As a health care attorney, I am called upon quite frequently to draft and/or review .  One of the recurring discussions I have with physicians about such arrangements revolves around the issue of contract termination.  Many physicians, understandably, are hopeful of securing an “iron-clad” employment agreement that cannot be terminated without some distinct finding of cause such as the physician’s conviction of a felony or loss of license.  However, when negotiating an employment agreement, both parties to the arrangement should consider the risk that the employment relationship may not work out for a variety of reasons – including clinical performance.

If the relationship becomes untenable for the employer and the only way the agreement can be terminated is for cause, the employer will likely scrutinize the employed physician’s performance very closely for a reason to terminate the agreement.  Terminating a physician’s employment for cause without a firm basis for doing so can create legal exposure for the employer since, for example, a physician whose clniical skills have been called in to question could sue.  On the other hand, a disgruntled physician employee can have a very disruptive impact in an office, with patients and on valuable referral relationships but he could face a breach of contract claim if he leaves employment before the end of the term.

For the above reasons, I often suggest that physician employment agreements afford both parties the opportunity to terminate the relationship without cause on a certain number of days’ notice.  Such a provision can allow for an easy way out without exposing the employer to a wrongful termination lawsuit or exposing the employed physician to the stigma of having been terminated for cause.  And, in my experience, after spending time and money to recruit/interview and negotiate the contract, parties rarely end such an arrangement without having a pretty good reason, so the risk of an “out of the blue” termination is usually not as great as many physicians initially fear.