Tyler urological surgeon Ryan Tubre, MD, faced a “laundry list” of contract negotiations when he opened his practice in 2023. From provider contracts with insurers to electronic health record (EHR) software vendor contracts, Dr. Tubre had to examine – and sign – numerous documents before he could begin treating patients.
Dr. Tubre turned to Texas Medical Association’s practice services staff in search of relevant resources. They provided general contracting resources and checklists related to different stages of practice development. TMA’s practice services staff also directed Dr. Tubre to a resource list of attorneys in private practice who might be able to help. TMA does not provide legal advice or recommend or endorse any attorneys.
“The help was a lifesaver. I couldn’t have opened my practice without TMA’s assistance,” Dr. Tubre said. “‘Don’t lose hope.’ ‘We’re going to find answers.’ These were the messages TMA provided to my practice when we encountered bumps in the road.”
Heather Bettridge, TMA’s associate vice president of practice and information services, says physicians should view contracting as an opportunity to memorialize a written outline of the expectations for all involved parties. Although contracts can’t reduce all risks, a properly drafted document can help protect physicians from potential legal and financial challenges down the line.
“Physicians have more negotiation power than they think,” Ms. Bettridge said. “Remember, it’s not just about what [others] want – it’s about what you want, too.”
TMA has compiled information across four contract areas – real estate, employment, technology and managed services, and health plan agreements – for Texas Medicine readers to review.
Texas attorney Michael Z. Stern, whose private practice law firm offers certain legal services to TMA members at reduced rates, says real estate contracts and leasing agreements are often some of the first documents physicians encounter.
These contracts commonly outline key terms – like lease duration, rent or purchase price, and maintenance and repairs – for physicians seeking to lease an existing facility, or buy an office or land to build on.
However, Mr. Stern warns real estate contracts only become more complex from there. Physicians must consider concerns unique to medicine, like the confidentiality and safety of patient’s medical records – a physician’s lease should limit a landlord’s access to where patients’ medical records are kept, for example – and medical waste disposal specifications, among others.
Physicians may need to enter into a business associate agreement (BAA) with their landlord in certain circumstances. This agreement outlines each party’s responsibilities regarding protected health information (PHI), which may be a HIPAA compliance requirement under certain circumstances.
For instance, if a landlord is expected to have access to secure PHI – such as through the retrieval and disposal of PHI when a physician tenant’s lease ends or by being involved in the installation and maintenance of technology that stores PHI – the situation may create the need for a BAA, according to the American Health Law Association.
Physician tenants also should consider a contract’s clauses, like exclusivity or rent escalation clauses.
While one clause may work in a physician’s favor others, like rent payment clauses, could allow landlords to increase a physician’s rent over time to match inflation or other market rates.
“Take contracts as a starting point, and always, always hire an expert to walk you through the contract’s complexities,” Mr. Stern said.
Mr. Stern recommends physicians work with an attorney or real estate broker to “break down a contract to the details.” He also suggests physicians:
- Shop around for the best location to meet the needs of their practice.
- Enter contract negotiations with clear expectations and goals.
- Work with professionals, like contractors, who understand the specialized regulations required to lease or build out a medical office building.
- Only sign a contract when they understand the terms completely.
“Always remember that the contract was drafted in favor of the person who wrote it,” Mr. Stern told Texas Medicine. “It is absolutely vital to read and review each agreement before signing.”
Another contract physicians could face early on in their careers is an employment agreement for physicians joining a practice or facility.
Physician employment contracts generally outline a doctor’s salary, the number of hours they are expected to work, their availability and on-call hours, and outpatient care or administrative duties, among other terms and conditions.
The American Medical Association notes a physician should understand and be comfortable with the terms of an employment contract, especially when it comes to the two compensation models a contract can have:
- Fixed compensation: a set salary not dependent upon a physician’s performance. This model is often used for new physicians, per AMA; and
- Variable compensation: a compensation model that accounts for a physician’s performance against set benchmarks – such as volume of patient visits, use of supplies and utilities, or any number of trackable measures of productivity or profitability – when determining salary. More experienced physicians typically receive this type of compensation.
TMA Director of Practice Services Teri Deabler says physicians entering employment negotiations should come prepared.
“Do your own research,” Ms. Deabler said. “Ask about salary, work expectations, and term provisions. You need to advocate for yourself as much as you advocate for your patients.”
Ms. Deabler cautions physicians to be aware of the potential impact of a noncompete clause – or a “covenant not to compete” – the terms of which are often described in complex contract jargon. These clauses could restrict a physician’s ability to practice in a certain geographic area, or to join a competing practice or hospital for a specified period.
The terms and conditions of certain employment agreements can affect a physician’s career options, Ms. Deabler says. Before signing any employment contract, Ms. Deabler reminds physicians to:
- Actively review and negotiate compensation.
- Consider obtaining legal advice and having the proposed contract reviewed by a privately retained attorney.
- Ask questions about any provisions they don’t understand, including medical professional liability and termination clauses.
Technology and Managed Services
Contracts for services like janitorial duties, billing and coding, and equipment leases should also be considered.
Ms. Bettridge says a well-drafted medical billing contract will detail, among other things, which services are provided by the medical billing business, the pricing for those services, and the terms under which payment is rendered.
This type of contract may also be called a service agreement. She says these contracts usually specify:
- What services the billing company will or will not provide;
- How much the services will cost, and how they will be calculated;
- When the billing company will begin providing service;
- How the information regarding patient services will be passed along to the company;
- Patient privacy and confidentiality protections; and
- The term of the contract, including how to terminate the contract.
Another technology contract physicians encounter – perhaps, the most important one, Ms. Bettridge says – is an EHR agreement.
The ONC recommends these key contract provisions be negotiated:
- Service level agreements and service performance agreements, which define expectations and obligations between clinicians and billing services;
- Data protection conditions. EHR vendors typically do not offer transition services and may charge a hefty price to export data in valuable formats;
- Security and privacy obligations that account for potential costs associated with breach of privacy; and
- Written assurances of vendor responsibility for installation, testing, and specific system maintenance.
Additionally, Ms. Bettridge suggests physicians utilize common contracting due diligence when evaluating an EHR agreement and do not hesitate to ask vendors for what they want.
If you’re not sure what you want out of your EHR, Dr. Tubre recommends “picking about three or four [EHR] systems to trial and then make a decision from there.”
TMA members shopping for an EHR can utilize TMA’s updated EHR Comparison Tool. This members-only benefit helps physicians identify product features, functionality, and pricing that will best suit their practice.
Dr. Tubre said the “most difficult” contract he faced when opening his practice was a health plan agreement. He says if he had not negotiated the contract’s terms, he’d be “stuck” to a commitment that did not serve his practice or his patients.
“As a solo practitioner, you essentially have no power,” he said. “Sometimes, it feels like you have to take what they give you and build off that over time.”
However, to adequately negotiate a payer contract, physicians should seek the advice of their privately retained attorney, identify their practice’s strengths, and understand the market it serves. With these resources at hand, physicians are better positioned to negotiate and avoid unfavorable contract terms, Ms. Bettridge says. Additionally, she suggests physicians consider the following:
- Do you have copies of all your contracts and fee schedules?
- Do the proposed fee schedules cover your costs?
- Do you understand how the fee schedules are structured and what that means for your practice?
- Are your contracts loading into your practice management system for payment auditing?
- Are the administrative requirements manageable or overly burdensome?
- Do certain health plans account for a large percentage of your payer mix?
- Are all documents referenced in the contract available to you for you to review?
- Can the terms of the contract and its equally binding referenced documents be amended by the payer without your notice or approval?
- How will you be notified of any proposed amendments to the contract?
Getting all those questions answered before entering into an agreement will bring the focus back to what’s most important for practices, Dr. Tubre notes.
“Do your research, because that’s going to prevent any headaches in the future,” he said. “The last thing you want is … contracts to [delay] you from caring for your patients.”
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Alisa Pierce
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