Physician Contracts: 10 Issues That Are Often More Important Than MGMA Compensation Data

MGMA compensation data analysis is one of the least useful stats for physician job satisfaction. It is also unlikely to be helpful during a physician contract negotiation.

Many physician contract review services promote MGMA compensation analysis as a primary reason to hire them. That focus is wrong and unhelpful to the physician, and sometimes a waste of time and money. While it may be interesting to know whether your proposed compensation is in the 40th or 70th percentile in your area, it does little for you in a contract negotiation and has minimal correlation with job satisfaction.

Having multiple job offers among competitors in the same geographic location is far more helpful than MGMA compensation data. We are likely to benefit during negotiations by having a concrete reason that the employer should increase compensation. A desire to move from the 70th to 80th percentile is often not motivating for the employer. If you zone in on only one employer and obtain only one offer, you may be doing yourself a disservice. It is challenging to negotiate and extract concessions from a prospective employer unless the employer has a real fear that they will lose you to a direct competitor.

Base salary should rarely be the deciding factor for physician clients negotiating employment contracts. Non-competes, moonlighting, termination clauses and timelines, call schedules, clinical hours, Physician Duties, PTO, parental leave, incorporating campaign promises into the contract, and the value of other benefits are often more important. I find physicians considering their second contract are rightfully weighing these factors far more than first contract physicians. They may have jumped on the job offering additional compensation but realize now that this marginal increase in salary over competing offers was not worth it.

1) Non-Competes and Other Restrictive Covenants

Most states continue to enforce non-competes. They can be very punitive. Physicians should consider what happens when (not if, but when) the employment ends. Do you need to move to be employed in your specialty? Is your next best option made worse by the non-compete? The restrictive covenant is often the most powerful leverage point an employer has. If they know you must move the family, or that the next best job will be very inconvenient and offer less compensation, they will be less motivated to listen to your concerns throughout employment. It is important to consider that your negotiations with the employer never really stop. They continue throughout your employment. If your non-compete makes leaving very costly, either on a personal or financial level, you will be more likely to give in to ongoing demands to expand your job scope without additional compensation.

2) Moonlighting

Moonlighting opportunities can be very lucrative. Some specialties are well positioned for locums and remote or part-time options that give the physician the ability to earn extra, above-market compensation. A moonlighting opportunity may assist the physician in sharpening certain skills in subspecialties that they have no exposure to in their primary employment. It may also allow the physician to pursue an altruistic endeavor. Moonlighting may also give a physician with a painful non-compete an easier exit ramp. The physician may be more likely to leave and sit out for the non-compete period when their moonlighting gigs are fulfilling and lucrative.

However, many physician employment contracts give the employer the unilateral right to deny moonlighting opportunities. I do not like allowing physicians in certain specialties to accept this provision because it is far more valuable than they may initially believe.

3) Termination Clauses and Restrictions

Termination clauses affect every single contract provision. If you have a five-year contract, but either party can terminate without cause upon 90-days’ notice… well, you don’t really have a five-year contract. Savvy physicians will negotiate termination clauses such that the non-compete is made unenforceable when the employer terminates the physician without cause. Very few employers want to take the additional steps and expend the resources to prove a for cause termination, and often prefer to terminate a physician without cause even when they may have cause. Favorable termination clauses decrease the pain of termination on the physician and gives them more leverage throughout the employment.

4) Call Schedule

My experience has been that a punitive call schedule is one of the leading causes of burnout and job dissatisfaction. Some crappy employers will refuse to commit to evenly distributed call among physicians in the same practice area. They want the option to please senior or disgruntled physicians by reducing their call, putting additional call responsibilities on others. I often encourage physicians to push this issue in negotiations. Physicians are often quite surprised when employers deny this request because it is such a fundamentally reasonable request!

For example, I recently negotiated a physician contract with a boilerplate “Call Schedule and Scheduling” provision that said nothing about how call would be distributed. Following our objection and request for “evenly” distributed call, the practice offered a change that stated… “… Physician agrees to rotate or otherwise share on-call coverage…”. I pointed out that this change says nothing about “even” distribution, and the physician would have no right to object to lopsided or punitive call schedules. I explained that the physician needs an enforceable right to a call schedule that is equal to others in her specialty. The next round of changes included a new statement, “Call coverage will be equitably allocated in the sole opinion and discretion of the Employer.” WOW! The Employer is the only party that gets to decide what is equitable? Yeah, right… This practice was deathly afraid of giving in to an even distribution of call.

Physicians who can get “evenly distributed” call as a specially negotiated term into their contract may end up with the strongest contract in the group, which often provides additional leverage throughout the employment. Do not assume that call schedule will always be evenly distributed. Asking for it during a contract negotiation will often require the employer to show their cards.

5) Clinical Hours and Non-Clinical (Administrative) Hours

Spell it out in the contract. Like Michael Scott says, “Explain it to me like I’m Five.” Vague statements regarding clinical and administrative hours can be used against you to expand the scope of your job duties without additional compensation. It may be important to consider when those clinical hours can or must occur. Are cancellations removed from your required clinical hours? What happens if you are strapped with other administrative or collaborative care responsibilities and there is nothing in your contract that restricts the amount of time your employer can demand you spend on these non-clinical responsibilities? What if you are in a mobile unit and it is unclear how many clinical hours you will have each day? This provision may also be specialty specific.

Further, consider whether to ask for a special schedule, like four 10-hour days or three 12-hour days. Having an extra weekend day (or even simply having consistent weekend days off) can be far more valuable than a couple thousand dollars on each paycheck.

6) Defining Physician Duties

The “Physician Duties” section often reads like dull and meaningless lawyerly drab. You already know what a physician is supposed to do, right?

However, you may be surprised to find it stocked with vague statements that the employer can use to expand the scope of your required duties. For example, I have seen Physician Duties often defined as, “… any professional health care services within Physician’s specialty… and any duties incidental to those duties…”. With expansive statements like this, where do the Physician’s responsibilities end? The employer may be motivated to argue that everything they expect you to do is ‘incidental’ to your services.

A common concern is about collaborative care responsibilities with nurse practitioners and physician assistants. If your employer is interested in forcing you to be responsible for an expanding number of NPs and PAs over your objections, they will likely point to provisions like this in your employment agreement. If you want to exclude or limit your collaborative care duties, this is the time.

7) PTO

Having seven weeks off per year is incredibly valuable to me, my physician wife, and our two littles. I don’t know how much more compensation my wife would need to drop from seven to two weeks, but it would be substantial. It would be far more than simply increasing standard pay. We can plan multiple long vacations per year. She can fully unplug for several days at a time, several times a year. Not only is this better for her on a personal level (and, consequently, better for me on a personal level), she believes it also makes her a better physician.

Investigate whether vacation leave is separate from sick time, or if sick time is simply deducted from vacation. Employers may lump all PTO with paid holidays, such that each federal holiday is a forced PTO day. Alternatively, an employer may calculate your PTO separately from federal holidays. For example, if you have 30 PTO days per year (sometimes stated at 240 hours per year or 6 weeks per year) but federal holidays are deducted from them, you have 20-ish days that you get to choose and about 10 that are chosen for you. Finally, watch out for how an employer handles your PTO and your call schedule, and that you are not on call on an evening when you also took PTO!

Most employers will allow you to accrue PTO time starting with your first paycheck, but some may not let you accrue any for an initial period. Most will also prevent you from rolling part or all of your PTO from one year to another… If you are not careful and do not schedule out all of your PTO in advance, you may be working for free! If you have a productivity-based compensation model, then you are at least potentially adding to your productivity bonus. However, if you are on a base salary or have a productivity bonus that is unattainable, then you are giving your employer extra work for free. Way too many physicians are not taking all of their PTO.

I often counsel physicians to consider special work schedules and PTO offerings, even if it comes at a lower base salary. The benefits often outweigh the decreased compensation. This is a factor that MGMA compensation data may miss.

8) Parental Leave

I recently wrote in detail about Maternity Leave. If you have any expectations of starting or growing a family, it is important to understand how that employer handles parental leave. Ask many questions and consider the impact pregnancy and maternity leave may have on base compensation, variable compensation, productivity bonuses, and RVU based compensation models. We were afforded ample leave time for our recent addition, and it did not affect base or variable compensation. We would have required an exorbitant amount of money to give that up.

9) Other Benefits

I highly recommend obtaining a current explanation of all benefits offered by the employer. What is their 401k/403b match? Do they have roth and mega backdoor roth options? Do they offer a 457 deferred comp plan and what are the distribution options? What will your out-of-pocket healthcare and dental costs be? Do they have healthcare and/or childcare flexible spending plans? Do they provide a life insurance policy, legal plans (great for wills and estate issues), or other fringe benefits? What about reimbursements for moving expenses, CMEs, or board exams? If so, when do they pay out?

This issue alone can often account for tens of thousands of dollars a year, and solely focusing on MGMA compensation data may cause you to overlook this important aspect of your compensation.

Also, these benefits are often required to be consistent across all employees, and thus are often not negotiable. Employers often can unilaterally change these benefits so long as they do it for all employees.

10) The Employer’s Campaign Promises

What were the employer’s important campaign promises during the recruitment process? What was said that made you particularly excited about this employer? Let’s consider ways to incorporate these campaign promises into the employment contract.

Physicians may be surprised that verbal explanations during the recruitment process may not be easily enforceable. Wisconsin law creates a distinct private statutory cause of action for fraud committed by employers during the hiring process. I have used this threat when enforcing physician employment contracts, but there are no guarantees that verbal representations are enforceable. You are much better served by incorporating all campaign promises into the contract.

In short, if the employer promised it during recruitment, we should push for it to be included in the contract. If they refuse to include the campaign promise in the contract, you should know that it is not promised and you cannot rely on it.

MGMA Compensation Data May Not Be Very Important

MGMA compensation data analysis is one of the least useful stats for physician job satisfaction. Many other issues have a larger impact. This list of 10 issues is not exhaustive. What is important to you? For us, an additional $25,000-$100,000 in salary would not be worth giving in on most of the issues identified above.

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