As healthcare reform continues to be implemented, the trend toward clinical integration and consolidation also continues and will be a defining characteristic of healthcare delivery in the years ahead.  One critical component of clinical integration and consolidation has been health systems employing physicians to form large multi-specialty groups to serve the patient population.  Physicians contemplating entering into an employment relationship with a hospital or health system must examine a number of critical issues before entering into an employment agreement.

First, in negotiating an employment agreement with a hospital, physicians should be aware of their value based upon their specialty, training and experience.  Numerous organizations, such as the Medical Group Management Association, publish annual compensation surveys setting forth compensation levels for all physician specialties and geographic regions.  These salary surveys and salary data should be consulted in negotiating an employment agreement with a hospital, and extensive experience and subspecialty training should likewise be considered in determining fair compensation.

Another subject that must be addressed in negotiating an employment agreement with a hospital is the amount of on-call duties that will be required of the employed physician.  Many proposed physician employment agreements contain vague language concerning the amount of on-call coverage that will be required of the employed physician.  The employment agreement should specifically state the amount of on-call coverage that may be required in a given month, and preferably should set forth maximum limits on the amount of on-call coverage.

Another crucial aspect of an employment agreement is the determination of the rights and responsibilities of the parties upon termination of the employment arrangement at a future date.  The employment agreement must address the physician’s rights upon departure regardless of the reason for the departure.  Among the most important considerations are whether the agreement contains a non-compete or similar clause and, if so, the scope of any such clause.  Additionally, the issue of the purchase of medical malpractice “tail” coverage upon departure must be addressed in the employment agreement.

There are numerous other issues that must be closely examined before a physician enters into an employment agreement with a hospital or health system.  In addition to having experienced legal counsel to review and negotiate the employment agreement, a physician should also consult with other physicians employed by the hospital or health system and inquire as to their experiences as employed physicians.