I have been representing physicians for over 40 years, and the vast majority of the people I work with are genuinely nice. Overworked, stressed, sometimes distracted – yes, but most physicians entered the profession because they were sincerely concerned about people and wanted to help. Medicine can be a truly thankless job, and the vast majority of physicians don’t pursue it solely for the money.
Unfortunately, this characterization of physicians is not universal. I have represented hundreds of physicians who began their careers at private practices and were later offered partnership after a few years. This is by far the most common situation for physicians employed by private practices. However, over the years, I have witnessed some practices that seem to view new physicians as replaceable pawns. These practices apparently have a business model that hires physicians fresh out of training at below-market wages, with the promise that they will be well compensated when they become partners. Nonetheless, these outlier practices never actually intend to make the physician a partner.
Over the 40 years that I’ve been representing physicians, I have only seen this occur a handful of times, but it seems to be happening more frequently lately. I’ve observed a few variations of physicians being trapped by unscrupulous private practices. One variation involves the physician being hired at a low salary but being assured that they will be considered for partnership in “a few” years. Each year, they are told that they are on the partnership track, but for whatever reason, it never materializes. At some point, they realize that no year is ever going to be the year they are made a partner.
Another method I have seen used to exploit physicians is the “without cause” termination clause, even if the employment agreement specifies when the physician will be considered for partnership. A few months before the date when the physician is supposed to be considered for partnership, they are terminated without cause by the practice.
I don’t want to imply that there is anything inherently wrong with an agreement that provides for termination without cause. The ability for you to terminate the agreement if you aren’t happy there or if you need to leave for other reasons, such as caring for sick parents, is important and should be included in any agreement. However, you must realize that termination without cause can be a double-edged sword.
While you might assume that I would recommend having partnership guaranteed, I am generally cautious about a contract that promises you partnership. Medicine should be a collegial profession. It is not unreasonable for a practice to ensure that they still want to be your partner after they have seen you in practice. The fact that you are superbly clinically qualified and managed to handle a 15-minute interview without being obnoxious does not necessarily mean that you will be a good colleague through the day-to-day stresses of practicing medicine. In addition, guaranteed partnership may seem appealing now, but what if the practice hires a total jerk after you, and you realize that you are going to be a partner with that physician for the rest of your career?
Any employment agreement with a private practice should include a provision specifying when you will be considered for partnership (e.g., after three years of service). The practice should agree to consider you in good faith at that time. The methodology used to determine the purchase price if you are offered ownership should be provided. Finally, if it is contemplated that you will become an equal owner if offered ownership, this understanding should also be provided. If the practice is unwilling to commit to when they will consider making you a partner, I would consider that a significant red flag.
Ultimately, however, no matter how well-drafted the agreement may be, you are still at the mercy of the practice if partnership is not guaranteed. Although private practices often pay somewhat less than hospitals to starting physicians, the practice should be offering close to median compensation for starting physicians at a private practice. MGMA benchmarks can often be utilized to determine what compensation is being given in the area to physicians in your specialty starting out at a private practice. You should not accept a greatly reduced salary, signing bonus, or relocation allowance based on promises of future earnings.
There isn’t a foolproof way to avoid being taken advantage of. Checking a site like Rate Your Healthcare Employer might tip you off, but it is a relatively new site, and not all practices are listed (and some physicians are hesitant to leave a review for a private practice because of a concern that the practice may figure out who left the review).
You should always speak to any physicians who have previously worked at the practice. I think it is reasonable to ask the practice to provide you with the names of each physician who has left in the last six years. It is very important to speak to these physicians to learn why they left. If they left because they were not offered partnership when promised, your decision should be made for you.
My favorite advice to gastroenterologists (although it is equally applicable to all physicians) is that you should follow your gut in choosing where to work. If you are not comfortable with the people at the practice, even if you cannot pinpoint why, you should seriously reconsider your desire to work there.
Dennis Hursh is a veteran attorney with over 40 years of experience in health law. He is founder, Physician Agreements Health Law, which offers a fixed fee review of physician employment agreements to protect physicians in one of the biggest transactions of their careers. He can also be reached on Facebook and LinkedIn.