Employment Agreement for MD or DO: Key Components, Negotiation Tips, and Legal Insights

Employment Agreement for MD or DO

Securing a fair and comprehensive employment agreement is critical for both Medical Doctors (MDs) and Doctors of Osteopathic Medicine (DOs). Whether you’re a physician entering a new role or an employer drafting a contract, understanding the nuances of these agreements ensures clarity, protects rights, and fosters a positive professional relationship.

In this guide, we’ll break down the essential components of an employment agreement for MDs and DOs, offer actionable negotiation strategies, and highlight common pitfalls to avoid.

Why Employment Agreements Matter for Physicians

Employment agreements for physicians are more than just formalities—they’re legally binding documents that define your professional journey. For MDs and DOs, these contracts outline compensation, responsibilities, malpractice coverage, and post-employment restrictions. A well-structured agreement:

  • Safeguards against misunderstandings.
  • Ensures compliance with state and federal regulations.
  • Protects both parties’ interests in case of disputes.

While MDs and DOs share similar scopes of practice in many states, their employment agreements often follow comparable structures. However, osteopathic physicians may negotiate terms related to osteopathic manipulative treatment (OMT) if applicable.

Also Read: The Fine Print of Family Ties in Healthcare Compliance

Key Components of an MD or DO Employment Agreement

1. Position and Responsibilities

Clearly defined roles prevent future conflicts. This section should specify:

  • Job Title and Specialty: e.g., “Cardiologist” or “Primary Care DO.”
  • Clinical Duties: Patient load, call schedules, and administrative tasks.
  • Practice Locations: Whether multiple sites (e.g., hospitals, clinics) are involved.

Pro Tip: Ensure the agreement allows flexibility for evolving healthcare needs, such as telemedicine services.

2. Compensation Structure

Compensation models for physicians vary widely. Common structures include:

  • Base Salary: A guaranteed annual income.
  • Productivity-Based Pay: Bonuses tied to Relative Value Units (RVUs) or patient revenue.
  • Profit-Sharing or Equity: For roles in private practices or partnerships.

Example: A DO might earn a 250,000 basesalaryplus 15500,000 annually.

3. Benefits and Perks

Beyond salary, benefits significantly impact job satisfaction. Key inclusions:

  • Health, Dental, and Vision Insurance
  • Retirement Plans: 401(k) or 403(b) with employer matching.
  • Paid Time Off (PTO): Vacation, sick days, and continuing medical education (CME) leave.
  • Signing Bonus or Relocation Assistance: Common for high-demand specialties.

Negotiation Insight: Employers may offer student loan repayment assistance to attract early-career physicians.

4. Malpractice Insurance

Malpractice coverage is non-negotiable for physicians. Contracts should specify:

  • Type of Coverage: Claims-made vs. occurrence policies.
  • Tail Coverage: Who pays for extended reporting if the policy ends.

Critical Note: Without tail coverage, you could face liability for past treatments after leaving the job.

5. Termination Clauses

Termination terms dictate how either party can end the agreement. Key details:

  • Notice Period: Typically 60–90 days.
  • With-Cause vs. Without-Cause Termination: Define acceptable reasons for immediate dismissal (e.g., license revocation).

Red Flag: Avoid vague language like “failure to perform duties,” which could be misused.

6. Non-Compete and Restrictive Covenants

Non-compete clauses restrict where you can work post-employment. Key considerations:

  • Geographic Scope: A 10-mile radius is reasonable; 50 miles may be excessive.
  • Duration: 1–2 years is standard.

State Laws Vary: California bans non-competes, while Texas enforces them strictly. Consult a lawyer.

7. Confidentiality and Intellectual Property

Protecting patient data and practice innovations is critical. Ensure the agreement:

  • Complies with HIPAA regulations.
  • Clarifies ownership of research, patents, or medical protocols developed during employment.

Negotiation Strategies for MDs and DOs

1. Consult a Healthcare Attorney

Never sign a contract without legal review. Attorneys specializing in physician agreements can:

  • Identify unfavorable terms.
  • Ensure compliance with Stark Law and Anti-Kickback Statutes.

2. Prioritize Your Needs

Rank negotiation points by importance:

  • Must-Haves: Malpractice tail coverage, fair non-compete terms.
  • Nice-to-Haves: Signing bonus, extra CME funding.

3. Benchmark Compensation

Research salary data from sources like MGMA or AMGA to ensure competitive offers.

4. Push for Clear Metrics

If bonuses are tied to productivity, demand transparent formulas (e.g., $50 per RVU).

5. Limit Liability

Negotiate caps on potential damages for contract breaches.

Common Pitfalls in Physician Employment Agreements

1. Vague Language

Ambiguities in duties or compensation can lead to disputes. Insist on specificity.

2. Ignoring State Laws

Non-competes, licensing, and malpractice rules vary by state. Verify enforceability.

3. Overlooking Restrictive Covenants

A poorly negotiated non-solicitation clause could bar you from contacting former patients.

4. Failing to Plan for Termination

Understand severance terms and what happens to benefits upon exit.

5. Verbal Promises

Get all terms in writing. Oral assurances hold no legal weight.

Final Checklist Before Signing

  • ☑ Reviewed by a healthcare attorney.
  • ☑ Compensation aligns with industry standards.
  • ☑ Malpractice tail coverage addressed.
  • ☑ Non-compete terms reasonable and enforceable.
  • ☑ Termination clauses fair to both parties.

Conclusion

An employment agreement for MDs or DOs is a cornerstone of a successful medical career. By understanding its components, negotiating strategically, and avoiding common traps, physicians can secure contracts that support their professional and financial goals. Always invest in legal counsel to ensure your rights are protected—this isn’t just paperwork; it’s the foundation of your future in medicine.

Also Read: AHCA Exemptions in Florida: Key Issues for Healthcare Providers 

The Debate Over Physician Owned Hospitals

florida healthcare law firm physician owned hospitals

florida healthcare law firm physician owned hospitalsBy: Dave Davidson

The debate over the pro’s and con’s of physician-owned hospitals has been raging for decades. Physician-owners say their hospitals are more patient-focused, provide higher quality care, obtain better outcomes and therefore receive higher patient satisfaction scores. They also point out their convenience and efficiency.

Opponents argue that physician-ownership leads to overutilization and cherry-picking of only the best patients. The less-desirable patients (both clinically and financially) are then left to be taken care of by the community hospitals. For those reasons, both the American Hospital Association and the Federation of American Hospitals remain strongly opposed to physician-owned hospitals.

Federally, the Stark Law includes an exception which allows a physician to refer patients to a hospital in which the physician has an ownership interest, so long as the ownership interest is in the entire hospital, and not just a subdivision of the hospital. However, in 2010, the federal government weighed in again on the issue, and passed the Affordable Care Act (ACA), which includes provisions which (i) restrict physician referrals to hospitals in which they hold an ownership interest; (ii) restrict any increases in physician-ownership of a hospital; and (iii) restrict expansion of physician-owned hospital facilities. CMS has granted exceptions to these restrictions, but those have been limited to rural hospitals and high Medicaid hospitals, and attempts to amend the law have failed.Continue reading

Webinar | Virtual Practice Workshop: Turning Challenges into Opportunities

Turning Challenges into Opportunities Webinar
Turning Challenges into Opportunities WebinarHosted by Candela and Crystal Clear Digital Marketing, Florida Healthcare Law Firm attorney Chase Howard will be a panelist.
Back by popular demand, join us for another Virtual Practice Workshop & uncover the growth opportunities you can capitalize on now, while also protecting your practice in today’s disruptive landscape.
AGENDA: 2:00 PM – 3:00 PM | EXPERT ROUNDTABLE Industry influencers share tools, resources & strategies for improving patient engagement, creating treatment demand & taking advantage of growth opportunities to meet the needs of today’s changing climate. Moderators: David Pataca, MSL, LSO, Executive Regional Director, Candela Medical Audrey Neff, Marketing Director, Crystal Clear Presenters: Chase Howard, Attorney, Florida Healthcare Law Firm Ilanit Samuels, Medical Director & PA-C, MCMS, Baumann Cosmetic Dermatology Dr. Tali Arviv, MD, Arviv Medical Aesthetics
3:00 PM – 4:00 PM | SALES & MARKETING STRATEGIES TO STAY RELEVANT DURING COVID-19 Presenter: Audrey Neff, Marketing Director, Crystal Clear

April 21 @ 2:00 pm – 4:00 pm

Free

What’s Missing From Your Physician Employment Contract?

direct primary care agreements

physician employment contractBy: Chase Howard

The average physician employment contract exceeds twenty pages, not including exhibits. While they all include basic terms related to compensation, length and restrictions, many simply do not contemplate important terms that have serious impacts on physician’s daily lives. A physician’s first employment contract is the most significant financial decision of their lifetime. The same can be said for each subsequent contract, which means that understanding, and negotiating, your contract is the most valuable investment you can make prior to entering into a contract.

To understand what’s in your employment contract, simply read it over a few times. To understand not only how those terms affect you, but also what isn’t in your contract, hire an experienced health care lawyer.Continue reading

Physician Engagements: Who Do I Really Work For and Does it Matter?

physician engagement

By: Randy Goldberg, Co-Counsel

I am a successful physician who works for a thriving practice that is affiliated with a local hospital or Ambulatory Surgical Center (“ASC”).  The hospital/ASC was so impressed with my professionalism and skills that they retained me to perform certain additional duties and services for them.  Of course, they are paying me for my time and services.  This is great, I love my work, I am generating two sources of respectable income – all is good.

Not so fast!

As can sometimes be the case, all is good while there is smooth sailing and while the money is coming in.  However, once there is a bump in the road, a hiccup in a procedure, or a third party employee files a complaint with the Equal Employment Opportunity Commission (“EEOC”); the Florida Commission on Human Relations (“FCHR”); Department of Labor (“DOL”) or any federal or state agency complaining about some alleged incident in their workplace. Their filing of a lawsuit can be against you individually, against your practice or against the hospital/ASC.  Not to mention, a lawsuit can be filed by a patient or third party against the practice or the hospital/ASC.  Then what?Continue reading

Physician Employment Contracts: Hidden Terms

physician employment contract

physician employment contractBy: David Davidson

Over the past few years, it seems like physician employment agreements are getting shorter and shorter.  While I applaud all efforts towards efficiency and economy, you should not always take those documents at face value.  For example, I recently reviewed a one page employment contract for a client.  That single page basically said, “We are hiring you as our employee for a term of one year, with an annual salary of $$$.”

At first glance, the simplicity of that document might seem refreshing.  That’s especially true if you’re worried about how much time it’s going to take for your lawyer to get through it!  My client’s second glance revealed a multitude of unanswered (and essential) questions.  There was no mention of expected duties, schedules, standards, renewals, terminations, insurance, benefits, vacation time, sick leave, CME, etc. in the employment contract  However, when we reviewed the contract together, we discovered that although those points were not even referenced on that single page, they were still legally, “in there.”Continue reading

Healthcare Trade Secrets: How to Protect Your Practice’s Trade Secrets

Healthcare Trade Secrets

dreamstimemaximum_51887081-flipBy: Shobha Lizaso

“Prevention is better than cure” is a maxim that has reigned in the healthcare industry for thousands of years; however, this phrase echoes through the halls of the legal profession as well.

Healthcare practices often neglect to appreciate the value of their confidential information as assets and the need to protect these assets. Although HIPAA and HITECH compliance aids in maintaining the confidentiality of patient records, it does not protect a provider’s trade secrets.

Trade secrets of a healthcare practice may include any of the following: patient lists, financial information, contract rates, contract terms client lists, collection rates, marketing tactics, pricing/discount information, and methods of doing business. If leaked, this information may be used by competitors to secure advantages over a healthcare practice. For example, patient lists could be used to solicit a practice’s patients or contract rates and terms can be used by a competitor to undercut the rates of a practice.Continue reading

Physician Compensation Targeted by the Department of Justice

healthcare business change in ownershipBy: Jeff Cohen

The DOJ reported on August 5th a settlement with a South Carolina hospital concerning physician compensation.  Though certainly not the first or the biggest case of its kind (e.g. note the Halifax Hospital and North Broward Hospital District cases, which generated settlements of over $100M and $60M respectively), it’s attention grabbing nonetheless.

The SC case was brought by a whistleblower, a neurologist formerly employed by the hospital.  The doctor alleged that the seven year employment agreements violated Stark and the Anti Kickback Statute because the compensation was more than what was legally permissible and was also based in part on ancillary services ordered by the employed doctors.  Seasoned readers will understand that the concept of “fair market value” (FMV) is at the heart of regulatory compliance and also that compensation surveys of organizations like the Medical Group Management Association (MGMA) are important guides in term of what is/is not FMV.  In the SC hospital case, compensation met or exceeded the top 10% of similarly qualified physicians in the area, which is very interestingly noted by the DOJ (because some of the comp levels were still within the MGMA surveys).  In other words, the trend here is for the Feds to push back against comp levels on the high end of the FMV spectrum.Continue reading

Physicians: Start Preparing for 2016 Changes in Healthcare

By: Jeff Cohen

Stepping into 2016, physicians and medical practices must continue to be vigilant about the changing landscape in healthcare.  Those who adapt quickly and smartly will thrive, while those who don’t will lose.  What can they do?

Stabilize

Stability for medical practices requires two things:  clear analytics and fixes.  Smart medical practices will examine threats outside the practice and within it.  As far as external threats go, the key area to focus on is competition.  Do you know what competitors are doing and how they’re different than you?

Internal threats are general revealed in the form of (a) employees that need better training and communication, (b) employees that just need to go, and (c) creating a succession plan for the practice.  If the practice is top heavy with older physicians, what plan is in place to ensure that “new blood” is brought in?  What recruitment strategies are in place?  Can the practice go it alone or does it need a recruitment arrangement with a hospital that can demonstrate a community need?  How will the older physicians phase out?  Is there a plan in the corporate documents to make sure phase out is slow and planned?  What do departing physicians get?  What about billing and collection?  When was the last time that was analyzed?  And finally, coding analysis.  Is money being left on the table?  Far too many practices actually undercode visits and services out of fear of payer audit.  Apart from constituting a False Claims Act violation (though regulators are not fast to indict providers who are underpaid), the differential can mean the difference between a good year and a bad one.

Finally, in light of the fact that regulatory and recoupment activity has never been higher, practices would do well to ensure compliance via a self-audit and compliance plan.  This is a different animal than a coding audit.  This one looks at all contractual relationships to ensure compliance and augments coding compliance.  Continue reading