Reading Your First Physician Employment Contract

Most physicians sign their first employment contract at the most exhausting point in their training, with no business education and a deadline. Medical school teaches anatomy, physiology and pharmacology in exhaustive detail. It rarely spends an afternoon on the document that will shape the first years of your professional life.

The good news is that a contract is not mysterious. It is a set of promises about money, time, risk and exit. Once you know what each section is doing, you can read it with the same structure you use to read a chart: history, findings, plan, and what could go wrong.

“When someone hands you a contract to look at, you better have a lawyer look at it, and you better ask for more than what they’re giving you”

Start with your leverage

Before you read a single clause, understand your position. Demand for physicians varies by specialty and by region. A specialist who would be the only one of their kind within a wide radius is in a very different position from a primary care physician entering a crowded market. Employers know this, and their first offer reflects it.

Dr. Siddiqui's advice in The Dark Side of Medicine is direct: treat the negotiation as the moment you become your own business. A first offer is an opening position. A reasonable counter-proposal is expected, and the worst realistic answer is usually an offer to meet in the middle, or to add value somewhere other than salary, such as vacation days, a signing bonus or a stronger bonus structure.

Useful leverage includes your specialty's local supply, the size of the employer's open panel or wait list, any procedures you bring that the group cannot currently offer, and competing offers. Salary surveys from organizations such as MGMA or specialty societies can help you understand where an offer sits, but their full datasets are typically sold to members, so ask your employer or attorney which benchmarks they rely on.

How you will be paid

Compensation sections tend to follow a handful of patterns:

• Straight salary. Predictable, common in academic settings and for the first year or two of many jobs.
• Salary plus productivity. A base salary with a bonus once you exceed a production threshold, often measured in work relative value units (wRVUs).
• Pure productivity. Pay equals your wRVUs multiplied by a dollar rate per wRVU, sometimes with a guaranteed floor for the first year or two.
• Collections-based or percentage models. More common in private groups, where pay tracks what the practice actually collects for your work, less your share of overhead.
• Quality and citizenship components. A smaller slice tied to measures such as patient experience, documentation or committee work.

Whatever the model, insist on seeing the formula in writing. Ask what happens if you fall short of a threshold in year one: is there a clawback, a salary reduction, or simply no bonus? Ask how often production is reconciled and when bonuses are paid. Our guide to RVU-based compensation walks through the arithmetic.

Employers that bill Medicare and Medicaid also have to structure physician pay within federal fraud-and-abuse rules. In general terms, the physician self-referral law (the Stark Law) and the federal Anti-Kickback Statute mean compensation should be consistent with fair market value and should not reward you for the volume or value of referrals you make to the employer's other services. That is the employer's legal problem to solve, but it explains why some proposals, such as a bonus tied to imaging you order, may be refused.

Non-competes and other restrictive covenants

A non-compete clause limits where, and for how long, you can practice after you leave. A typical clause names a radius around one or more practice locations and a period of time. Read the definitions closely: is the radius measured from your primary office or from every site the employer operates? Does it apply if the employer terminates you without cause? Does it survive if the employer is sold?

Enforceability depends heavily on state law, and the landscape has been shifting, with a number of states adding limits that apply specifically to physicians. At the federal level, the Federal Trade Commission's 2024 rule that would have banned most non-competes was blocked in court and the agency stopped defending it in 2025. The FTC has said it will still pursue unreasonable non-competes case by case and has warned healthcare employers specifically. None of that changes the practical advice: assume the clause you sign will be enforced, and have a local attorney tell you how courts in your state treat it.

Look also for non-solicitation clauses (limits on contacting patients or recruiting staff after you leave) and any provisions on who controls patient records and notification when you depart.

Malpractice coverage and the tail

Ask two questions: what type of policy is it, and who pays for the tail?

An occurrence policy covers incidents that happen while the policy is active, no matter when the claim is filed. A claims-made policy covers claims filed while the policy is active. When you leave a job insured on a claims-made basis, you need extended reporting coverage, commonly called tail coverage, for claims that arrive later about care you provided during employment. The alternative is “prior acts” or “nose” coverage purchased by your next employer.

Tail coverage can be expensive, and contracts often shift it to the departing physician. A common negotiated middle ground is that the employer pays the tail if it terminates you without cause or if you leave after a set number of years. Get the answer in writing, along with the policy limits.

Termination, call and the rest of the fine print

Termination. Contracts usually allow termination “for cause” (loss of license, exclusion from federal programs, serious misconduct) and “without cause” with written notice, usually measured in months. Check that the notice period is mutual and how it interacts with your non-compete and tail. Watch for vague cause definitions such as failure to meet unspecified “standards.”

Call. Ask how call is distributed, whether it is shared equally among partners, whether extra call is paid, and how call frequency may change as the group grows or shrinks.

CME and benefits. Confirm the dollar allowance and days off for continuing medical education, licensing and board fees, society dues, retirement plan matching and vesting schedules, disability and health insurance, and paid time off.

Duties and schedule. The contract should state your expected clinical days, locations you may be assigned to, administrative duties and any requirement to supervise advanced practice clinicians. Supervision can be meaningful unpaid work unless it is credited.

Assignment and change of control. If the group is acquired, can your contract be transferred to the buyer without your consent?

Signing bonuses, relocation and loan help. These usually come with repayment terms if you leave early. Know the schedule.

Bringing it together before you sign

Read the contract twice: once as if everything goes well, and once as if you leave in eighteen months. The second reading is where most surprises live. Then put your questions in writing, ask for a redlined draft, and keep the conversation professional. Employers expect negotiation from candidates who understand their value.

Finally, have an attorney who regularly reviews physician agreements in your state read the document. A flat-fee review is a small cost against the life of a multi-year contract, and an attorney will know which clauses are standard locally and which are not.

Educational information only — not legal, financial, tax or billing advice. Consult qualified advisors. Laws and payer rules differ by state and change often; the descriptions here are general.