COVID-19 Impacts on Physician Contracts

Payment Structure

One of the first considerations is the payment structure of the agreement. This would include how much of a physician’s salary is based on performance statistics, such as seeing a certain number of patients, and how much is supposed to be paid as a guaranteed salary.

“If you’re largely paid by productivity measures and the clinic is closed down, there probably isn’t all that much you can do,” said James D. Kelso, JD, LLM (Health), head of the Kelso Health Law Firm in San Antonio, Texas, who specializes in physician contracts and legal services. “In that model, if the physicians aren’t working and producing work relative value units, they aren’t paying for themselves or the clinic’s overhead.”

It’s fairly unusual for an employer to simply implement a pay cut. Contracts almost always have sections specifying that neither side can change the terms of the agreement without the consent of the adversely affected party. To get around this, employers will present the physician with a contract waiver that’s essentially a take-it-or-leave-it mandate—agree to a change in the terms or find a new job.

Your response to a unilateral cut is very contextual depending on what the contract says, the extent to which the employer violated the contract, the amount of money in play, and the importance to the physician of maintaining a good relationship with the employer. —Benjamin J. Mayer, JD, MBA

If you’re given a take-it-or-leave it offer, your ability to negotiate may be limited. If an employer agrees to make additional changes to your contract to get your acceptance, then they have to make similar concessions to all physicians. Doing that would defeat the employer’s reason for making the cuts: conserving cash.

Most contracts also have a “termination without cause” section. This means that either side can terminate the contract with proper notification after a certain amount of time, usually 60 to 90 days. In practice, this gives the physician a certain amount of time to find a new position when the employer wants out of the agreement.

In post-COVID-19 reality, if you’re likely to be terminated or to leave, then you should take into consideration the possibility of unemployment extending past the time any reserve funds run out. “The length of time it takes to get a new job is one of the things that has really hurt some people during the pandemic,” said Kelso. “It’s been very difficult to find a job when no one is hiring, and if you do find a job opportunity, interviewing and becoming comfortable with the potential employer through Zoom meetings is really tough. In addition, state regulators have also reduced staffing, which means that even if you got an offer in a timely manner, you still may not get the paperwork completed before the start date.”