employment contracts even more critical for early-career physicians securing their professional footing.