In this second installment of critical physician employment agreement considerations (see the first installment "Defining the Scope of Practice"), I want to briefly discuss term and termination provisions. Signing an employment agreement always involves a leap of faith to some degree since it is very difficult to predict (and capture in a written agreement) exactly what the work experience will be like.
I have counseled many physicians over the years who negotiated excellent contracts only to learn that they hated the work environment once they actually started the job. Similarly, practices may find that the candidate they thought was perfect during the interview process doesn’t actually work out so well in "practice". It is critical therefore when negotiating an employment agreement that both parties clearly understand how long of a commitment each is making and how the agreement can be terminated if things don’t work out.
Most physician employment agreements are terminable “for cause” and “without cause”. For-cause termination generally means that a party to the agreement can terminate the agreement – usually immediately – if the other party breaches or violates the agreement in some way. The employment agreement should clearly spell out each of the causes for which the employment can be terminated. The causes for termination should be objective and reasonably within the employed physician’s control but not so restrictive as to leave the employer without recourse if some unexpected behavioral or performance issue arises.
Common causes for termination may include loss or suspension of license or medical staff privileges, failure to obtain or maintain managed care participation, failure to obtain or maintain board certification, commission or conviction of a crime, or patient safety related issues, attendance issues or poor productivity.
Commonly physician employment agreements can also be terminated without cause which means that either party can terminate the agreement at any time – usually upon a certain number of days notice – without having to identify any specific reason for the termination. Without-cause termination can be a scary proposition for many physicians but it is not all bad. This type of termination provision can offer protection for both parties since, in the absence of a without-cause provision, each party is obligated to abide by the terms of the agreement for the entire term unless they are able to find cause for termination or are willing to breach the contract (and potentially be sued for breach).
When one or the other party feels "trapped" in an undesirable employment relationship, bad things tend to happen. While there is a risk that the agreement may be terminated at any time, when both parties to the arrangement are happy, that risk is generally low.