For Cause Termination of a Physician Employment Agreement

For cause termination of a physician employment agreement can have a huge impact on your career, so these provisions must be reviewed and negotiated.
for cause termination of a physician employment agreement

For cause termination of a physician employment agreement

For cause termination of a physician employment agreement is obviously a delicate issue. Employers have a  legitimate desire to make sure they can terminate a physician’s employment agreement if the physician turns out to be a lousy physician, or if patient demand just doesn’t justify paying the physician any longer.

A physician employment agreement should provide reasonable protection to both the physician and the employer if either party fails to live up to the bargain. That’s the whole reason for having for cause termination of a physician employment agreement. However, too often for cause termination of a physician employment agreement is based on nebulous language that allows an employer to terminate “for cause” even though the physician has done nothing wrong.

For example, for cause termination of a physician employment agreement can sometimes be based upon an employer’s “determination” of a breach. I always try to require such determination to be a reasonable determination made in good faith.

Although you can see the employer’s point in providing for cause termination of a physician employment agreement if a physician is accused of a crime (would you want to send your kid to a pediatrician who is accused of child abuse?), sometimes I am able to convince the employer that only an actual conviction will suffice as grounds of “for cause” termination.

Another common ground of for cause termination of a physician employment agreement is loss or suspension of medical staff privileges. Although that’s reasonable if you are tossed off the medical staff after a due process hearing, these provisions should provide that a temporary suspension for administrative reasons (such as untimely charting) is not grounds for termination of the agreement.

The agreement should also provide reasonable flexibility for both parties to get out of the deal, even if the other party didn’t do anything wrong – or “without cause” termination of physician employment agreements

In legal jargon, the phrase for cause termination of a physician employment agreement means the other party breached the agreement. A party can terminate the agreement for cause if the other party didn’t do what it was supposed to do, or did something it wasn’t supposed to do. It;s important that the grounds of a for cause termination of a physician employment agreement are clear, unambiguous, and reasonable. 

Of course parties can also use “without cause” (or “not for cause”) terminations, even though the other side didn’t do anything wrong.

You may also be interested in my posts about physician productivity compensationletters of intent in physician contracts, and hospital negotiations.

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 have an agreement you would like us to review, you can start your review here. We can also provide a free consultation to talk about how 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.