Whether you are signing your first physician employment agreement or negotiating a new contract after years of practice, reviewing the terms carefully is critical. Physician contracts often contain complex compensation formulas, restrictive covenants, and productivity benchmarks that can significantly affect both your professional opportunities and your financial future. Taking the time to fully understand these provisions before signing or having an attorney modify the proposed language, can help prevent misunderstandings and costly issues later.
Understanding wRVU Compensation
Many physician employment agreements rely on a productivity-based compensation system built around work Relative Value Units, commonly referred to as wRVUs. A wRVU is a standardized measure used in the health care industry to quantify the work involved in providing medical services. Each procedure or service is assigned a specific number of wRVUs based on the time, skill, training, and intensity required to perform it.
In many employment agreements, physicians receive a base salary along with a productivity component tied to the number of wRVUs they generate. Contracts may also include bonuses for exceeding certain productivity thresholds. While this model can reward high-performing physicians, it is important to understand exactly how compensation is calculated. Key factors often include the conversion rate used to determine payment per wRVU, the time period used to measure productivity, and whether the required targets are realistically achievable given the physician’s specialty and expected patient volume.
Important Terms Often Found in Physician Contracts
Compensation is only one part of a physician employment agreement. Many contracts include provisions that can significantly affect a physician’s career flexibility and day-to-day work expectations.
For example, many agreements include non-compete clauses, also known as restrictive covenants. These provisions typically limit where a physician may practice after leaving the employer for a certain period of time. The geographic scope and duration of these restrictions can vary widely, and they may affect a physician’s ability to continue practicing in the same community.
Termination provisions are another important area to review. Contracts typically allow employers to terminate physicians either “for cause” or “without cause.” However, the notice requirements, definitions of cause, and financial consequences of termination may differ significantly between agreements. In some situations, physicians may also be required to repay signing bonuses, relocation expenses, or other incentives if they leave the practice within a certain timeframe.
Physician contracts also frequently address work expectations such as call coverage, patient load, administrative responsibilities, and scheduling requirements. Understanding these expectations ahead of time can help physicians determine whether a particular opportunity aligns with their professional goals and desired work-life balance.
Finally, malpractice insurance coverage is another critical provision. Many employers provide claims-made coverage, which may require the physician to purchase tail coverage upon leaving the practice. Because tail coverage can be expensive, it is important to understand who is responsible for those costs before signing the agreement.
Why Contract Review Matters
Physician employment agreements are often lengthy and filled with specialized terminology that may not be immediately clear. Even experienced physicians who have reviewed contracts in the past may encounter new compensation structures or restrictive provisions that deserve closer attention.
Having an attorney review your contract can help clarify how the agreement actually operates in practice. A careful review can identify potential risks, explain compensation structures like wRVUs, and help physicians understand the long-term implications of restrictive covenants and termination provisions.
Physician employment agreements often contain detailed provisions that can have lasting effects on your compensation, mobility, and professional responsibilities. Having knowledgeable counsel review the terms can help identify potential concerns, clarify complex provisions, and ensure the agreement aligns with your long-term goals.
