3 Key Points to Look for in Your Medical Employment Contract by Sara Shariff

1. The Non-Compete Clause

     Employers will attempt to restrict medical providers' ability to leave and practice in competition to their business by including a non-compete clause or other restrictive covenants in the employment contract.  In North Carolina, a non-compete clause has to be in writing and signed by the restricted party, which would be you- the prospective employee (See N.C.G.S. § 75-4).  Some things to know about non-compete clauses are that they are regularly contested and generally disfavored by North Carolina courts.  In order to fit in the scope of valid and enforceable non-compete clauses, the restriction must be specific and reasonable.  This means that the are of practice that you are being restricted from continuing to work in should be in the area in which you will actually work in for this employment position.  Also, reasonableness is generally determined by the scope of the geographical territory and time frame for the restriction.  For instance, a convenant with a long restriction period and a broad territory is less likely to be a reasonable and enforceable non-compete clause.  There is unfortunately no bright line test for determining the validity of these non-compete clauses, but it is crucial to fully understand the terms of any non-compete clause before signing an employment contract.

2. Compensation and Benefits

     Medical employers will typically have considered numerous applicants and gone through multiple interviews before extending an offer to their top candidate.  While nothing is set in stone when there has just been an offer made, you should realize that you have some leverage in determining what compensation and benefits you would be willing to accept.  The amount of leverage might differ depending on factors like the position or the employer's size.  Some benefits to generally look for, or ask for, in your employment contract are adequate malpractive insurance, vacation time, funds or reimbursements for professional development and licensing fees, and compensation bonuses.  The first offer is generally not a "take it or leave it" offer, and you should feel comfortable negotiating for a better offer and a fair employment contract.  

3.  Fair Compensation Formula

     There are various formulas used by medical employers for calculating cost- efficient compensation for providers.  While understanding the formulas themselves may seem complicated, the key thing to check for is that the formula and overall expected compensation are fair.  Medical employment contracts will often base compensation on "productivity" or "patient contact."  In this type of formula, you will see Relative Value Units, or RVUs, as the basis for calculating your earnings.  This is a preferred formula for employers because RVUs are the measure of value they use in getting Medicared reimbursements.  The disadvantages to using a productivity formula include possible inconsistencies in earnings based on the number of patient visits, it may create a competitive work environment, and requires adequate management to ensure that providers are not overburdened with non-billable administrative tasks.  Other formulas include receiving a percentage of your net earnings or compensation formulas with a guaranteed base salary.  This is the last key point to look for in your employment contract, because this is likely one of the main factors that will determine whether you accept an offer.  It is therefore not only important to understand the compensation formula used, but to negotiate when appropriate for a fair and reasonable pay.  Employers will understandabley not change the entire compensation formula they use for each new employee, but they do have an interest in ensuring that their employees are efficient and motivated medical providers.