Pertinent Pearls in Contract Review

I always like to start off by saying “congratulations” to anyone I speak with who has received an employment agreement. With all of the hard work from undergraduate studies, podiatry school, and residency, whether it’s a first or a third job, obtaining a job offer is no easy task.

Once the pleasantries are out of the way, it is time to get into the nuts and bolts of the employment agreement. There are various main sections and subsections with particular items to consider within each, that include the below (possibly with different header names in your specific document). Do not let all the verbose legal jargon confuse you, as when you distill it down to the points below, the jargon is often not as difficult to comprehend. In reviewing the contract, it is worth understanding and discussing these items so you are aware of its terms.

Compensation Scheme and Schedule

What is the outlined pay structure? Possibilities include a collections-based structure with a base salary and bonus, conversion to a full bonus–structure at some point, or relative value unit (RVU)–based with a base salary and bonus.

What counts under your collections? This is often not spelled out in a contract but is good to know. Items to consider include office visits; procedures (in-office or surgical); hospital consults; cash items (pads, laser sessions, topicals, etc.); radiographs taken in the office; durable medical equipment (DME) such as boots, braces, night splints, etc.; and orthotics.

What miscellaneous items are included within the “compensation” components? These can include several different line items, such as those below.

Continuing medical education (CME) dollars. How can these be used—conference only (registration, travel/accommodations), or electronics (ie, a new laptop)?

Licensure and fees (state, hospital, DEA). Is this paid for outright by the employer, part of your CME allotment and deducted from the total given, taken out of your salary pre-tax, or not paid at all?

Society/board fees. The same questions apply here as for licensure fees.

What is your schedule regarding office(s), times, and days of the week?

• Is it a 4- or 5-day work week? What office location(s)? How is surgical time built in? Are there early/late hours? What are the weekend mandates and terms? Can you eventually reduce a 5-day work week to 4-days (with/without a change to the pay structure)?
• Call schedule (integration into a practice-based and/or hospital call schedule). This may not be 100% known at the time of negotiation, but the employer should have an idea of where you will fit into the schedule  since they are looking to hire.
• You should look to have a say if any of these metrics change, so you can agree to it beforehand.

Days off—paid time off (PTO) vs CME vs sick day.

• Are these kinds of days delineated for each of the noted items above, lumped together, etc.?
• What holidays are given? Is a holiday counted separate from or deducted from your PTO allotment of days?
• How can CME days be used? Conferences only or days for self-study/online CME?
• Do unused PTO days/hours roll over to the following year?

How the Contract Enumerates Benefits

Benefits are often mentioned in the contract but may require asking for supplementary information from the practice’s human resources department. Items would include:

Health, dental, vision insurance. When do these benefits this start? Can your spouse/family join? It there a penalty (ie, added fee) if your spouse joins this plan if they are offered their own elsewhere and decline. What is the plan type—standard or high deductible? Does the practice make an health savings account (HSA) contribution on your behalf?

Malpractice insurance. What kind of insurance do you have—claims-made or occurrence? If insurance is claims-made, who pays for tail coverage if you leave? What are the policy limits? Is this the “normal” amount for your region?

Life insurance. Is there any policy given? Some practices may offer this, but it is not a substitution for obtaining your own policy outside of the job.

Disability insurance. What is the policy surrounding disability (this often is also listed under section(s) pertaining to employment/termination/ability to perform your job). Again, some practices may offer this, but it is not a substitution for obtaining your own policy outside of the job. As an aside, obtaining disability insurance is often much less expensive prior to graduating residency for all, and prior to a pregnancy for women.

Retirement—401k, 403b, 457, etc. What kind of plan(s) exist? When can you start contributing (often after 1 year of employment)? What is the employer contribution? Is the employee  a non-profit? Consider public service loan forgiveness.

Student loans and repayment. Does the employer offer loan repayment assistance? What are the terms? Often loan repayment will require working for a certain duration of time or else any money paid-out may need to be repaid. Is the employer a non-profit? Consider public service loan forgiveness for ones loan repayment plan. In higher amount or more complex loan situations, one may consider consulting with a student loan advisor.

A Guide to Partnership in Contracts

While partnership may not be on your radar on day one of employment, the contract (or a secondary document or addendum) should exist and stipulate the exact pathway to partnership. This way, it is known what you need to do in order to hit this goal, whether it is a number of years employed, dollar amount collection level, becoming board certified, etc.

What is the “cost” of buying in (the last valuation)? Can your payment be made pre-tax? Is buy-in made in installments or one lump-sum?

What does partnership “get” you? More income? More power or a “seat at the table” with decision making? More “headaches” with the business side of medicine?

Navigating a Restrictive Covenant

What are the terms regarding the number of offices included, duration, and distance?  This can be variable based on geography from a distance standpoint whether in a city/suburban versus rural environment.

What offices are counted in the terms? All of them? Does the covenant count offices where you spent a certain percentage of your time/see a certain number of patients/collect a certain amount of money?

Is the restrictive covenant “reasonable?” Are places not owned by the practice included, such as a hospital, would care or surgical center?

Miscellaneous Contract Items

Family leave (maternity/paternity).

• What is the policy, if any?
• Will your contract be adjusted accordingly? If an employee on leave takes 3 months off, will your yearly target collections or RVU target be reduced by 25%? Will you need to make up any call during that time period?
• NOTE: if none of this has been determined, this is the time for you to help write the policy with the employer.
• NOTE: The employee should look into what state mandated benefits are offered as this will often come into play.

Sign-on bonus. More often seen in larger practices, private equity, or hospital-employed situations, sign-on bonuses range between 5–15% of your base salary. This will be counted as income and taxed.

Moving expenses. These are offered most commonly in settings similar to the above (large practice, private equity, hospital-employed), and may often be upwards of $10,000. Of note, moving expenses are not “free money” and will be counted as income and taxed.

Loan repayment. Is this offered? Often loan repayment will require working for a certain duration of time or else any money paid out may need to be repaid.

Academic employers. Is there any tuition reimbursement for you or your children, or a tuition discount for your children?

Ancillary income streams.

• Can you consult for companies? Who gets this revenue? Is it added to your collections or paid in full (ie 100%) to you? If collections, remember then you only get a fraction of the total amount.
• Can you do legal work? Who determines the fees of service? Who gets this revenue?
• Is there any surgical center buy-in? Real estate?
• NOTE: For many of these ancillary items, consider opening a personal LLC as some of these items may not be counted as part of one’s W2 wages, but rather 1099 (independent contractor) paid income. This also may allow you to open a separate, individual (or solo) 401k plan as another method of allocating dollars for retirement.

In Conclusion

Understand that the points listed here are taking into consideration all types of job structures, from a private practice with one other employee/associate, to a large orthopedic group, to hospital-employed physicians. Each situation will offer different components of the above and have more (or less) ability to negotiate the terms to some degree. I feel it is prudent from your perspective, after reviewing the contract, to rank the items from most to least important to you, and use this as a negotiating strategy in what you ask for, what you concede to not pushing as hard for, or even leaving as-is.

While you may not be able to come to a complete agreement on all the items you wish to negotiate, the hope is there is some room to make adjustments. This may be the first time you get to ask for what you want. During residency—your first “job”—you were handed a contract that you may or may not have read, and signed it since it was virtually non-negotiable. Now you have more power, so do not feel awkward in asking for things you want changed, or at bare minimum, asking for clarification on items you do not understand. If you still do not understand something, ask for examples (eg, regarding a compensation schedule) or talk to your colleagues including coresidents, friends, or attendings.

Once points from discussion and negotiation are agreed upon, it is vital that the document has all the unforeseen items outlined (potentially items listed above) and you fully understand and are comfortable with what you are signing. It is key to get everything in writing, whether direct updates within the document, an addendum document, or a question-answer email between you and the person(s) you are negotiating with (that you save as a “personal addendum” to the employment agreement), to have the items in print to refer back to in the future. Just as they teach physicians in practice, if it is not written down and documented, it did not happen.

The agreement document serves as the foundation of your future within this employment setting and therefore it is crucial to be as “perfect” as possible. Therefore, it behooves you to take all the necessary steps to make sure you get the contract you want with full understanding of the agreement.

Dr. Hood is a board-certified foot and ankle specialist who practices at MidJersey Orthopaedics, part of the Hunterdon Healthcare System in Flemington and Washington, NJ. He runs the website PodiatryContractReview.com. Follow him on social media at @crhoodjrdpm.

Any views and opinions expressed are those of the author(s) and do not necessarily reflect the views, policy, or position of Podiatry Today or HMP Global, their employees, and affiliates. Information regarding contracts is provided as a service to our readers. Every effort has been made to ensure accuracy; however, the above is informational only and is not official legal advice. HMP and the author do not represent, guarantee, or warranty that this information is error-free and/or will yield any particular result.