“Nothing is certain except death and taxes.”
Physicians are commonly offered one, two, and three-year employment contracts that appear ironclad and have automatic renewal clauses. The length of these contracts encourages us to believe we can confidently make major financial decisions based on expected income. Moreover, we want to believe that enduring years of training and oppressive loans have finally resulted in financial success. So, we read contracts hoping these agreements will be honored.
However, in medicine, there are no guarantees. This article discusses how physicians sign contracts that only guarantee 90 days of pay based on a facility’s ability to terminate an agreement on 90-days’ notice.
What is a 90-day notice?
90-day notice is addressed in the “Termination” section of your contract. This section defines the time interval required for either the practitioner or facility to terminate the agreement. In most cases, either party must provide at least 90 days’ notice to terminate the agreement without cause. Some employment agreements may extend this to 120 days or longer. Independent contractor agreements may require as little as 30 days’ notice. For this article, we refer to the 90-day interval, which is most common among employee contracts.
Since physician contracts are not guaranteed, they are only as good as the 90-day notice required to terminate a physician without cause.
*Please recognize that all agreements will have verbiage for how much notice is required if a facility or practitioner were to terminate the agreement for cause (i.e., criminal activity, negligence, etc.). Usually, this includes a notice of 30 days or less.
In most cases, physicians do not sign guaranteed contracts like professional athletes. A professional athlete may be able to sit out, remain on the active roster, yet still get paid. It does not work that way in medicine.
In the sport of healthcare, facilities pay practitioners for services provided, not to win a participation trophy. Governmental agencies mandate hospitals to pay employed practitioners for their direct services provided. It would be frowned upon to pay practitioners to sit idly in the doctor’s lounge.
If you don’t show up and produce to the standards of a facility, they may let you go without cause. The facility must only give 90 days’ notice to terminate the contract. It’s very simple! Facilities are not required to pay a practitioner’s salary beyond 90 days.
*Recognize that privately-run clinics and surgery centers may be set up differently to pay practitioners.
Most employed physicians sign contracts with facilities that automatically renew once the length of the contract is up. In reality, physicians agree to contracts that automatically renew on a daily basis due to the 90-day provision. Each day, the contract between the facility and practitioner renews for the following 90 days. In other words, you work each day tirelessly as a physician to extend your contract another 90 days.
This is not meant to suggest that all employed physicians should be worried about a facility terminating them in 90 days. It is a reminder that the length of the contract is not guaranteed. Remember, facilities may unilaterally end the agreement earlier than expected. This should lead all practitioners to evaluate their employment contracts carefully. What if a facility were to give 90-day notice and you were not expecting it?
The 90-day requirement is a double-edged sword. As easily as an employer can terminate the contract, so can the physicians. Just like the employer, a physician can cut short a contract by giving a 90 days notice. This can be a blessing for physicians looking for a way out.
Physicians must be hopeful that facilities will honor their agreement to keep them employed for the length of the contract. If facilities honor their agreements with physicians, then there should be a sense of job stability for the length of the contract. That said, all physicians must be aware that any contract can be shortened, and all that the facility must do is provide a 90-day notice.
This is not professional sports; this is healthcare. Guaranteed contract don’t exist. Guarantees in medicine are hard to come by, especially for employed physicians. This article discussed how an employment contract might appear as a guarantee but should not be thought of as such. In truth, the contract length can be shortened at any time by a facility providing 90 days’ notice to terminate. Take the time to review your contract and think about what is guaranteed. Many employed physicians are only guaranteed the next 90 days.