Physicians Practice - June 2008 - (Page 46) Roediger’s exercise also can be useful if the practice and the physician ever end up in court. “You can say, Your Honor, before we even hired this person we did a ZIP code analysis and we figured out that this is where all the patients came from . . . This was founded in fact.” CHASING YOUR TAIL With the cost of malpractice insurance skyrocketing, it’s no wonder the issue of malpractice insurance has become a sticking point in many employment agreements. It’s not just a matter of who pays, but how. Your contract with any new physician should specify the overall level of coverage, as well as the type of coverage mandated — occurrence or claims made. Occurrence coverage, as most people know, covers any claims for services rendered during the period in which coverage exists. Claims-made coverage addresses any claims while the policy is in effect, but once payment stops the coverage is gone. While claims-made coverage is often cheaper for practices, it opens the question of what happens when a physician leaves. Does the practice pay for the extra “tail” coverage that covers anything the physician did under the claims-made policy, or is it the responsibility of the physician? Society Hill Anesthesia has come up with what it thinks is a fair solution to tail coverage. If a new physician leaves the practice within 12 months of being hired, then he or she is responsible for 100 percent of the cost of the tail. If the physician leaves within two years of being hired, then the practice will split the cost of the tail with the physician. After two years, the practice will pay the tail itself. “What we’ve basically addressed in the contract is a commitment to the organization,” explains Edwards. “If we’re willing to hire you and you decide that this is not the job for you in a short period of time, we don’t feel it’s fair to expect us to cover that tail coverage.” PARTNERSHIP: TO BE OR NOT TO BE? IS YOUR NONCOMPETE CLAUSE LEGAL? Many practices aren’t aware that noncompete clauses, sometimes called covenants-not-to-compete (CNCs) or restrictive covenants, are unenforceable in certain states. In California, for example, CNCs are illegal. A lawyer will know if CNCs are enforceable in your state, or you can check with your state medical association for more information. In Witte’s opinion, partnership is a double-edged sword in most employment agreements. On the one hand, he thinks many employment agreements would get signed faster if terms for partnership were included; on the other hand, he knows practices sometimes are leery of committing themselves to partnership terms at such an early date. But Roediger thinks practices have to expect questions about partnership from physician candidates. “If this is a private-practice situation, and particularly if there is a restrictive covenant, it is reasonable to expect that the associate is going to want to know more about the partnership arrangements in the contract,” she says. This is a situation in which practices may have to overcome their reluctance and commit to partnership terms in advance. In the first place, you should already have made a business case for taking on a new partner in the practice, so you should already know some of the financials behind your decision. An accountant will be able to help you fill in the remaining details about increase in revenues, planned growth, and buy-in. Secondly, you’re much better off being clear about the practice’s expectations in advance instead of letting them cause problems later. “I have seen more situations fall apart, whether it is one or four years later, and the associate feels they have helped build the practice so why shouldn’t they buy in at that time? It’s half their practice, too. You also feel this is your practice, you have built it up from the ground,” explains Roediger. Edwards has a slightly different perspective. Working with such a large practice, he has been through a lot of physician hires and observes, “Not everybody wants to be a partner.” Society Hill Anesthesia defines partnership as a full-time position with full call, and not every physician is looking for such a heavy call schedule. “We’ve changed our questioning to ‘What are you looking for?’ rather than automatically assuming that everybody wants to be a partner,” says Edwards. Society Hill Anesthesia now has different agreements for employment vs. shareholder track positions. Make sure that both you and your candidate are clear about what you want the position to become once the term of the agreement is over. Do you both see partnership at the end of the road? CONFIDENTIALITY AND ACCESS Although most employment contracts contain standard clauses about HIPAA and patient confidentiality, few practices think to include language about practice confidentiality. To protect your practice’s business, it’s not a bad idea to make sure the physicians know they can’t share proprietary information about practice operations, patient demographics, and finances with outside parties. Roediger looks at hundreds of physician-employment agreements every year, and one area she hardly ever sees addressed is post-termination access to records. “In the event that a doctor ever gets sued or investigated, he or she has the right of access to their records,” says Roediger. Also, depending on the physician’s specialty, she may need access to records for purposes of board certification. Roediger recommends adding that into the contract as well. KEEPING IT FAIR Everyone enters the process of negotiating a contract with some degree of trepidation. It’s only natural to be on guard against potential injury, and it seems like an employment agreement WWW.PHYSICIANSPRACTICE.COM 46 | PHYSICIANS PRACTICE | JUNE 2008 http://WWW.PHYSICIANSPRACTICE.COM
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