Physician contracting: Understanding letters of intent

Physician contracting: Understanding letters of intent

What is a letter of intent? And what kinds of things should be provided in yours?  

In an episode of the “AMA Earning the Rounds” podcast, AMA Senior Attorney Wes Cleveland discusses letters of intent and when really should you retain an attorney all through the contracting course of action. 

Cleveland has been a practising attorney for much more than two decades and, prior to signing up for the AMA, worked for the Texas attorney general and the Texas Professional medical Association, and in private exercise representing medical professionals. This episode is the 2nd in a 6-component sequence on navigating contract negotiations from begin to end. 

Under is a lightly edited entire transcript of his presentation. You can also listen to the entire episode on Apple Podcasts or Spotify, and find out a lot more with the AMA about understanding health practitioner work contracts. 

Wes Cleveland: One of the items that has retained demonstrating up is this idea of a letter of intent. So, what is that? Effectively, a letter of intent is an initial letter that an employer may possibly give you that kind of sets the expectations that are likely to implement for the duration of a negotiation process. Mainly, the employer will give you this letter of intent just to make sure that you are on the exact same website page with the employer. 

What does it necessarily mean to be on the very same website page? Nicely, the letter of intent will address main elements of employment, like how very long the employment’s heading to be. Is it going to be for a year? The original work I’m talking about. Is first work heading to be one yr? Two years? 

What’s the compensation likely to be? What are the benefits going to be? You know, the auto, health insurance policy, employer paying for CME. When’s the start day heading to be? And also, what are your duties likely to be? For case in point, are you going to be doing work full time? What does “full time” mean? What are your connect with obligations heading to be and so forth? 

Now, this is an vital point. Ideally, almost everything I’m stating at this presentation is vital, but this is specially critical. Commonly these letters of intent aren’t binding, which suggests just what I’ve said. You are not always certain by these. In other words, if the payment would say $300,000 and you indication it, that would not suggest that you have to accept $300,000 and leave or not get the job done there. It could maybe be later negotiated to $350,000 or $400,000 or whatever it is.

Which is what it indicates to be nonbinding. Nonetheless, in some instances, it could be binding. And then you would be locked in, let’s say, to that $300,000. 

So, if you acquire a letter of intent, I would endorse at that level getting a lawyer seem at that. Yet again, a attorney who specializes in symbolizing physicians in employment agreements. At that stage, I would, due to the fact it really is an essential document. 

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At times what you will also have in there is, even if it is really not binding, there will be a provision in this letter of intent known as a standstill agreement, which mainly states, “Through the time we are conversing about you potentially doing the job for us, you’re not heading to negotiate with any one else.” That is regular. 

But here is the type of caveat I want to deliver up about the nonbinding nature of letters of intent. Even if the letter of intent is nonbinding, it isn’t going to automatically hamstring you, but what it can do is it can generate anticipations on the portion of the employer, let us say in terms of your payment, that might make it extra complicated for you to depart from later on in the negotiations. 

For illustration, let us say you receive a letter of intent and the compensation is detailed, once more, let us just say $300,000. And you indication it, and then later you get a attorney, and you appear it about, and you do some study on the internet. It’s possible you have entry to one of the big nationwide payment surveys. For instance, the Professional medical Team Administration Association [MGMA] publishes people surveys.

You say, “Now wait a next, that’s a small little bit reduced. That’s lessen than the median for this geographic region and for my specialty.” You could go back again in there. You are not prohibited from going back again and stating, “You know, I think $400,000 definitely is additional appropriate and extra good marketplace price for my services in this portion of the nation.” And then the employer could say, “Yeah, but I thought we kind of, you know, recognized it was going to be $300,000.” 

It is really not that you may be bound by the $300,000. That’s just sort of the condition, in phrases of the anticipations. That’s why I just say, in this space, even when you are speaking about a letter of intent, I would at that position try to determine a lawyer that might be ready to aid you even starting up with this, with the letter of intent. 

A single issue I want to also emphasize to you—and this is a make any difference of contract legislation, irrespective of the discussions you could have had, guarantees that have been designed to you throughout a period of discussion, or negotiation—none of it is really heading to make any difference until it can be in the contract. If there are guarantees that have been manufactured to you and it seems fantastic and they will not make it in the contract, the employer’s not heading to be bound to that. It’s acquired to be in the deal, so that’s why it’s essential genuinely to review it really carefully. But just hold that in brain, if it truly is not lessened to writing, then it truly is not likely to be part of your arrangement. 

Let’s discuss about fringe rewards. These are vital. 

Of course, I believe almost certainly the most thoughts I receive during presentations to people is about payment and how do I know what honest compensation is. 

When I get these issues about what’s good compensation for my specialty, a great deal of people will say, “What about the MGMA survey or it’s possible some other countrywide survey? How can I get access to that details?” 

Very well, all those factors are pricey, due to the fact they get a good deal of work to create. It’s several hundred bucks to get those people, most likely much more. I don’t know, it can be been a while since I checked. But, what’s critical to know is that you probably won’t want to devote revenue on people surveys. But  that the variety of legal professional that you would want to interact to critique your deal might nicely  have accessibility to that survey info. So, that is one more thing that I want you to be aware of. 

Now, we go back again to fringe positive aspects. Normally, you’ll have a litany of fringe advantages that will include vacation, personal time off, use of the cellphone, often times a business motor vehicle, everyday living insurance coverage, license charges, credentialing software costs and also CME. A great deal of moments one of the larger products is continuing health-related education and learning, where by you can expect to be provided time off to go to the conferences that you consider are important and to what extent will your employer fund your attendance, your vacation fees and the registration charges for attending people conferences. That is an vital consideration usually for inhabitants. 

And then just one issue I also want to deliver to your focus is disability insurance. For some specialties, if you might be bodily disabled, that’s it. Let’s say for example, surgery. So, if you are in a specialty where by if you were physically disabled for a interval of time, let us say a automobile accident or whatever, I would consider pretty cautiously in conditions of receiving as a lot incapacity insurance plan as you quite possibly can. Which is a specific observe I want to make for you with that regard. 

A single other thing I want to point out about fringe benefits also is you may be intrigued in obtaining flexible time, so be positive to check with that as properly. And if you are requested to operate full time, make certain that, in addition to being aware of the area of in which you might be heading to be working and so forth, make sure that you comprehend how full time is defined. Is it, dependent on your specialty all over again, 8–5, Monday via Friday, or does it include things like weekends or evenings? Difficulties like that. Definitions in contracts are incredibly crucial, so that is a little something you want to feel about as very well. 

I am a lawyer, and have been representing medical professionals for most of my legal career. Now, I’m expressing this not for the reason that I am a attorney. What I do propose to you strongly is that when you acquire an provide of work, or even, like I stated right before, the letter of intent, what you must actually do is consider about choosing an attorney with experience in evaluating and negotiating physician work agreements. And you will find quite a few reasons why I say this. 

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There are several lawyers, several styles of attorneys, that have as many various lawful specialties almost certainly as there are medical specialties. Lawyers that emphasis on patents, mental home, bankruptcy and genuine estate. I will tell you that physician contracting issues seriously are, variety of, a world unto their individual. There are prerequisites in all those contracts due to the fact of fraud and abuse factors that never display up in frequent business contracts, no matter if it be genuine estate or any other variety of agreement, normal rental agreements, items like that. It’s really important for you to discover an legal professional with experience in these kinds of contracts. 

Not only can you use that sort of attorney, although, for lawful advice, but there is certainly also some simple motives why hiring a lawyer who specializes in medical professional work agreements is crucial, specially for an lawyer who has a whole lot of encounter. That attorney will know the market place. That legal professional will also, quite often, know the opportunity employer and the culture of that opportunity employer, and it may possibly preserve you some time and dollars in negotiations. 

Your legal professional may say, “Yeah, I know there is this restrictive covenant in this article, but I can explain to you I have numerous consumers that operate for this group and it’s a make any difference of institutional coverage. This employer simply does not negotiate its restrictive covenants, does not do significantly tweaking with its compensation arrangements.” Matters like that. And which is just good information to know up front because then you know that throughout negotiations if you are getting a no, it can be not that there is gamesmanship going on, it really is just simply an sincere rationalization of the employer’s institutional policy. 

We’ve talked about analyzing an employer, like I claimed right before, in terms of its society. If your attorney has been in that sector for pretty a while, that lawyer will have an plan, likely, of what sort of standing that employer has in the group. It really is heading to count on the size of the community, of program, but your legal professional might be a excellent useful resource for making an attempt to get an thought about what the lifestyle is like at that employer. 

For instance, the legal professional could have other clients that now operate for the employer, and have labored there for many several years, and say, “I have some clientele there I have represented above the a long time. They are incredibly happy with functioning at this employer, and it’s a superior area to work.” 

And then when it will come in conditions of spending an attorney, you will find distinctive methods that you can prepare that. You can pay out them hourly. You can also say, “Search, I’ve bought $1,000 that I’m keen to pay out. I never want you to go more than that. Can you overview the agreement for me? Maybe give me some tips on what I could possibly negotiate, for less than $1,000.” If you want the legal professional to negotiate for you, they may well assume to have a little bit increased retainer. 

But I consider it’s really important to keep an attorney with experience in physician contracts. And I detest to wax cliche like this, but what you can consider of your career so much is, like, you’ve got started off off on your own a person-property line and you’ve got pushed 99 yards down, and you happen to be ready to rating. You don’t want to fumble the ball right at the finish. 

In some cases you may well have a pair hundred thousand dollars in financial debt, it’s possible much more. A tiny little bit a lot more to employ the service of an lawyer to aid you carry out an analysis negotiation is likely to be nicely, well, very well value the cash. Now, 1 detail prior to I leave this issue. You might say, “Effectively, how am I going to obtain an legal professional who specializes in this operate?” And it really is really effortless to do. Just think about what is actually the state in which you would be doing the job if you recognized the employment. Let’s say it is Arizona. 

All you would will need to do is connect with the Arizona Professional medical Affiliation, converse to them, say, “What medical professional attorneys do you know in the point out that you imagine properly of?” And that professional medical association, who will operate with these lawyers all the time mainly because it is a particular specialty that they consult routinely on all forms of doctor challenges, will know who these lawyers are and can conveniently endorse at the very least two or 3 for you. So, which is the place I would start off. 


You can listen to this episode and all “AMA Earning the Rounds” podcasts on Apple Podcasts or Spotify.