Written employment contract updates for physician practices to consider in the wake of COVID19

Many physician practices have reopened and are trying to get back to “business as usual”. However, it is essential that physician practices take the time to review whether their employment agreements served them well during the pandemic, and what changes might be needed. This is especially important given that we may yet face a second wave of COVID-19.

Most physician employment contracts contain a provision requiring parties to a contract to agree to any modifications in writing. However, as a result of COVID-19, medical practices facing closures and forced service reductions found themselves in a dilemma. How could the practice afford to continue paying full compensation to physician employees with no/reduced revenue? It should be noted that although many physician practices received loans and grants as a result of the COVID-19 pandemic, most practices received inadequate support and the majority of employment decisions came before funding was even available.

Unfortunately, physician practices largely did not follow their written contracts when faced with the challenges of the pandemic. A lot of employers (including large institutions) unilaterally modified their contracts verbally, via email, or a written memo to all employees. Although most employees went along the proposed modifications, others sued their employers for breach of contract.

Of those employers that complied with their contracts, most entered into proper written amendment with their physician employees. Where an agreement could not be reached by the parties, some employers provided notice of termination without cause and paid out the contract term. In other cases, giving notice to the employee brought the parties to the table and an agreement was ultimately reached. Unfortunately, there were some employers that summarily terminated employees who refused to sign amendments and still others who fabricated grounds for termination to avoid their obligations. These unscrupulous employers will likely face litigation as a result of their actions.

From the perspective of an employer, the world has changed. In order to be prepared, physician practices should consider the following updates to their written employment contracts:

1. Employers should give themselves the right to unilaterally modify compensation. It should be tied to certain events (such as a closure or reduction in services below a fixed amount), and all employees should be treated the same across the board. Employers should clarify when the reduction will end based on objective measures, such as a return to a certain volume of collections, patient volume or similar measurement. Offering a repayment plan to employees or a chance for employees to earn additional income is also a very welcome approach.
2. Employers should give themselves the right to terminate a contract more quickly when certain events occur, such as a closure of the practice or perhaps a reduction of practice volume below a certain amount. I prefer that termination not be immediate and that a reasonable notice period be provided, but lengthy without cause provisions (i.e 180 days) are inadvisable.
3. Employers may need to have the right to assign employees different hours and locations in the event of certain specific circumstances. I am always in favor of specificity in a contract as it relates to schedule/location in order to reflect the parties’ understanding; however, the pandemic made it clear that employers made need the right during a crisis to close locations and/or modify clinic hours, and thus the need for flexibility becomes key.

When COVID-19 hit, many physician practices elected to immediately terminate/furlough their physician employees without regard to what the written employment agreement required. It’s important to remember that a contract generally can only be terminated in accordance with its terms, so a physician practice that wants the ability to furlough its physicians or immediately lay them off must revise its contract to allow for such an approach. Again, I suggest the conditions when some provisions may be used be specifically described so as to make the contract as reasonable and fair as possible to both sides.

Every physician practice must think about the challenges it faced (and may still be facing) during the pandemic and what contract provisions could be helpful. Practices should revise their contracts now with practical solutions for potential disaster that could occur in the future, whether related to health, natural disaster or even war.

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Asking for a raise when taking on more work

Ideally, additional job duties are accompanied by a commensurate increase in pay. But in the real world, employees often take on new duties without an automatic raise. Before asking for more money, evaluate your job performance honestly. For example, consider whether you put in a full day of work most days or whether you usually leave early. You may be asked to take on more work because your boss doesn't think you're as productive as you should be. On the other hand, if your solid performance is being rewarded with greater responsibilities, research salaries in your field and then ask for an appropriate raise.

Suggestions

1. Determine the typical salary for your job before you ask for a raise to ensure you're not expecting more than the market value for your position. Use online salary calculators and wage information as well as information from colleagues in your company or industry to find current data on salaries for jobs similar to yours.
2. Ask for a raise that's close to the market value for your position, and show your employer the salary data you gathered. Tell your employer how much time the additional work he wants you to do will take and how you intend to manage the added workload along with your regular duties.
3. Don't put your employer on the defensive by threatening to resign if you don't get a raise for dong more work. Instead, give your boss solid business reasons that warrant giving you a raise by citing other things you have done to benefit the company or your co-workers.
4. Prepare to respond to a counteroffer by determining beforehand whether you will take other benefits your boss may offer, such as additional vacation days, a bonus or a title change. In any case, respond positively even if your boss offers you a smaller raise than you want. Consider that a small raise is more than you had before.
5. Ask your boss what it would take to get a salary increase if he won't give you a raise right away. Get specific information from him on a time frame for a raise and the tasks you must perform to get the pay increase you want. Work on those tasks and document them as you perform them so that you can ask for a raise again at another time.

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Competing against a noncompete clause

Physicians often ask my opinion regarding restrictive covenant provisions in their employment agreements. Sometimes, I review such restrictions from the perspective of a physician looking to leave a medical practice. Other times, it is the medical practice looking to protect or enforce its rights.


In most states, some form of competitive restriction can be found in physician (and other provider) employment agreements and will be enforceable if properly drafted. Competitive restrictions are typically intended to protect an employer from “unfair” competition once a provider’s employment has terminated; however, noncompete provisions can sometimes go beyond what might be considered reasonable in a particular state.


It should never be assumed that a noncompete provision is “enforceable” or “reasonable.” No lawyer can, or should, provide such a guarantee. The specialty of the medical practice, geographic location, and the facts and circumstances related to an employee’s termination can all play an important role in assessing enforceability of a restrictive covenant. Often, the length of time a physician worked for a practice, and the reason for a physician’s termination, can be important factors as well.


One of the most important concepts a court will focus on when reviewing a noncompete clause (and therefore deciding whether to enforce such provision against a provider) is whether the employer has a “protectable interest” in enforcing the noncompete.


For example, if a physician practice has a patient base composed 75 percent of patients who reside within a 5-mile radius, the court might question if they have a protectable interest in a 25-mile noncompete radius. If a medical practice solely performs specialty services, such as urology or radiology, the court might question whether it has a protectable interest in preventing a departing physician from practicing all medicine rather than just the specific medical services that would compete with the employer. This kind of analysis is key to a valid and enforceable noncompete.


Another example of a noncompete where an employer may not have a protectable interest in enforcing a covenant against a physician is when an employer loses its contract to provide services at the hospitals its noncompete was written to protect. A recent decision by the Appeals Court of Indiana (“Court”) in Great Lakes Anesthesia, P.C. v. O’Bryan, et al., 27A02-1708-CT-1956 (April 2018) affirmed a lower court ruling that an employer could not enforce its noncompete under such circumstances.


In the particular case reviewed by the Court, two married certified registered nurse anesthetists (CRNAs) were hired by an anesthesia group (the “Group”) to provide nurse-anesthesist services at Marion General Hospital in Marion, Indiana. The CRNA signed an employment agreement with a provision that if the CRNAs terminated their employment (other than for cause) they could not render anesthesia services for 24 months at the specific facilities where they had worked for the Group or within a 25-mile radius of those facilities. This would prevent the performance of services at Marion upon termination.


Shortly after starting to work at Marion for the Group, Marion terminated its contract with the Group and entered into an agreement with a different anesthesia group to provide services at Marion (the “Replacement Group”). The CRNAs asked the Group to be released from their noncompetes so they could continue to work at Marion (with the Replacement Group). The Group rejected their request as well as the Replacement Group’s offer to buy out the CRNAs’ contracts. The Group then tried to send the CRNAs to another hospital greater than a 30-minute drive from their home.


The CRNAs terminated their employment with the Group and stayed on at Marion with the Replacement Group. The Group went to court seeking a preliminary injunction to stop the CRNAs from working at Marion, but the lower court rejected the Group’s efforts. On appeal, the Court made it clear that noncompetes are strictly construed against employers and will only be enforced if reasonable, including whether the employer has a protectable interest. In particular, the Court indicated that before a covenant will be enforced, the employer must first prove that by violating the covenant the employee gained a unique competitive advantage or ability to harm the employer.

In this case, the Court essentially held that because the Group ceased providing anesthesia services at Marion, it lost any protectable interest it previously had in prohibiting the CRNAs from working at Marion. Although this is only a summary of its holding, the essential takeaway from the decision is that a physician practice may not have the ability to prevent its provider employees from continuing to render services at a particular facility once it loses the contract for that facility.

This case is a good example of why both physicians and employers need to understand what factors will allow a noncompete provision to be found enforceable. Not all cases will turn out the same, of course, and different facts can also completely alter the outcome of any court’s interpretation of a noncompete provision. For example, if the CRNAs had formed their own group to steal the Group’s contract, the court might not have looked at the facts the same way.

Groups that hold exclusive contracts should keep this case in mind when drafting their non-compete provisions and when deciding how to enforce their rights. Legal counsel should generally not encourage a physician practice client to incur legal expense and/or to sue competing physicians unless and until a full analysis of the practice’s protectable interest is conducted.

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Small Business Hiring: Experience Trumps Education

Half of Small Business Owners Say Experience Trumps Education

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How to Ace the Final Interview

Making it past the first round of interviews offers a sense of satisfaction and gets you one step closer to landing the position. The final interview is your last chance to prove your qualifications and push yourself into the lead candidate position. The initial sessions give you an idea of how the company interviews and what they're looking for, but additional preparation for the final interview readies you for a more in-depth questioning session with the hiring manager.

Suggestions

1. Confirm the time and location of the final interview. Don't assume it will take place in the same location as your previous interviews. Verify the format of the interview so you can prepare for the number of people sitting in and understand what will be expected of you.
2. Replay all of the previous interviews with the company in your head. Make notes about your answers so you can respond consistently. Identify questions and answers that stumped you or didn't go as well as you'd hoped so you can practice those areas before the final interview.
3. Research the company if you haven't already. Even if you researched before your first interview, review the information and read more on the company. Show you care about the company by being able to tailor your answers to the company's vision and goals.
4. Talk to any acquaintance you know who already works for the company to get a sense of what to expect from the final interview. Ask for any insight into exactly what the hiring manager is looking for.
5. Write down specific examples from your prior work experience as a review for the interview. The final interview often involves more in-depth questions and answers. Having ideas in your head to show you possess the necessary skills makes answering those questions easier.
6. Prepare yourself to show the hiring manager how well you'll fit into the company. Use the specific examples from your experience and your knowledge of the company to demonstrate that you're a qualified candidate who will excel in the position.
7. Consider your requirements and desires for salary and benefits. Questions about these topics may arise in the final interview. Preparing yourself to answer the questions helps you avoid being caught off guard and giving a salary range you later regret.
8. Bring extra copies of your resume in case there are additional people sitting in on the interview. The hiring manager should have a copy of your resume available from the previous interviews, but being prepared with extras shows you're on top of things.

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