New Ventures, New Risks: Review all possibilities before affiliating with a hospital

In light of this clause, I advised my client against signing the contract as long as the monetary risk-shifting language remained. Hospitals are often amenable to modifications to this concept but will not identify the provision for a physician.

The Fine Print

These contract provisions are becoming increasingly popular and are a way for employers to shift their financial exposure to employed physicians. Lawyers reviewing the documents on behalf of their physician-clients often miss these provisions. The irony is that physicians are attracted to the hospital-employment model, wanting to avoid risk and receive a paycheck in exchange for security. By joining a hospital or health system that contractually shifts the financial risks to the employed physician, the physician has effectively lost the autonomy he or she once had in private practice, yet remains on the hook for the deficits of his or her practice, which the physician no longer controls.

Physician-hospital affiliations and employment models can be very beneficial for all parties involved. It is imperative, however, that the parties understand the terms and conditions of the contracts that govern the relationship. While a package may seem attractive overall, a short and simple caveat like that which appears in an employment agreement can quickly turn a seemingly good offer bad.

Steven M. Harris, Esq., is a nationally recognized health care attorney and a member of the law firm McDonald Hopkins, LLC. Steve may be reached at sharris@mcdonaldhopkins.com.