Contracts 101: What to Consider Before You Seal the Deal
When the job offers start rolling in (yay!), it’s a time to celebrate and savor all that your hard work has accomplished so far. If you also happen to experience a mixed-emotion cocktail with feelings of both elation and anxiety, don’t worry, that’s perfectly normal—commitment is scary.
You are about to enter the next phase of your journey: the process of negotiating a contract. In this next series of posts, I’ll help arm you with essential know-how about negotiating a radiology job contract, including important considerations and what to lookout for before sealing the deal.
When you do finally put your John Hancock on that piece of paper, you’ll know what you’re signing up for (an advantageous agreement that provides you with fair, reasonable benefits and protections—and no unpleasant surprises).
In this post, I’ll go over the basics of a radiology employment contract, its key elements, and begin to discuss a couple of them in detail. Subsequent posts will cover the remaining elements. Let’s begin!
Welcome to contract negotiation. The first rule of contract negotiation is: you DO NOT talk about contract negotiation. Oh, wait, sorry, that’s the first rule of Fight Club (a film, considered a ‘cult classic,’ also, a book by Chuck Palahniuk).
Actually, the first rule of contract negotiation is: you must understand the importance of using very specific, clear, precise, nuanced language and definitions.
Before we get into a more detailed discussion of key contract elements and the negotiation process, let’s first define a few critical terms, starting with the job offer.
Job offers can come in a few common forms . A verbal offer is usually made over the phone with basic information about the position and compensation. The candidate is typically asked to accept or decline the offer within a specified period of time. If your answer is yes, then you’ll receive a letter of intent or an employment agreement. A letter of intent is typically one or two pages and includes the basic job position/title, compensation structure, and legal language about what each party is beholden to by the agreement. Terms should be negotiated before the letter of intent is signed. It is not considered legally binding but it establishes good faith between two negotiating parties . If shopping around, a letter of intent offers a way to compare different practices and offers without being obligated to draft a final legal contract.
The best scenario is to receive an initial offer by way of a formal detailed employment agreement—usually a lengthy document, depending on an institution’s preferences and culture. Although the degree of detail included may vary, it’s the final, permanent form of the agreement. All cards are on the table, so to speak. This type of offer is ideal because you are then in a position to carefully review the terms, determine if they are agreeable or not, and consult with a mentor or attorney about specific language within the agreement.
A contract between a radiology group and its radiologist member is an employment agreement that sets the tone for the professional relationship in a radiology practice . It is a promise or set of promises for the breach of which the law provides a remedy or for the performance of which the law recognizes a duty .
An integration clause, which protects both the individual radiologist and the radiology group, should be included in every radiology contract. Its purpose is to prevent the parties from claiming later on that the contract doesn’t reflect their true and complete understanding of the agreement. Such a clause spells out that all prior written or oral statements or agreements regarding the radiologist’s employment with the group are merged into and superseded by the current agreement. That means that any verbal promises made prior to signing the contract are not legally binding unless they are included in the contract. There are numerous examples of radiologists who were verbally promised equity ownership, for example, but whose employment contracts failed to reference this promise .
Contract language and cautionary tales
The exact contract language becomes very important if there is ever a dispute between a radiologist and the group. The use of the term employee, for example, has generated legal controversy for radiology groups and their members  because federal anti-discrimination laws only apply to “employees” and not independent contractors or bona fide general partners.
The distinction between “partner” and “employee” is also significant. In one case, a radiologist who received an equal share of group profits, participated in group management, and was referred to as “partner” in meeting minutes and other correspondence, was considered by the group and found by the courts to be an employee, preventing the radiologist from sharing in accounts receivable on termination of her employment. In this case, the employment agreement did not explicitly refer to her as a “partner” and the radiologist reported her income as an “employee” on her tax returns. The court also noted that the employment agreement contained a provision stating that employment does not confer an ownership interest in, or a personal claim on, fees charged by the employer for the employee’s services.
Contract review (by an attorney)
An employment contract between a radiologist and a radiology group is intended primarily to benefit and protect the radiology practice. Parlez-vous Legalese? Only when a candidate is by formal training able to understand the language in the contract (i.e., is a lawyer), or has conferred with an attorney to review the contract, will a candidate be assured that the contract affords her adequate protections. In other words, unless you’re an MD, JD/Esq., get a lawyer.
|An employment contract between a radiologist and a radiology group is intended primarily to benefit and protect the radiology practice.
It’s best to engage an attorney who is familiar with radiology contracts, including appropriate scope of a noncompete clause, malpractice coverage, and partnership buy-in/buy-out language. Ideally, the attorney should be familiar not only with the radiology field, but also the legal climate and topography of where you will work. A great contract attorney from Wisconsin may not know anything about the legal climate in California.
How to find an attorney
One option is to just pick one at random from the first attorney’s billboard you see—but I would advise against that approach. Colleagues, however, can be a source of recommendations for attorneys. If that isn’t an option, an alternative is to use an online marketplace called UpCounsel (www.UpCounsel.com). After submitting information online about what kind of legal work is needed (e.g., physician contract review), it will provide you with a list of several attorneys to choose from, along with each attorney’s practice interests and experience. A contract review typically includes a phone consultation, follow-up emails and a review of contract revisions . Attorneys can also be found through the ACR Legal Department’s State Attorney Referral List . Spending $300 – $3,000 to have a lawyer review a contract could turn out to be some of the best money ever spent. Securing an attorney early in the job search will enable the candidate to respond in a timely manner to a contract offer, especially one that comes up unexpectedly.
Key elements of a contract
The Table below lists and describes certain key elements that a candidate should examine in every contract.
|Term and termination
|Effective date of initiation, specific date of termination, and provisions for renewal
|Initial salary, bonuses, incentives, profit-sharing, and method of adjustment (including quality or quantity metrics)
|Time to partner, criteria for partnership, change in compensation/benefits with partnership, parity with other partners/shareholders, and buy-in/buy-out process
|Number of hours/day, number of days/week, number of weeks/year, and whether it varies from week to week (and if part-time, will days off be fixed or flexible)
|Retirement options (including employer matching and a description of specific retirement plans), insurance (e.g., health, dental, vision, life, disability, malpractice), paid vacation, continuing education allowance (e.g., reimbursement for conference attendance, journal subscriptions, professional fees, society membership dues), provision of office supplies and equipment, moving/relocation allowance, cell phone allowance, and student loan forgiveness
|General versus subspecialty, location (e.g., hospital, office, home, and travel requirements), and call (e.g., frequency, scope of clinical coverage, hours, evening/night/weekend/holiday responsibilities, available ancillary support, and whether prorated for part-time)
|Scope of students (e.g., medical students, residents, fellows, peers, and ancillary support staff) and format (e.g., one-on-one, conferences, and online education)
|Grant funding, publications (number/year), and support (both monetary and protected time)
|Leadership roles (e.g., section chief, vice chair, center directorship, program director, clerkship director), and support (both monetary and protected time)
Employment restrictions: a heads-up
An employment contract may stipulate that an employee cannot engage in the practice of medicine except as the employee of the employer, unless authorized by the employer. This will be important to a radiologist who wants to moonlight or provide medico-legal consulting outside of the practice.
A practice may require that all income earned by the radiologist, with the exception of interest income and passive investments in stock and real estate, be submitted to the group. This provision may be waived if the group wants to encourage the radiologist to lecture, publish, or initiate practice-related business opportunities .
Radiologists in academic settings are generally required to teach and publish. This often goes unpaid, but in cases where such activities are compensated (such as honoraria for lectures, or book and editorial royalties), the radiologist should be aware of her rights to keep such compensation.
Beginnings and endings: term and termination
An employment contract should clearly state the effective date of initiation and the specific date of termination, and should specify whether there is an initial period of probation. It is also desirable for a contract to include terms for renewal, such as automatic renewal for each succeeding contract year unless terminated (so-called “evergreen” contracts). In cases of automatic renewal, negotiations for changes in the contract should begin at least 90 days before it expires.
Termination can be with cause or without cause, and the provisions for the former should be clearly spelled out. These might include death of the employee or employer; suspension, relocation, or cancellation of license or right to practice medicine in the state; governmental restrictions or limitations on the practice; unprofessional or unethical conduct; illegal drug use, conviction of a felony, or the suspension, revocation, or cancellation of hospital staff privileges; or legal restrictions on the employer’s files or property . Be cautious if cause is defined in subjective language such as “inappropriate behavior” or “actions that are negative for the practice.” An attorney can help craft alternative language.
If terminated, you’ll want to know whether you’ll get compensated for outstanding collections, and if so, for how long. You’ll also want to know if you’ll be compensated for unused vacation or sick days. There should also be a clause in the contract stating that the radiologist will be given a chance to rectify or cure the problem and the period of time allowed to fix the situation.
The contract should stipulate who you report to and who has the authority to terminate, be it other partners, officers, or members of the board of directors, and what majority of input is required to approve termination. It should also state that either party may end the employment at any time without specifying a reason (i.e., without cause) by giving sufficient written notice . The notification period for termination without cause should be the same for the employer as it is for the employee.
Termination provisions prioritize the interests of the practice but will be more acceptable to the employee if every member of the practice has signed a similar agreement. The contract should clarify how and by whom the radiologist’s performance will be evaluated, including whether it will be objective or subjective or a combination of both. It should also state how soon after starting must the radiologist go from being board eligible to board certified.
Want to know more about contracts? The next post will cover compensation and partnership agreements, both of particular importance to all job seekers.
- Sharma R. Navigating and negotiating your first job contract. tctMD. April 11, 2017. Available at: https://www.tctmd.com/news/navigating-and-negotiating-your-first-job-contract. Accessed July 3, 2019
- Radiology Career Handbook. ACR Resident & Fellow Section, 1st ed. 2008. American College of Radiology, Reston, VA
- Muroff JA, Muroff LR. Contracts in radiology practices: contract types and key provisions. J Am Coll Radiol 2004; 1:459-466
- Restatement (second) of contracts. Philadelphia (PA): American Law Institute; 1979
- Hamilton B. Physician negotiating: go get what you’re worth. KevinMD.com. February 27, 2019. Available at: https://www.kevinmd.com/blog/2019/02/physician-negotiating-go-get-what-youre-worth.html. Accessed July 5, 2019
- ACR state attorney referral. Available at: https://www.acr.org/Practice-Management-Quality-Informatics/Legal-Practices/Attorney-Referral. Accessed July 6, 2019