University of Washington School of Medicine
Seattle, Washington
In part 1 of this series, I examined fundamental legal provisions in employment contracts—such as term, termination, malpractice insurance, restrictive covenants, and assignability—that form the backbone of any agreement (Gastro & Endo News 2025;76[7]:18-19). In this second part, I shift the focus to provisions that directly affect your daily work and long-term financial well-being.
A clear understanding of your duties, how compensation is structured, and the scope of benefits offered can be the difference between a sustainable, rewarding job and one that quickly leads to dissatisfaction. Below, I discuss important items to consider to ensure your career and financial future are protected.
Duties and Responsibilities
Every employment contract should clearly define your clinical, administrative, and on-call obligations with as much specificity as possible. Beware of vague, catch-all phrases such as “duties as assigned by the employer.” This language can leave you vulnerable to ever-expanding responsibilities without additional pay or resources. Push for clarity on expected clinic days per week, procedural volumes, average patient load, and any nonclinical responsibilities, such as teaching, research, or administrative assignments. The contract also should specify your call responsibilities, including weekend and holiday coverage.
Equally important are clear definitions of supervisory roles and working relationships, including to whom you report, who reports to you, and what role, if any, you will play in hiring or managing support staff. In addition, a practice should inform a potential hire of any performance evaluation process, outlining how and when evaluations occur, and the potential positive (bonuses, promotion) or negative (probation, termination) consequences that may result. Being explicit about these terms helps prevent misunderstandings, protects you from overextension, and provides leverage if workload expectations become unreasonable.
Outside Activities: What’s Allowed?
Physicians often have opportunities to participate in outside activities, such as locums work, consulting, teaching, lecturing, writing, and serving on advisory boards. Most contracts restrict outside clinical work unless specifically approved in writing. Nonclinical activities, on the other hand, generally should be permitted and explicitly exempted from restriction. If a proposed contract limits outside work, negotiate clear exceptions for academic, educational, or specific professional endeavors. Verify whether honoraria, travel reimbursements, or consulting income must be turned over to the employer.
In addition, if you expect to collaborate with industry, such as startups or device development ventures, ensure the contract guarantees that any intellectual property generated through outside activities remains the exclusive property of the physician and that the employer waives any claim to it. Preserving the freedom to engage in professional opportunities beyond your primary job is valuable for career development and personal fulfillment.
Compensation Models
Compensation often is the centerpiece of a physician contract, and understanding the model is critical. Most compensation structures fall into 1 of 3 categories: fixed salary, productivity-based pay, or a hybrid model. A flat salary is common early in employment, offering predictable income but no reward for higher productivity. Productivity-based models may be tied to relative value units (RVUs), net collections, or gross billings—each with very different implications. For example, RVU-based bonuses reflect the volume of services, while collections-based formulas depend on a practice’s billing efficiency and payors. Whatever the model, ensure the formula is transparent and documented in writing.
Request benchmarks such as Medical Group Management Association data to compare with national averages, as well as internal data from colleagues to judge whether proposed targets are realistic. Be cautious with contracts weighted heavily toward productivity, especially early in your career, and confirm the practice can provide sufficient volume to meet expectations. Finally, clarify how incentive bonuses are calculated, including thresholds and caps. If the structure seems overly complex or discretionary, ask for a written example.
Benefits
The value of your benefits package can add significantly to your overall compensation, often 20% to 30% beyond salary. Key benefits typically include health, dental, and vision insurance, as well as disability and life insurance. Retirement plans deserve particular attention. Many employers offer a 401(k) or similar plan, sometimes with matching contributions, which effectively increases compensation and accelerates retirement savings. Be sure to clarify the matching formula and whether there are annual limits.
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Vesting is another critical detail. Vesting determines how long you must remain with the employer before you “own” the employer’s contributions to your retirement account. For example, a plan may require 3 years of service before you are fully vested. If you leave before that period, you may forfeit part or all the employer’s contributions. Finally, consider what happens if the practice changes ownership. Your employment contract should specify that your 401(k) account, including vesting status and accrued contributions, will be honored under new ownership.
Other contractual benefits may include paid vacation, a continuing medical education (CME) allowance, reimbursement of board and license fees, and signing or relocation bonuses. Confirm whether CME days are separate from vacation. Review limits, exclusions, and coverage carefully. Signing and relocation bonuses can range from $10,000 to $30,000 or more; clarify whether payment occurs at signing, the start date, or after a probationary period. If you are not relocating, ask whether the allowance can be converted into a signing bonus. Pay close attention to repayment provisions; most bonuses must be repaid if you leave the job within 1 to 3 years. If so, negotiate prorated forgiveness so you are not obligated to return the full amount if you leave after a significant portion of the term.
Final Considerations
I strongly recommend having your contract reviewed by an attorney experienced in physician employment law. Healthcare contracts often involve state-specific nuances, so your lawyer should be familiar with the laws of the state where you plan to practice. Legal review can be expensive—just as physician services are—but the cost is small given the long-term protection it provides. Getting your contract right at the outset is an investment in your career, livelihood, and future.
In theory, any part of an employment contract is negotiable. In practice, however, large health systems and group practices tend to limit individualized agreements for reasons of consistency and liability.
That said, knowing the value you bring to a practice will help you gauge how much leverage you have. Enter negotiations with clear priorities: Understand which terms are nonnegotiable, which are desirable but nonessential, and which you can let go. While you may not achieve every change you seek, ensuring your top concerns are addressed is a realistic and worthwhile goal. Even small adjustments in terms—such as call schedules, bonus thresholds, and restrictive covenants—can have significant long-term consequences. Approach discussions respectfully, and aim for a win-win outcome that balances your interests with those of your employer.
Conclusion
In this series on physician employment contracts, we have reviewed the foundational legal provisions that establish the framework of an agreement, as well as practical elements such as duties, compensation, and benefits that determine its day-to-day impact and long-term value. I hope these tips will help you review contract offers with greater clarity and confidence, whether considering a first position or renegotiating an existing one. Best of luck!
For any questions, feel free to reach out to me at klausmergener@aol.com.
This article is from the October 2025 print issue.