Anatomy of an Employment Agreement

Health Law Talk Presented by Chehardy Sherman Williams

+ Full Transcript

Rory Bellina (00:15):
Hello everyone and welcome to Health Law Talk, presented by Chehardy Sherman Williams. Before we get started, please be sure to subscribe to our podcast and follow us on Facebook, Twitter, LinkedIn, and YouTube, – links in the description below. We hope you enjoy this episode.

Conrad Meyer (00:34):
All right. Good afternoon everyone. Welcome to another episode of Health Law Talk today with Conrad Meyer and Rory Bellina.

Rory Bellina (00:40):

Conrad Meyer (00:41):
Everyone. And today we have a special guest Dr. Sagar Shaw. Dr. Shaw, are you there?

Dr. Sagar Shaw (00:47):
Yes, sir, I’m here.

Conrad Meyer (00:49):
Oh, happy to have you on board. And today we’re gonna be talking about the anatomy of a physician contract. Basically Dr. Shaw has just gone through this entire process. He is a he is now ready to enter his career after extensive schooling and education, and he has his first contract. And we just went through it together and we’re gonna talk about the anatomy of the physician contract. Rory, you wanna talk more about Yes. How we’re gonna do this? Yeah.

Rory Bellina (01:14):
Before we get started, Dr. Shaw, do you wanna give our listeners a little introduction or background about yourself?

Dr. Sagar Shaw (01:20):
Sure, absolutely. I grew up in Richmond, Virginia. went to undergrad and medical school at vcu and VCU School of Medicine. while I was in medical school, I did a Master of Health administration. and so that really got me interested in a lot of the, the behind the scenes, if you will, of, of what goes on in the hospital. And which came in really ho handy when I was negotiating contracts and working with Conrad on working on the contract. And so then I did an orthopedic residency at Louisiana State University in New Orleans. And and I’m currently doing a hand surgery fellowship at University of Colorado in Denver.

Rory Bellina (02:09):
That’s, that’s great. Thank you for that introduction. And you mentioned negotiating contracts. So it sounds like throughout this process you have talked to different systems or hospitals. So tell us a little bit about that. How did that go? you know, did you receive, did you just start with interviews and then receive letters of intent or kind of how did that process

Conrad Meyer (02:30):
Yeah, how did the process work out when you started hitting the facilities and, and seeing who was interested in you?

Dr. Sagar Shaw (02:35):
Yeah, and so I think the, the big thing is before really doing the job search or really committing to interviewing, I think you have to do some research on what practice model works best for you as an individual. And just a couple examples include a group practice where everyone’s a partner in the group and you can join as an employee, employee of the group, and then eventually work your way up to partner. Then there’s the hospital model where you can join as an employee of a hospital. And so those are really the two main ones I was looking at. A third one is an academic model where you can join a university and not only have clinical duties, but have research duties and educational duties by teaching residents and medical students as well. and so what I was looking for was more a private practice setting. and so I geared my efforts in looking at hospital employed jobs and group practices.

Rory Bellina (03:37):

Conrad Meyer (03:38):
In what were the criteria was, was there any criteria in your mind? In other words, I mean we obviously you ended up with, with the hospital side. So what was the decision making process looking from a group practice model versus hospital? How did that play out in your mind and what were the deciding factors?

Dr. Sagar Shaw (03:53):
Yeah, it’s a great question. So, one of my mentors told me that there are three components to looking for a job. One is the location, two is the salary, and three is what type of work you’re doing. And I was told that if you can get two out of the three of them, that’s a home. That’s fair. That’s, that’s, that’s a win. cuz rarely will you ever get all three of ’em to, to the maximum that you want. And when I say the quality of the work or the kind of work you’re doing, that’s includes things like call complexity of the cases, number of hours you’re working and things like that. And so those three things were really what drove me one direction or the, the other. And what really drew me to the hospital was the wide catchment area and the volume of trauma that the hospital got. And because of all the trauma that they got, they had really awesome cases. and so rather than doing really simple cases every day, I had the opportunity to do very, very complex cases in the hospital setting. And that’s really what drew me towards that setting.

Rory Bellina (05:08):
So let’s, let’s jump in right there. So you decided the hospital setting was where you wanted to go. You obviously went on some interviews. Did the hospital kind of start this off with a letter of intent to you? And for our listeners, a letter of intent is kind of the, the prequel to the full employment agreement that kind of defines, you know, a range of pay, how many hours they expect you to work, kind of the basic main terms, just to make sure that, that you and the potential employee are on the right page. And if you can agree to that, then you know, the larger employee agreement comes into play and you really start negotiating the language. So was a letter of intent offered to you?

Dr. Sagar Shaw (05:46):
It was, and they refer to it as a term sheet. It just briefly went over the basics of the compensation and what type of productivity metrics they were looking at, and the ballpark of, of how productive they wanted me to be for a given amount of compensation. And they outlined the amount of call I would take and the different sites that I would be working at. And so those were really the big things that most people look at when they initially look at a job. And then once we agreed on that, we moved into the contract where we negotiated all of the details.

Conrad Meyer (06:22):
And so, so Dr. Shaw, let, let’s just go through that. So with, when you were negotiating that with the hospital, it sounds like you were doing that on your own? I know that over the hundreds of contracts that I’ve done over the years a lot of times, you know, when, when I get the call to do a contract, usually there’s one or two or three options that have happened. The doctor has already negotiated and just says, Okay, Conrad, all I want you to do is look at this and tell me I’m not, you know, walk to minefield. Right? Yes. You know, and I’m Rory, I know you have that. Yes,

Rory Bellina (06:53):
I know exactly where you’re going. And there’s, there’s three options here.

Conrad Meyer (06:56):
Right. And then, so then the second option is, is, okay, Conrad, I have no idea what I’m doing. I have never I mean, all they did was take me out to dinner. I think they sound great. You know, can you help me negotiate this? that was the, the next option. And, and so I guess the question that I get, you know, and a lot of times I tell the doctors, Wait a minute before you do anything, don’t agree to anything. Don’t, don’t say, Oh, that sounds great. Right, Right. Roy.

Rory Bellina (07:19):
I mean, and I think the third option, at least in my mind, is we get the phone call after the letter of intent or the term sheet’s been signed, and all the big things that we would negotiate have essentially already been done on. And it’s hard for us to, to walk that back. So it’s really a, a, there’s three options on what part we’re invited into this to, to look at. And, and that can really vary the leverage that we have and that the providers have on on negotiating.

Conrad Meyer (07:43):
And one thing I wanna to ask you, Dr. Shaw, you came in, I mean, I’m, you and I have spoken numerous times you were very well educated on where you wanted to go. So the question is, is how did you prepare for that? What research did you do about comp model and how did you kinda walk through your call coverage? I mean, we all know what, you know, how that, what that works. But how did you walk that through for your caseload call coverage, mid-level support, compensation? What research and where did you go to find that information to help you make those decisions?

Dr. Sagar Shaw (08:18):
I think my background with the MHA really helped me, and that really came into play when I was doing a lot of this research. I kind of knew what to ask and what to look out for. But I think the best place to start, if you have no idea where to start or where to look, is the MGMA data. it’s, it’s really hard to know or gauge what different compensations are for different areas. you can try Googling it, but those numbers are not accurate. and so what the, the MBMA data is, is like they, they’ve compiled very detailed statistics on physician compensation and have stratified it by specialty and even further stratified it by location work setting which includes hospital setting or group practice or academics. and they’ve separated into to regions the south the east, the the west and the north. And they’ve really looked at different metrics including rvu productivity and how that correlates or is associated with the actual dollar amount that physicians are compensated. And I thought that was a really helpful place to start. It, it, it told me what the median compensation was for a hospital setting in the South, and I started there and did some more research on rvu benchmarks and went from

Rory Bellina (09:54):
There. So when you met with the hospital, did you immediately go ahead and, you know, start negotiating on your own with your term sheet? Or did you bring in Conrad before that process? Or kind of what point did you say, Okay, I need, I need some help, I need someone to help walk me through some of these intricate details.

Dr. Sagar Shaw (10:16):
Yeah, so I did a lot of it before I got Conrad involved. I will say having an attorney involved was a huge help. I don’t think I could have done that gone through the process without an attorney. cuz there are a lot of pitfalls that an attorney’s eyes were just more used to catching than mine. and so I thought that was really helpful. But I did a lot of the, the salary negotiation, the compensation negotiation before I got Conrad involved. And then once I felt comfortable with compensation model that worked for me, I called Conrad and said, Hey, can you look over the contract and make sure that I’m not missing anything

Rory Bellina (11:02):
Here. Sure. And that, and that’s where, let, let’s jump right into that, you know, okay, so you’ve negotiated your compensation, your call coverage, maybe how much they’re gonna give you for continuing medical education, that kind of thing. Now you get the big employment agreement and, and that’s when you say, Okay, now I need someone to help me with that. So, you know, some of the, the big things that Conrad and I look at there, there’s big, you know, conditions or terms that we look at, you know, the, and, and we kind of wanna walk through some of those and, and get your opinion on which ones matter to you, which ones weren’t very significant to you. So, you know, one of the first ones that we’ll look at, it’s very simple, is, is the term of the agreement. You know, we, we like to see the term, or at least I like to see the term set very rigidly and don’t like it to be an open-ended. Because I think from what I’ve seen providers like to know, okay, this agreement will cover me for X amount of time and, and I’m kind of protected during that time. How did you feel, or if they talked to you about shorter versus longer terms, Like what was Dr. Shaw, what was your impression on that? Did you want something that was short and you would have to worry, you know, in 10 months, are they gonna renew it or are they going to try to change my compensation? Or were you looking for something more long term?

Dr. Sagar Shaw (12:19):
that’s a good point. I, I think both have their benefits and drawbacks. I think ultimately, whether you agree on a short term agreement or long-term agreement, I think an important clause to have in your contract is that you can modify it as you go. great point,

Rory Bellina (12:36):
Because if, if you get there and, and you’re, let’s just say meeting the 50th percentile of productivity and you’re getting paid for the 50th percentile of productivity, that’s great. But then on the other hand, if you’re getting paid for the 50th percentile, but then in year one you’re at the 90th percentile, right? Then you want room to be able to negotiate or renegotiate the terms that have been set in the contract and not necessarily be bound by what is on the contract for a given term.

Conrad Meyer (13:11):
And, and I agree with that. I mean, I think the term is relative to your position that you’ve staked out, right, Dr. Shaw from the negotiations you’ve had originally. So if you’ve had a good negotiating or success, right, in terms of your comp model, your vu production benchmark, your conversion factor, and we’re gonna get more into that a little bit later, but if you’ve had a good outcome, then I would say, Hey, I I want to keep that for as long as I can but still have that option to renegotiate. Would that be fair to say?

Dr. Sagar Shaw (13:44):
Right. I I agree with that.

Rory Bellina (13:45):
Yeah. And I think, you know, following up after term, the next thing that that can become overwhelming is what are your duties? And that’s a very, that’s a very broad category. We like to see, you know, it, it define as closely as possible to what your day-to-day look like, what locations you’re gonna be at. Are you gonna be in a hospital system where they could bounce you around from clinics or, you know, outpatient clinics? I think it’s important to know, are you allowed to moonlight? Is this a full time where you’re, are you restricted, I know Conrad, you’ve seen that before where we have, it’s very clear and it says, this is your job, this is your,

Conrad Meyer (14:19):
Well, you have to look at the point of view. If it’s from the employer point of view, I mean, I wanna make sure that they’re, that this doctor’s doing everything for me and me alone, right?

Rory Bellina (14:26):
Correct. Including if they’re, if they’re brought into medical review panels or depositions, any ancillary compensation for that, a lot of these employers want to capture that, where anything that you do that touches medicine, they’re considering that under their

Conrad Meyer (14:40):
Umbrella. Now, I think we addressed that, Dr. Shaw. What, what I think we handled that in, in, in, in your situation. I mean, I think that was a concern for you, was it not?

Dr. Sagar Shaw (14:49):
right. It was I think you did a great, great job putting your claws in there that kind of protected me from that.

Conrad Meyer (14:56):
And, and one thing I wanna mention too, and I know, Roy, you’ve experienced this and Dr. Sh know this is your first, this is your first one, which by the way, congratulations. I mean, I’m, I’m very happy for you. Congratulations. This is a big deal. but a lot of times when I tell physicians after seeing this they go on like these, these dinners, these recruitment dinners and so forth, and they get winded and dined and they, they’re promised everything, but then, and they go, even go on the term sheet, right? But when we finally get the agreement, what they were told at the dinner and what they were told, and all these, you know, you know, you know, glad handing, you know, Kumbaya yacht parties is not in the agreement. And they say, Well, wait a minute, you know, I was told X, but it’s not in the agreement. So Rory, I know you’ve experienced that. What, what would you

Rory Bellina (15:36):
Say that absolutely, and I would say one that, that is sticking out recent in my head and, and Dr. Shot I’m sure was important to you, is call coverage. Call coverage seems to be something that in the early conversations it’s brought up, especially for physicians or, you know, coming out of residency and fellowship, you know, you’re, you’re jumping into your first job and you’re expected that you’re gonna have to take call, you know, more than the more of the senior physicians or partner senior group. But it’s a very important topic because a lot of times you’re sold on a practice or a hospital where we have a hundred doctors on call, and so you’re gonna have call every 100th night, or, or in a better example, a smaller group where you rotate call, Well, what does rotating call really mean? Because if all of a sudden half of the doctors decide to leave and start their own practice, well now you’re taking it twice as much.

And is there additional compensation for that? What’s the maximum amount of call coverage that you have to take per month? I think that, you know, call is something that is kind of hidden in the weeds and not talked a lot about, but once you get in there, you could find out that, whoa, I didn’t know that I was gonna be taking call this much. Or a big group of the doctors just broke off. So, you know, Dr. Shaw, what’s your, what was your comfort level with, with call and, and and that big area of an employment agreement?

Dr. Sagar Shaw (16:53):
Yeah, it’s a good point. I think call’s one of the most important parts of a job agreement. And like you said, it’s, it’s a dynamic thing. It’s not static. such as when the number of physicians in the call pool changes, either from retirement or people leaving and so on. I think you have to clearly define a few things. first of all, is there compensation for call or is call compensation built into the base salary? Because that would change how much you’re getting paid per call. For example, if it’s built into the base salary, the more call you take, the less amount correct per call you are getting, as opposed to if you’re getting paid for each call shift, it just increases linearly. And so that’s one thing to pay attention to, especially if there’s a huge change in the call pool that would make a big difference.

And then another thing is what type of duties are you expected to perform while you’re on call? This is specialty dependent, but are you going in several times in the middle of the night to, to do procedures? Are you getting woken up? Do you have a mid-level on under you to field phone calls patient phone calls, Where do they go? Is there a call center? all of these are kind of important things to think about when it comes to call coverage. It’s, it’s, you can try to get as much as you can written in the contract, but I think a lot of it depends on the group of doctors that you’re joining and you just have to have a level of trust with the, the practice that you’re

Rory Bellina (18:37):
Joining. Exactly. I was gonna say that exact phrase that there has to be some level of trust that it’s gonna be as fair of a call rotation

Conrad Meyer (18:44):
As well in a, in a practice though, it’s like you’re getting married, right? I mean, you’re really like, you’re really getting married to the practice and you have to kind of figure out is this, is this, you know, when you’re dating, right? Is this gonna be a good relationship or not? Right? Right. So and I was mentioning before, so even on the call coverage with Dr. Shaw and how important that is to him and other physicians, you know, what you’re promised in a dinner or what have you when you’re in, you know, just in those discussions or terms needs to be in the contract wording, like, literally black and white, here’s what I was promised, otherwise it’s not gonna happen. So. Correct. And that’s just in other terms too. Absolutely. If you promise something, it needs to be in the contract, otherwise it will not happen. That’s the general rule.

Rory Bellina (19:25):
And, and, and my position on calls, I try to advocate for a cap per month. Right. And I also try to advocate for, you know, that that provision where if a, if a certain number of physicians leave, you’re not gonna be essentially penalized for that. That if, if a group breaks off that your cap at that and it’s up to the practice to, you know, go outside

Conrad Meyer (19:45):
Or the hospital get locums, yes. You have to get locums. They gotta get locums.

Rory Bellina (19:48):
Right. It’s not fair for you if you come in just at a, at a bad

Conrad Meyer (19:52):
Time. Absolutely. Absolutely. So looking at that in, in your case, you know, I know that we were successful in negotiating that, so I think that’s an excellent thing to, to have that carved out. I think a lot of times I will tell you that, that a lot of employers, especially on the hospital side, don’t reimburse for call coverage. They expect it in the base.

Rory Bellina (20:13):
Correct? Correct. And that’s a big, that could be a deal breaker, you know, for some, when you’re, when you’re comparing employers next to each other that could be a deal breaker as far as one pays x amount of dollars per hour per shift for call coverage and the other one just expects it of you.

Conrad Meyer (20:28):
So as far as we got through call coverage, we looked at comp, what were some of the other items on your hot list, Dr. Shaw, that you thought that you needed to address?

Dr. Sagar Shaw (20:40):
Really those were the two big ones, but then aside from that is how much support staff do you get? do you get a mid-level provider to kind of help you? For example, in a surgical field, it’s, it’s huge to have another set of experienced hands to help out in the surgery. and, and not only that, but then they in clinic they can really help speed the flow in, in your clinic. And so you can make you significantly more productive having a mid-level provider in addition to improving the quality of your life and job satisfaction. So that’s one thing that I kind of looked for. And then same thing goes with clinic support staff. Do you have a nurse or a medical assistant that’s gonna be fielding phone calls while you’re in the operating room or, or on your off days? and if you have a secretary that’s helping arrange your schedule how does the front desk work? Or who hires the front desk, how many employees are there, All of these things maybe you may not want to put the minutiae in your contract, but they are important to kind of look at and discuss.

Rory Bellina (21:55):
Sure. No, those are all great points and I think they, they make a big difference when you’re evaluating different opportunities. And, and one thing that I wanted to bring up as well, and I’d like to get Dr. Shaw, your opinion on when you went through this and when you were comparing your opportunities is kind of that, that catch all of other compensations. So a lot of, you know, hospitals or practices or whoever it may be, they’ll offer moving, moving expenses, sign bonuses, continuing medical education, allowances, you know, some of the will lawful student loan repayments if you decide to do outside research, medical directorship rates. So when you were looking at your different proposed opportunities, which one of those things really stuck out to you or mattered to you more than, more than some of the others?

Dr. Sagar Shaw (22:43):
To be honest, the way that I looked at all of those things, those were for the most part one time compensations, like signing bonus and relocation, I averaged it out into the contract cuz it makes a difference in the early stages. But when you’re looking at a, at, at a 20, 25 year long career, the 50,000 or a hundred thousand dollars signing bonus at the initial stage of the term, you know, averaged out isn’t really that significant. So while it might be helpful given that most positions coming out of training aren’t, don’t exactly have a significant amount of savings, I think that money helps upfront, but it shouldn’t really be a, a make or break kind of thing in the contract, in my opinion. Sure, sure. I think it definitely helps, but I think for me it, I was looking at more of like a long term stretch and how you can maximize the compensation over the long term, not necessarily just at the short term. So the signing bonus and relocation, although I did pay attention to them, we’re not make or break sort

Rory Bellina (23:49):
Of things. Sure. And and what about benefits? You know, a lot of, like, you’ve got small practices, you’ve got large hospital systems, they vary on the benefits they can offer, whether they give you, you know, the larger hospital systems will give you, they’ll pay for your parking, give you a meal allowance and a, a gym membership and some of the smaller practices will give you a car allowance and they’ll pay for your cell phone and your pager and you know, maternity leave, 401k, you know, association dues, that kind of thing. Did you take that same approach and kind of lump all that in and figure that, you know, this’ll average out across the board and and focus more on other things? Or did any of those make a difference to you?

Dr. Sagar Shaw (24:28):
Yeah, those are all very important. but it, it’s really hard to compare apples to apples when you get into all that kind of stuff. I agree. I think the more components you’re comp comparing, the harder the comparison become. And so I think you gotta really focus on your top three to five things that you want to compare between jobs and focus on those because every single job is gonna have its pros and cons and you can go on forever just sitting there thinking about the pros and cons of each job and comparing. And so I, although those things are important, I don’t think I really put as much emphasis

Rory Bellina (25:09):
On them. Sure. And so I, you know, I think we’ve, you know, if we’re ranking these things we’ve talked about, you know, being happy with where you’re going, being happy with your compensation, being happy with your benefits, and you know, like you said, you went to Conrad and he approached this, approached this and, and discuss all these topics with you. But kind of the big bad wolf in these agreements is always the termination. It’s always what happens if and when there’s a termination. And this is typically, you know, I I think our calls at least mine range, I get, you know, some physicians that will say, I’m negotiating it and we get the termination language worked out on the front end. And then the other half is I get a call from a, a new client, a doctor that I’ve never heard of that says, I need to get out of this and here’s my agreement and I look at it and there’s not a whole lot I could do. So Conrad, do you want to take over and discuss the big bad wolf of, of the termination section of

Conrad Meyer (26:03):
These? Sure. I mean, absolutely. So one of the first things I do before, before we even getting into negotiations and things like that with a contract, if I’m the, if I’m the one that’s, if we’re in this process is, is I look at the termination, I’m like, how do we get out of this agree, What, what, what mechanisms allow my client to get out of this contract easy with the least amount of damage and, and, and, you know, cover everything from any repayment of any loans they’ve asked for tail coverage, which is a big, huge issue. You know, who, who pays for that? And, and under what circumstances does, does my client have to pay for that? Does the doctor have to pay for that? And so those are the things that are really important to me. And what are the trigger the time triggers?

So for example without cause termination, you know, normally 90 days seems to be the standard. You know, I’ve seen him as low as 60 then I’ve seen him as as big as 180. So I mean, imagine if, if, if you get the call like on the, on the second part of what you just said and a client says, I really need to get out of this, right? Oh my God, I gotta get out of this place. Right? And you look at the plot, the contract, and they have 180 day without termination cause they’re stuck there for a half a year for six months.

Rory Bellina (27:08):
Right, Right. And if they try to breach that, then, then that’s a for cause then we have to go back and look at all the, all the, the things that they have to repay. And so because

Conrad Meyer (27:17):
I have that right now, I have a, have a, have a contract where I have a doctor right now who’s called me, similar situation who said the same exact thing, I can’t wait to get outta this. How do we get out of this? He has 180 day without termination clause. Okay. So he has six months to wait, but then he forfeits all of his bonuses. He has to repay moving expenses and all these other expenses that he incurred over a year and a half ago. Right. I think it’s insane. Right.

Rory Bellina (27:39):
So Dr. Shaw, I know that you and Conrad probably and Conroe went over all these with you. What were your concerns going into this? Because Conrad brings up the dinners a lot and you know, you never expect to break up or to, I use the term break up, you ever have to leave your employer or, or that end. But I’m sure Conrad went over all this with you. What were your big you know, questions or concerns or things that you encounter had discussed for, you know, termination for cause or without Cause

Dr. Sagar Shaw (28:09):
Yeah, some of the big things that we talked about is, is there a payback of any of the either bonuses or, or any compensation if you terminate before the three years or whatever your term is? I think that was probably the biggest thing that we talked about.

Conrad Meyer (28:31):
Yeah. And I think, I think, and you see it all kind of ways. I mean I think the ones that are very more onerous are there’s no pro out of forgiveness. you know, if you do it without cause right? And, and basically you pay it all back within, you know, even the initial term, which could be defined as more than a year. Right. So it’s, it’s, I mean imagine if you have a $20,000 moving expense and the initial term is defined as the first three years and you leave in year two and a half, suddenly you’re paying that moving expense back with no forgiveness. So I think the termination, you gotta really watch out the termination without cause and the repayment. But also I think one thing that, that I find, and I dunno about you Rory, and I didn’t really see it in, in Dr. Shaw’s situation, but these overly broad and undefined, vague terms of termination for cause.

Rory Bellina (29:17):
Correct. It could be as absolutely correct. When I see the termination for cause provisions, it’s usually, you know, every letter in the alphabet doubled on all the reasons they could terminate you. And, and then you can only terminate the agreement for one or two things. But you know, typically they’ll have, you know, breach of policies, procedures, well that could be you wore the wrong scrubs on Thursday or, or you know, you didn’t, you didn’t scrub in at the correct time or this surgery went

Conrad Meyer (29:45):
Or anything that causes reputational harm to their group practice. Which I mean, say for example, you know, especially here in New Orleans, I mean if someone goes out on Bourbon Street during Mardi Gras and they hit, you know, pictures on their Facebook page of them acting a little bit, you know, absolutely inebriated and that might offend the practice and manager who maybe his, you know, doesn’t drink alcohol right. And doesn’t find that finds that offensive, well then suddenly you might be in the crosshairs.

Rory Bellina (30:07):
Right? And, and that’s, it’s broad enough to where it, that could be a, a termination for cause trigger and now you are immediately out and you’re repaying everything that you never intended to pay for a minuscule violation. So I think the termination provision, in my opinion is one of the things that’s most heavily negotiated or, or going back and forth. And kind of to, to segue to that non-compete, I know Conrad and I deal with that all the time. Dr. Shaw, I’m sure you’re familiar with this, with your, you know, research and expertise. What concerns did you have with non-compete provisions?

Dr. Sagar Shaw (30:43):
I think it’s really dependent on the individual. if you are from an area and you are set on, on living in that area and you’re set on raising your family and dying in that area and, and you’re, then it’s, it’s, it’s one thing. You’re in one situation where, you know, you may or may not wanna sign a non-compete, whereas if you’re flexible and you’re willing to move and you don’t really have ties to another area you know, the non-compete is not that big of a deal. But it just, it really depends on the individual. overall I think I’m pretty flexible in, in terms of where I wanna live. I’d be happy, really anywhere. And so the non-compete I think is a, a fair thing to put in the contract from an employer’s perspective just because they would want to protect themselves from really helping a physician build a practice and then that physician leaving to compete against them. So I totally see where the non-compete is, is a desirable thing for employers, but it’s really just person dependent when you’re the physician, how important it is for you. And for me, it was kind of in the middle of the road. I knew it was there but you know, I wasn’t it, it wasn’t one of the most important things that I was

Rory Bellina (32:03):
Looking at. Yeah. And, and I think that Connor would agree that it’s much better to work these out on the front end, on the non-compete if we can get it narrowed down to the parishes and you know, cap it at, it’s typically the two years in Louisiana. But if we can somehow negotiate that lower and really restrict the parishes to where you are, I think it makes for a much better breakup as opposed to, you know, having to fight it on the back end.

Conrad Meyer (32:28):
Yeah, and I, and I agree, I agree with that too. I mean, I think anything on the front end is good and, and not on the back end, you know, so I, I think, and, and, and to be fair, I, I think there’s a lot of nuances dealing with the non-compete provision. You know, for example, who terminates and for what reason and correct when would it would apply. that, that also needs to be looked at in, in every contract

Rory Bellina (32:47):
And negotiating if, you know, if one party terminates for a cause, then it does or doesn’t apply. And same thing for with calls, I think there’s ways to make it fair for both employer and employee.

Conrad Meyer (32:56):
So rapid fire, I mean, we’ve gone through some specifics, but let’s, let’s get back to some generalities cuz we’re recording outta time here. So, so one of, just in general Dr. Sh what would you say would be some good, I guess we can all say, give our points here, but, but some good takeaways now that you’ve gone through this experience and congratulations by the way. Yes. So now that, now that you’re on the other side of the fence, if you will, what would you tell fellow residents, fellow fellows who are now going through this process? What would you recommend to them in terms of everything from research to hiring, you know, healthcare attorneys versus your friend down the street or, or not? I mean, what would you recommend to fellow residents and fellow fellows that are now, you know, especially now because we’re in, we’re in July, but you know, the process starts probably sometime in November, December, you know, in the fall for the following year. I know the new class is just coming in, but what would you tell your fellow residents and fellows about the process and what they should do?

Dr. Sagar Shaw (33:56):
Yeah, I, I, I think the, the most important thing is to just look at what is important to you and kind of narrow down from there. If location is the most important thing for you, start there and then work your way down. But like I said, you know, you look at three things location, compensation and the quality of work and no one gets all three of them. And so you really have to prioritize which of the three you want. So that’s the first place I would start. Secondly, I would do research by looking at the MGMA data. I think that is the most objective way to really compare compensation models between jobs is by using the MGMA data. And I think a good way to get access to that is through a healthcare attorney. and so that’s why it’s important to hire a healthcare attorney early because they generally have resources that would be too expensive for an individual to get.

For example, the, a data is thousands of dollars if you want to go and purchase it as an individual, but most healthcare attorneys would have access to this because this is what, what they do every day. And so I, I think having a healthcare attorney is, is, is, is invaluable. I think it’s a requirement for getting or a job contract and negotiating a job contract starting all the way from the research component all the way down to negotiating the small details. And so those are really the, the three main things I would, I would say.

Conrad Meyer (35:33):
That’s great. That’s great. Well, we, we, we, we would echo that from our end a lot of times, you know, we, when when we hear from doctors, it’s usually either after the fact or they don’t wanna spend the money, which I understand. but a lot of times, you know, they come back and they say, I would’ve never known any of this without you guys helping me. I would never have seen that. I wouldn’t have even thought about it. I mean, Roy, would you echo that? I

Rory Bellina (35:56):
Would, I would. And one thing that, that I hear a lot in, and Connor and I both do this, is it, it’s difficult for residents or fellows coming straight outta their program. You know, you’re, you’re trying to get that job and you wanna get that income coming in, but then you, you’re hesitant possibly to go spend money on an attorney. And we’re cognizant of that. We work with our residents and fellows to make sure that they’re getting an excellent review and we go through alls with them. We work with them on payment options to make sure that, that they’re comfortable with their employment agreement and, you know, their long term happiness with

Conrad Meyer (36:26):
Their, it’s their first contract. I mean, it is, you know, it really is. It’s about, to me, it’s about the relationship. Yes. I mean, I mean, even if, you know, Dr. Shaw moves to Texas or wherever, say, I mean, I mean, I don’t, you know, I don’t want ’em to of course, but I mean, if you move somewhere else, I mean, we have clients all over the country, right? So we’re not bound by Louisiana, so. Correct. It’s the relationship. So hopefully, you know, we have solidified a good relationship, a good rapport that, that if any doctor has questions, they can call back and ask.

Rory Bellina (36:51):
Correct. Correct. And we’re always willing to work with, with residents and fellows on, on, on payment options.

Conrad Meyer (36:57):
Well, and, and Dr. Shaw, I wanna thank you very much. I know Rory and I are very, very thankful that you decided to come on today to talk about this very important, very timely topic. we really appreciate your time and we would love for you to come back maybe, you know, down the road after you start your practice, and then maybe do a follow up on all right, you know, one year out, what are lessons learned that I wish I would’ve known, or maybe things are just doing great. if you’re open to that, we’d love to have you back on the show. Yes.

Dr. Sagar Shaw (37:25):
Yeah, absolutely. Thank you guys so much for having me.

Rory Bellina (37:29):
Thanks for listening to this episode of Health Law Talk, presented by Chehardy Sherman Williams. For more information or to contact us, please visit our website in the description below. Also, please be sure to subscribe to our podcast and follow us on Facebook, Twitter, LinkedIn, and YouTube.

In the US healthcare delivery system, physicians are exposed after residency and fellowship should numerous choices of whether or not to become employed by hospital systems, group practices, or start their own practice. On this episode of Health Law Talk, healthcare attorneys Conrad Meyer And Rory Bellina sit down with special guest Dr. Sagar Shah, a newly employed orthopedic hand surgeon, to discuss the details and the anatomy of a physician employment agreement. Dr. Shah shares with Mr. Myra and Mr. Bellina his thoughts on what issues were important to him as a physician in his employment contract as well as the research and preparation He felt was necessary when negotiating with future hospital employers. This episode details various provisions of the contract including compensation models, call coverage scheduling and Reimbursement, noncompete agreements, termination provisions, as well as numerous other provisions of a physician employment agreement. Do not Miss this highly informative episode on the anatomy of a physician employment agreement.

Health Law Talk, presented by Chehardy Sherman Williams, one of the largest full service law firms in the Greater New Orleans area, is a regular podcast focusing on the expansive area of healthcare law. Attorneys Rory Bellina, Conrad Meyer and George Mueller will address various legal issues and current events surrounding healthcare topics. The attorneys are here to answer your legal questions, create a discussion on various healthcare topics, as well as bring in subject matter experts and guests to join the conversation.

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