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“Locum tenens means ‘to hold the place of, to substitute for’ and locum tenens contracts are a common form of agreement for physicians who provide temporary medical services in place of full-time physicians.
Now, during the COVID-19 pandemic, increased demand puts physicians in a better position to negotiate their locum tenens contracts. However, too many practitioners sign them without fully understanding their implications. This is a mistake. A well-drafted locum tenens contract (a) protects the physician’s interests beyond compensation, (b) anticipates and addresses disputes, and (c) limits risks.”
Jack A. Gordon and Andrew E. Sarti are attorneys, Kent, Beatty, & Gordon, LLP.
They share their story and discuss the KevinMD article that they co-wrote, “Anatomy of locum tenens contracts: a physician’s guide to understanding contractual provisions to maximize opportunities and minimize risks.”
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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.
Transcript
Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show, we have Jack Gordon and Andrew Sarti. They are attorneys, and they co-wrote the KevinMD article “Anatomy of locum tenens contracts: a physician’s guide to understanding contractual provisions to maximize opportunities and minimize risks.” Jack and Andrew, welcome to the show.
Jack A. Gordon: Thank you very kindly.
Kevin Pho: Jack, let’s start with you. Could you share a little about yourself and your story to where you got to today?
Jack A. Gordon: I went to law school because I wanted to be a film director, long story, and ended up working in law firms for about a decade. During that time, my practice concentration was primarily employment benefits and employment rights, and we represented a lot of medical groups. When I went out and threw a shingle up on my own, I guess it’s about 25 years ago, I continued to practice in the area of employee benefits and employee rights, with an emphasis on hospitality and medical law. And I still do that to this day.
I’m the black sheep of my family. Pretty much everyone in my family, like Andrew’s family as well, are doctors. And so when I decided that I wasn’t going to follow the route of being a doctor, there was a certain level of consternation in the family, but I think they’re beginning to forgive me now.
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Kevin Pho: And Andrew, can you tell me a little bit about yourself and your story, briefly?
Andrew E. Sarti: Sure. I’m an attorney in contract law and commercial litigation. Like Jack said, many in my family are physicians. I do have a few attorneys, so not just the black sheep, which is one of the reasons why I’ve always been interested in health care and law from such an early age. I’ve been privileged to work with Jack for a few years now, advising many physicians or clients of ours with employment law-related matters, including negotiating, drafting, and revising locum tenens agreements.
Kevin Pho: Fantastic. So let’s get into your article, “Anatomy of locum tenens contracts: a physician’s guide to understanding contractual provisions to maximize opportunities and minimize risks.” Jack, just to start off with, can you tell me a little bit about the process a physician goes through to eventually sign a locum tenens contract?
Jack A. Gordon: Sure. It usually takes one of two forms. Either the physician goes to an agency, or the physician is contacted by an agency that says, “I have an opportunity.” The physician goes to a hospital or group and says, “I’m looking to do either hospitalist or locum tenens work,” and that hospital or group will present the locum tenens contract.
If it’s coming from either of those sources, and by that I mean, just to be clear, either from a hospital or from a placement agency, you have to bear in mind that neither of them is an advocate for you. They work for the purse. They work for the entity that writes their checks. And while many agencies market themselves as being your advocate, the fact is, they are not. And that’s why it’s important for a physician looking at the possibility of a locum tenens arrangement to make sure that they understand what they’re signing.
Too often, we see that the physician looks at the appendix or Schedule A, and that’s going to be your hourly rate. That’s how much you’re going to get paid per shift, whether there’s going to be a shift differential for holidays, overtime, graveyard shifts, and the like. And they look at what kind of expenses they’re going to be reimbursed. And they stop there and sign on the dotted line. And the problems are multifold when you do that.
What you should do instead is carefully study the document. And if you’re not well versed in the law, particularly with respect to employment law, you should have the contract reviewed by a professional. There are three basic things that you want to be focused on. You want something that protects you. You want something that prevents disputes between the parties, or at least has a mechanism for how to resolve those disputes. And most importantly, you want to limit your risks. And without actually reviewing a locum tenens agreement, and indeed negotiating terms very frequently, you will not succeed in the goal of having a locum tenens agreement that serves you.
Kevin Pho: And Andrew, what are some of the biggest pitfalls that you see in traditional locum tenens contracts that physicians should look out for?
Andrew E. Sarti: So there are quite a few. And one of the things that we have to understand as well is that the provisions, even though they might be common, the phraseology, the way they’re drafted and crafted, will change depending on the agency, the hospital, and who’s actually drafting it themselves.
One of the really common pitfalls, as Jack was just discussing, is that there’s a misconception. They believe that sometimes they’re kind of like contracts of adhesion, or they’re not negotiable when it comes to certain provisions. And one of the pitfalls we see a lot is that, like Jack said, they will focus on the dollar amount, but they won’t actually look at all the key terms and provisions and stuff that’s really meant, that could actually be drafted to protect and promote their interests.
Kevin Pho: And Jack, what are some of the differences between locum tenens contracts and, say, traditional physician contracts? Are there any specific things, specific to locum tenens contracts, that we should look out for?
Jack A. Gordon: Yeah, I think the biggest difference is the shift between employee and independent contractor, and perquisites and ancillary benefits, and the tax implications. When you employ a physician in a group or in a hospital, a person is going to be paid a wage, a salary. When you’re working as a locum tenens physician, you are an independent contractor. Very often it’s not actually the individual; the individual will set up a sub-S or an LLC or a sole proprietor corporation and run all their expenses through it.
The other big difference, and one of the reasons that many people, particularly certain personality types, prefer the locum tenens arrangement between master and servant, as we call it in the law, is the lack of the need to deal with all the day-to-day politics, the true meaning of the notion of independent contract. The advantage of this notion of independent contractor is really independence from the institution. You punch in and you punch out and you’re done. You do your shift, you get your shift differential if you’re working overnight, if you’re working New Year’s Day.
If you’re an employee, you have a schedule, you fill that schedule, and you get paid a salary, and you get deductions taken out of your pay, and you have to file your tax returns at the end of the year based on what was taken out of your pay. If you’re an independent contractor, you can run a lot of expenses. So I think those are the two biggest differences: One is the general independence, and two is the fact that because of that independence, you can actually not only gross more money but net a lot more money.
Kevin Pho: And Andrew, how much wiggle room do physicians actually have when it comes to negotiating these contracts? Are they fairly standard and rigid, or do you find that there’s room for negotiation?
Andrew E. Sarti: So it really depends on who we’re negotiating with, when it comes to a huge hospital group or an agency, depending on how big the agency is or if it’s a boutique firm. But usually, what we’ve found is that there is negotiation, and there is definitely wiggle room when it comes to promoting and protecting their interests, adding things such as a force majeure clause and stuff that’s industry standard that we’ve seen in other areas. Even with negotiating restrictive covenants, with ways to disarm them as fair and industry standards that aren’t offered right away. There is definitely some wiggle room.
Kevin Pho: We’re talking to Jack Gordon and Andrew Sarti. They’re attorneys, and they co-wrote the KevinMD article “Anatomy of locum tenens contracts: a physician’s guide to understanding contractual provisions to maximize opportunities and minimize risks.” Jack, do you have a take-home message that you want to share with the KevinMD audience?
Jack A. Gordon: I do, and it’s not really a self-serving message, a truly honest message. I don’t care if you come to us or you go to somebody else, but don’t do this on your own. You’re looking at a couple of hundred to a few hundred thousand dollars every year of your life that you’re in an arrangement with an employer. To negotiate and finalize a locum tenens agreement, you’re talking a few thousand dollars. So on a percentage basis, if you just have the smallest little change, like “the covenant not to compete doesn’t apply if you quit for good reason,” that could be $50,000 to you. So for a few thousand dollars, it’s well worthwhile.
Kevin Pho: And Andrew, I’m going to ask you the same question. Do you have a take-home message that you want to share with the KevinMD audience?
Andrew E. Sarti: Absolutely. I definitely concur with what Jack said. Also, I’d recommend reading the full version of our article, which you can find on the KevinMD website at the link towards the bottom, because there are real legal and practical implications to these contracts, and there’s so much. Even our version of the article, which is very short in scope, can show you some of the considerations and the concessions and the things that really go into these contracts, and how they can affect the physician and your success.
There are definitely real legal and practical implications in these contracts. And we’d recommend looking at the full article, because it discusses and gives more additional information, context, and examples with regard to the provisions, so physicians can really understand what provisions are for and against their interests.
Kevin Pho: Fantastic. Jack and Andrew, thank you so much for being on the show, and thanks for your insight.
Jack A. Gordon: Thank you.
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