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Employment Contracts in Healthcare & What You Need to Know

Employment Contracts in Healthcare & What You Need to Know

Written employment contracts are commonplace in the healthcare industry, particularly regarding high-level physician and administrative positions.

With these types of contracts becoming more prolific, its vital that, before taking any new position, you know what you're getting into without any ambiguity. Situations where young, recently-graduated medical professionals take a position without being aware of the full scope of their responsibilities or circumstances within the organization are frequent and can cause major problems for your career path.

This article will review employment contracts in the healthcare industry, their importance, and the elements that make up a typical contract going into the future.

Get It In Writing

You've heard it before, but we're going to restate it here! Take nothing at face value when it comes to employment agreements. Its better to be too detailed than vague in a hiring situation, particularly when you're new to the labor market and have just been fully-credentialed.

"Handshake agreements" may seem fine, according to your peers, friends, or family members, but they can lead to a litany of issues down the road. For instance, without detailed payment scheduling, the employer can reasonably delay your paychecks and it could be weeks, even months, before seeing your first check. This is absolutely unacceptable, especially after everything you've gone through to earn that medical degree!

Contracts may refer to outside documents, such as corporate bylaws or partnership agreements, and not directly mention some aspects of your employment. In these situations, be sure to obtain a copy of said document(s) before signing anything.

Don't fall prey to "verbal contracts" or "handshake agreements," and do be sure to get it all in writing before moving forward with your employment.

Get Professional Negotiation Assistance

Hire an attorney! This may seem painstakingly obvious to some, but many forego this step believing that they can interpret the legal jargon and navigate the maze that is an employment contract without any outside help. This is foolish and you ought to play it safe and hire assistance either way!

Furthermore, attorneys can do more for you than just interpret the contract and point you in the right direction. If you're a busy individual or if you're not all that confident in your negotiation skills, you'll likely be able to employ them to do the talking for you. Of course, this will likely cost you a little bit extra, but its usually worth it to ensure that you're getting paid the most that you could be for that particular position.

Elements of an Employment Contract

The first step in knowing about employment contracts in healthcare is to be aware of the necessary elements that encompass them. If you find that any of the following elements are absent, be sure to request copies of the specific clauses. Do not accept an answer resembling "oh, well that's never enforced anyway." It definitely could be enforced later down the line, and you need to know the circumstances well beforehand.


Put simply, this is just the duration of the contract, and thus, your employment. The portion of the contract covers how long the contract will be enforceable, with start and end dates, and most contain what is referred to as an "evergreen" provision meaning that the contract renews automatically unless one or both parties terminate it.


This section sets for the conditions in which you will continue to be employed, such as the maintenance of credentials, continuing educating units, etc.

Also typically covered in this section are the employees responsibilities, performance standards, autonomy, hours, call scheduling, offices and resources, and any outside activities such as consulting or teaching.

Go over this section with a fine-toothed comb to see if there are any components that you're unhappy with before moving forward in the negotiation process.

Compensation & Benefits

While compensation seems obvious, the benefits can range in their value depending on what you, as an individual, find more or less important. Be sure to compare each position holistically before jumping at any one position. One job could pay less, but make up for it dramatically with unique benefits that aren't offered by the others courting you.

Elements you'll typically find here include signing bonuses, moving costs, salary compensation, productivity incentives, paid time off, health insurance, life insurance, disability insurance, malpractice insurance, a retirement plan, paid expenses, and professional CEU allowances.


Many contracts will include what is known as a "noncompete" clause that will prohibit you from practicing within the same area for a given amount of time upon leaving the employer voluntarily.

The general idea is to discourage you from leaving early as the employer has spent their resources recruiting you, and they do not want to backtrack unless there is no other option.

The clause will typically dictate the services you are prohibited from performing, the geographic region, and the time period under restriction.

Review this section with the assistance of an attorney or other contract expert and attempt to negotiate some, or all, of these restrictions away. You don't know what the future will hold and you may have to leave the employer early for some unforeseen reason.


Provisions for termination should be clearly laid out in your employment contract. After all, you need to know how both they and yourself could end the contract in the end and the time frame in which it must be done.

Most contracts will include detailed accounts for cases in which there is causeno cause, and other circumstances where termination may be the outcome.

Termination with cause generally just refers to something that you may have done to warrant their termination of the contract and your employment, such as consistent tardiness, serious lapses in judgement, loss of credentials, the use of illegal substances, or some other egregious act that would cause them to think twice about your employment.

In cases that are without cause, the contract ought to state that either party can end the contract at any time without having to specify a reason but usually requires ample written notice. Typically, for higher level positions, 60-90 days is sufficient.

The last element to look for in the section of the contract may include compensation for unused paid days off and vacation time that you did not use.

Dispute Resolution

Upon the occurrence of a major dispute between yourself and the employer, the contract should clearly lay out how the situation is to be handled. This can include everything from mediation to a full-fledged legal suit.


Employment contracts in healthcare can be long and tedious documents that need to be diligently sifted through by not only yourself, but by a qualified professional that can help you make smart choices along the way.

Avoid rushing into any position without having a few offers on the table that can compete with each other. This puts the ball in your court and creates a sort of bidding war over your employment in which you can only benefit from.

Be sure to pay special attention to the noncompete clause or section and, before signing anything, consider negotiating sections of it that you don't particularly like being held to, out. If they want you bad enough and need to fill the position soon, they will likely entertain eliminating some parts to appease you.

Lastly, never underestimate your worth in the labor market! As you increase your skill level, there are fewer and fewer others out there that are even remotely qualified for the position, meaning your skills are increasingly sought after. Don't sell yourself short and be sure you get paid what you deserve!

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