By Heather Blacksmith
Physician contracts are crafted to be extremely difficult to break. This is not only to protect the physician but also to protect the practice that employs the provider. These contracts list critical details about a physician’s employment.
Particulars, such as their benefits, performance expectations, salary information, and most importantly, termination clauses. As a physician, it is essential to understand the aspects of your termination clauses and the differences between a with-cause and a without-cause termination.
What is Without Cause Termination?
In a physician contract, there are typically parameters that allow for a without-cause termination. This means that either the physician themselves or their employer can end the employment contract for any reason. With this form of termination, either party must give advance notice regarding the termination of the contract.
The physician contract will state the exact amount of time required for such notification. Most practitioners and employers enter into a contract with the expectation of a great working relationship. However, there are circumstances in which the arrangement simply is not a good fit. A without-cause termination clause will give both parties an “out” that is mutually beneficial.
How Much Notice is Required for a Without-Cause Termination?
One of the top concerns among physicians is can an employer require 90 days notice prior to termination. Put simply, yes, they can. The average notice length for a without-cause termination falls between 60 and 90 days.
This time frame allows the healthcare facility to find another physician to fill the gap and it also allows for the physician to secure another job before leaving their current posting. Notices can last longer than 90 days, however, they are not as common unless there is a shortage in a specific field or metro area.
What is With-Cause Termination?
Just as there is a without-cause clause in physician contracts, there are also with-cause clauses. A with-clause termination will come into effect when a physician has breached the contract, violated the laws of the city or state, or failed to fulfill their contractual obligations.
With-cause contract clauses can also be triggered when there is a moral breach, physician behavioral problems, or a host of other specific violations. With-cause clauses typically list out the specific scenarios in which this clause would be triggered. Some are standard such as being charged with a felony or losing their medical license, others may be practice specific.
How Much Notice is Required for a With-Cause Termination?
With-cause termination notice periods are a bit different. Unlike without-cause terminations, with-cause is typically due to a negative event. The particulars of the exact notice required are listed in the contract. In general, with cause terminations have an immediate effect, but they are paired with a certain period to “cure”.
In essence, if there is a problem that justifies termination, a facility can show cause and terminate the contract immediately. In cases where the problem is justifiable enough to warrant termination, but can also be rectified, a physician will have a certain time frame in which to correct the issue. Cure or termination notice periods generally last from 15 to 30 days.
The Main Differences Between With-Cause & Without Cause Terminations
Termination clauses are some of the most important provisions in a physician’s contract. Now that you understand how each of these clauses works, let’s break down some of the differences.
The majority of physician contracts will have an employment term. This can range anywhere from 1 year to 10 years depending on the facility. There are always provisions for termination that are beneficial for the employer and the physician alike.
The biggest difference between the clauses is the notice period. For without-cause terminations, there is an extended notice period. This allows for both parties to make other arrangements without a significant loss in income or provided service. A with-cause termination typically is immediate or may have a very short cure period in which the physician can cure the cause of termination.
Another difference between the two termination clauses is the award of benefits and bonuses. The termination type will have a dramatic effect on restrictive covenants, insurance tail coverage, and reimbursement of recruitment costs. In a with-cause scenario, physicians are required to pay tail coverage out of their own pocket, or at least of the cost.
With a without-cause termination, these terms are generally more generous. Repayment of the recruitment costs is typically required when a physician is terminated with cause, however, this is not the case when the termination is without cause. The non-compete clause will vary depending on the facility, but they tend to remain the same in both situations.
About the Author
Heather Blacksmith has a Bachelor’s Degree in Finance and works at a finance firm based in Seattle, Washington. She specializes in small business finance, credit, law, and insurance. When she is not working, she spends her time in her favorite coffee shop writing on various finance-related topics. Other than that, she enjoys adult coloring books, recycling, and running.