| Read Time: 4 minutes | Healthcare Business Law
physician employment agreements

While most Texas employees work on an at-will basis, doctors usually have written physician employment agreements in place.

For experienced doctors or specialists, these contracts can be worth hundreds of thousands, even millions, of dollars. 

Typically, a physician employment agreement is a straightforward document.

However, if a dispute arises between a doctor and their practice or between a practice and a hospital, it is essential to know what the employment agreement says. 

In today’s post, the Massingill team will cover just how important it is to cover the key terms in your physician employment contract.

We’ll also discuss how we can help you draft effective physician employment agreements in Texas.

Three Key Terms of Physician Employment Agreements

Three key components are critical to every employment agreement in Texas: How long? How much? And how many extras?

We will explain each idea below and why you will want a lawyer to help you address each term in your physician employment agreement.

How Long Should the Contract Be For?

The term, or duration, of the employment contract, is up to you. There is no set or recommended term for physician employment agreements.

Some questions to ask while putting together the agreement include:

  • Is the term long enough to allow a doctor to establish a practice? 
  • Is the term so long that a doctor might be stuck with an unfair compensation structure? 
  • Does the contract automatically renew at the end of the initial term and keep renewing unless one side cancels with notice?

Whether you are a doctor negotiating your first employment contract or an experienced practice manager negotiating your fiftieth physician employment agreement, carefully consider how long you want your contract to be.

How Much Should the Physician Be Paid?

How much should a physician be paid? Some organizations tie physician salaries partly to performance. If your organization decides to do this, how will it be implemented?

An experienced Texas business lawyer can help you effectively draft a physician employment agreement that reflects this.

How Will Expenses Be Handled?

Expenses can be an extremely controversial subject in physician employment contracts. Most employers pay for or reimburse a practice’s basic supplies.

Make sure to document who pays how much for what. An employment lawyer can help you draft an employment agreement that prevents disputes about expenses.

The team at Massingill can help. 

Managing Workplace Policies in Texas Employment Agreements

Leave Policies

Beyond the big provisions about how long, how much, and how many extras, physician employment contracts need to cover issues like paid leave. Make sure to include terms about vacation, sick leave, and disability in the contract.

HR Policies

Employment agreements usually cover some basic HR policies as well. In a physician employment agreement, some of those terms and policies might include:

  • On-call times—When do doctors need to be on-call?
  • Patient records and privacy—Can doctors take patient records with them when they leave the practice or ask their patients to “opt-in” to share that information?
  • Malpractice insurance—Who will pay for tail insurance after the doctor leaves the practice?

The Massingill team can help you draft an employment agreement that covers these issues.

Whether you are a doctor joining a practice for the first time or a practice hiring new doctors, drafting good employment agreements is one of the keys to success and sustainability.

Dispute resolution

Best practices dictate including a dispute resolution provision in a physician employment contract.

Physician employment agreements typically provide for mandatory arbitration, especially if the practice is part of a hospital system.

A Texas employment lawyer can help draft an effective dispute resolution clause, so each party knows what to expect.

Noncompete Clauses in Physician Employment Contracts

What Is a Texas Noncompete?

One issue that arises in Texas employment agreements is the issue of restricting competition after employment ends.

Competition is just as much an issue in medicine as in technology or oil. In Texas, noncompete agreements in physician employment contracts must meet strict statutory requirements.

Additionally, they must meet all the usual reasonableness conditions of noncompete agreements in Texas.

Those conditions are:

  • There must be consideration for the agreement and 
  • The limitations on time, geographical area, and scope of activity must be reasonable.

Meeting these two conditions is sufficient in a regular employment agreement. But a physician employment contract takes a little more work.

How Are Physician Employment Agreement Noncompete Clauses Different?

Because doctors provide a specialized service to the public, Texas law narrows the scope of when employment agreements are allowed to restrain physician competition.

These restrictions on noncompete clauses in Texas employment agreements for doctors include the following:

  • Noncompete clauses cannot deny the physician access to a list of patients they had seen within one year of termination of the contract;
  • They must allow access to medical records of the physician’s patients upon authorization of the patient for a reasonable fee established by the Texas Medical Board;
  • Patient lists must be provided to doctors in the original format or a mutually agreed-upon format;
  • They must provide a “buy-out” option for the physician to pay to void the noncompete with the price to be determined by a mutually agreed-upon arbitrator or, if the parties cannot agree, an arbitrator of the court whose decision shall be binding on the parties; and
  • Physicians will not be prohibited from continuing care and treatment of specific patients during an acute illness even after the contract has been terminated.

As you can see, physician employment agreements can quickly become highly complex.

Speak with a trusted member of the Massingill team to see how we can help you get your employment agreements drafted.

The Massingill Difference

Drafting a physician employment agreement strikes a delicate balance between the arts of medicine and law. This can be as complicated as it sounds.

But our experienced healthcare lawyers at Massingill know how to simplify this complex process.

Our Texas healthcare attorneys are here to hammer out the critical and fine details for our clients.

We understand how important it is to physicians and healthcare professionals to have solid agreements that cover all the essential elements of an employment relationship.

If you want help getting the most out of your business decisions, contact us online or call us at 512-410-0343.

Author Photo

Joshua Massingill

Joshua Massingill is an attorney practicing in Austin, Texas. He serves on the Texas State Bar’s Law Practice Management Committee, the Leander Educational Excellence Foundation (LEEF) Board of Directors, and the Success-Werx Board of Advisors. He mentors young entrepreneurs in Leander ISD’s INCubatorEDU program and is active in his church.

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