Expiration of Physician Employment Agreements

Most physician employment agreements will continue in full force and effect after an "expiration date". Nevertheless, it is generally a good idea to negotiate a new agreement when the old one expires.
expiration of physician employment agreements

Expiration of physician employment agreements

Expiration of physician employment agreements is becoming a growing concern. As more and more health systems are swallowing up smaller systems, I have been getting contacted by physicians who are concerned that their employment agreement has “expired”. For example, a physician’s employment agreement may provide that the agreement ends on June 30, 20xx. It is becoming more common for that date to come and go with no new agreement offered. Physicians in this position are rightly concerned about their status.

The good news in this situation is that most physician employment agreements are “evergreen”. That is, they automatically renew at the end of each term. Therefore, the physician’s employment agreement will remain in full force and effect even though the “expiration date” has passed.

In the somewhat unusual case where the physician’s employment agreement does not automatically renew, the physician should still be protected. Contract law generally provides that where both parties continue to perform under the agreement (i.e., the physician continues to provide services and the employer continues to pay compensation and benefits) the contract is considered “affirmed”. Therefore, the contract will be treated as if it had not expired.

Although you may be relieved to know that the employer is still obligated to keep paying you, you should still keep track of the expiration date. I was recently contacted by a primary care physician whose three-year contract had expired a few months ago. She had an offer from a nearby competing health system of about $60,000 a year more salary. When I spoke to her current employer’s lawyer about the situation, a new and much more lucrative contract was quickly forthcoming.

It is rarely a good idea to allow an old contract to continue. Your value to the employer may have increased significantly, either through changes to market compensation or because of your reputation among referring physicians. In addition, if you didn’t have an experienced physicians’ contract lawyer review the first contract, there could be significant legal traps that can be removed or lessened in a new contract negotiation.

You may also be interested in my posts about for cause termination of a physician employment agreement, without cause termination in physician employment contracts, and physician covenants not to compete.

To learn more about the critical issues to be aware of when negotiating a physician employment agreement, you can see my podcast of the 4 most common traps in physician employment agreements, my physician employment agreement checklist or, for the most extensive discussion of the topic, my  book on physician employment agreements. For specific information on topics you might be interested in, see my posts about physician productivity compensationMGMA compensation analysismedical record provisions in physician employment agreementsletters of intent in physician contractsphysician covenants not to compete, and call coverage requirements.

If you would like us to review your new agreement, you can start your review here. We also offer a free consultation to see if we can help.

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Dennis Hursh

Dennis Hursh has been providing healthcare legal services in Pennsylvania since 1982. Since 1992, he has been a physician's lawyer serving as Managing Partner of Physician Agreements Health Law, the first law firm in the country to focus exclusively on physician employment agreements. Dennis has devoted his life to serving physicians and medical practices. He is the author of the definitive book on physician contracts "The Final Hurdle - a Physician's Guide to Negotiating a Fair Employment Agreement, and a frequent lecturer on physician employment agreements.

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Physician Prosperity Program

How It Works

After purchasing the physician contract review, you will receive an email asking you to transmit the agreement and any concerns you have to me. Many physicians do this by email, but I will be available by phone, too. In three business days from the time you purchase the Physician Prosperity Program® and transmit the draft physician employment agreement along with any concerns you have about the agreement and the information I will need to perform the MGMA analysis, you will receive a detailed physician contract review letter from me.

After you receive my physician contract review letter, you will have the opportunity to discuss it with me, to make sure all of your concerns were met, and to correct any factual inaccuracies, or to point out things that were verbally promised but didn’t make it into the physician employment agreement. These discussions, and revisions of the letter following these discussions, are included in the initial fixed fee.

Once you are completely comfortable with the physician contract review letter, you transmit the letter to your potential employer.