Getting the Locum Contract Right

The 3 Things Physicians Should Look for When Reviewing Every Contract

Sep 04, 2020 · White Coat Investor

This series is developed in partnership with Dr. Jim Dahle‘s The White Coat Investor, the leading source of financial tools and information for doctors, and Doximity Careers and Curative (a Doximity company), where doctors can find their next long-term or locum tenens position.

A locum tenens contract might be for a relatively short period of time, but it is still an important legal contract that you need to understand when you sign. Dealing with locum tenens contracts is actually easier than with a typical physician contract. Due to the shorter time period, you are likely to have the opportunity to see more contracts and negotiate much more often than a typical physician. That additional experience is valuable in knowing what a typical contract looks like and what possibilities there are for negotiation. Nevertheless, at least for your first contract or two, I recommend you have it reviewed by either legal counsel in the state where you will be practicing or by a national physician contract review service.

The review itself serves four purposes.

  1. The first is simply education. It will help you to know what the contract says.
  2. Identify problems and red flags in the contract. These can be items that are in the contract or items that are not in the contract but should be. These will need to be changed or clarified during the negotiation process.
  3. Make suggestions where negotiation may be possible.
  4. Finally, a contract review is often paired with physician compensation data and can let you know how competitive an offer it and help you to know what you are worth.

A Typical Physician Contract Has Three Main Components

1. Job Description

The first component is a description of the job that you will do. The more specific, the better. Ideally, it will dictate where you will work, how many hours a day you will work, how many days a week you will work, how many patients you will see, what kind of breaks you will get, and how much call you will take.

While this section of the contract will vary by specialty, it is important to know what the expectations of the employer will be. Conflicts arise when your understanding is different from theirs. Consider the contract to be the written summary of your verbal communications. The employer should have no problem putting in writing anything that they told you verbally.

2. Compensation

The second component of a contract is what you will receive in exchange for doing that work. This includes a salary of some kind. Make sure you understand exactly how it is calculated. It may be a simple hourly rate. Find out if you still get paid that rate if you stay late to do charts or do charts from home. It may be a “per shift” payment. Again, find out what happens if you stay late. If it is based on Relative Value Units (RVUs), find out how many RVUs other doctors in this position generated. If it is based on billing, find out about how much has been billed by other doctors and convert that to your income. If it is based on revenue, you will need to learn about the payor mix of the practice.

Will you be paid as an employee or as an independent contractor? If a contractor, it will be much easier to open your own retirement plan and acquire your own benefits package. Remember that independent contractors must pay both the employee and employer halves of payroll taxes like Social Security and Medicare, as well as cover their own benefits. That means you need to be paid more as an independent contractor than as an employee for the compensation packages to be equivalent.

Other Benefits

In addition to salary, there are often many other benefits. A locums doctor may not be offered the typical “long-term doc” benefits like a 401(k) or health insurance. However, they are often able to negotiate for the employer to cover their travel and room and board. Airfare, a rental car, gasoline, food, hotel/apartment, and a food stipend are generally included. Make sure you know how each of these will be paid for. Malpractice insurance is also a large expense. Make sure you know who is going to cover it. If the policy is a claims-made policy instead of a stronger occurrence policy, who will be paying for the tail coverage when you leave? Will there be paid vacation or sick time?

3. The Break Up

The third important component of any employment contract is how the relationship will break up. What will happen if you do not like the job? What will happen if they do not like you? How much notice must you give and how much must they give you? What happens if you lose your license or hospital credentials? Under what grounds can they fire you for cause?

A particularly important aspect is the possibility of a restrictive covenant, or non-compete agreement. Even locum tenens contracts can have a non-compete in them. If you are doing locums close to home or think there is even the remotest possibility of permanently relocating to that location, try to minimize the radius and length of any non-compete agreement.

Make sure there is also the possibility for you to contract directly with the employer if you decide to stay on after the initial locum tenens contract.

When everything goes well, a contract may be barely needed. However, when something goes wrong, a contract is critical. In either case, a contract is useful to remind both parties of what they agreed to. Have your contract reviewed and do not be afraid to negotiate it. There is no such thing as a “standard contract” and as the rare commodity, you likely have a better alternative than the employer trying to hire you as a locum tenens doc. Negotiate an agreement that you will be happy with and enjoy your experience in a new environment.

Explore your next locum opportunity today at Doximity Careers!

Back to Blog