Military Physicians Leaving the Military

military physicians

Military physicians

Military physicians leaving the military have several issues that should be carefully evaluated before executing a contract with a civilian employer.

First of all, the income is definitely going to be higher than the military physician salary. Much like a physician coming out of training, the question military physicians should be asking is whether the salary is fair, not if they will be making more than they currently earn. Medical Group Management Association (“MGMA”) benchmarks can be utilized to determine if the salary is fair. Importantly, in an MGMA compensation analysis, MGMA benchmarks can be analyzed based on years in specialty. If MGMA has sufficient data for this analysis (not every subspecialty or specialty does have sufficient data) the years in specialty differentiation can be very helpful in analyzing an offer.

MGMA also has benchmarks for the physician sign-on bonus, CME, vacation and call coverage requirements. The MGMA data on relocation allowances is also of more than academic interest. Sometimes an employer can be convinced to add the relocation allowance to the signing bonus, so even if the military is paying for your move, you may still be able to utilize the relocation allowance benchmark to your advantage.

Military physicians also seem to be more accepting of the “this is our standard physician employment contract” line than their civilian counterparts are. Although that line is utilized frequently (because it works) only a tiny minority of institutions or practices actually require every physician to sign the identical agreement. Frequently the recruiter will tell the military physician that the recruiter is unable to make any changes to the agreement. This is often true, since many institutions and practices only allow a senior executive, with legal input, to change an agreement. It is always worth asking if the recruiter can forward questions regarding the contract to somebody else.

Military physicians also need to carefully review provisions regarding the start date. Civilian employers will require you to be credentialed at hospitals and by managed-care companies before starting work under a physician employment agreement. Many first drafts of civilian contracts allow the employer to terminate the agreement or delay the start date until all credentialing is completed. This can cause the physician to move to a new location and rent an apartment (or buy a house) expecting to have income on a given date. If the physician employment agreement does not allow you to start until all credentialing is completed, you may end up effectively unemployed. Landlords and mortgage companies are not particularly understanding if it turns out that you are not being paid when the rent or mortgage is due. The employer should agree to negotiate in good faith with you if not all credentialing is completed at the anticipated start date.

Another issue that the military physician needs to consider is physician covenants not to compete. Many physicians feel that there should be no limitation on the ability to practice if the physician leaves an employer. However, most states do allow an employer to restrict the ability of an employed physician to compete with his or her former employer. Too many physicians rely on the opinion of an attorney that a restrictive covenant is not enforceable by a court. In fact, the market will enforce a restrictive covenant that a court would never enforce. Your potential new employer is not going to risk going to court with the first civilian employer because they are allegedly “intentionally interfering with contractual relations” of the first employer.

The final issue that traps many physicians in their first civilian physician employment agreement is payment of tail coverage for malpractice insurance. There are two types of malpractice insurance in physician employment agreements: occurrence-based coverage and claims-made coverage. Occurrence-based coverage will cover any claim that occurred during the time that the policy was in place, so if a claim is made after you leave that employer it will be covered. However, claims-made insurance, as the name implies, only covers claims that are made during the time that the policy was in place. If the employer has claims-made insurance, then an extended reporting endorsement (a “tail”) must be purchased.

Tail coverage can cost nearly half a physician’s annual salary, so the physician may end up trapped in a position that the physician hates, because it is simply too expensive to leave. The physician employment agreement should contain a provision addressing who is responsible for purchasing the tail. If the employer is not willing to cover the entire cost of the tail, sometimes they are willing to pay a portion of the tail based upon years of service (e.g., 1/5 of the cost of tail coverage for each completed year of service). When negotiating these agreements, I always attempts to require the employer to pay for tail coverage if the agreement is terminated without cause by the employer, or because of the death or disability of the physician.

Military physicians should also realize that not all employers are equal, or treat their physicians equally. It would be prudent to investigate how physicians rate their employer at a site such as RYHE.org.

Military physicians entering the civilian job market are in a “seller’s market.” They should get a reasonable employment agreement. It is important to remember that while you were serving your country you were also gaining valuable experience as a physician. Do not sell yourself short!

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Dennis Hursh

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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    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.

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