What Does a Physician Contract Actually Cover? A Plain-English Breakdown

By DR Advisors | Physician's Trusted Advisor

A physician called us recently with a simple request: she wanted someone to explain three terms in her contract in plain English. Not negotiate them. Not redline them. Just explain what they meant.

So we did what most people would do — we went back to the health system's attorneys and asked for plain-language clarifications on her behalf.

They sent back more legal language.

We went back again. Same result. At a certain point, I just told her directly: here's what this means, here's whether you should be concerned about it, and here's what you do with that information. That was the end of the conversation she needed.

That's what we do at DR Advisors. We don't send you red lines and legal commentary to justify a fee. We sit across from you as your trusted advisor — someone who's been on the administrative side of these contracts for over a decade — and we tell you flat out what you have, what it means, and whether you should worry about it. We're here to protect your interest, not to speak the same language as the people on the other side of the table.

This post is a plain-English breakdown of what a physician employment agreement actually covers, section by section.

The Core Sections of a Physician Employment Agreement

1. Compensation

This is the section most physicians focus on — and still frequently misread. Your compensation structure typically includes a base salary, but the more important number is often what comes after it: the productivity formula.

Most physician contracts transition from a guaranteed base (sometimes called a "draw") to a productivity-based model after Year 1. Understanding what that transition looks like — what RVU threshold triggers your full compensation, what the conversion factor is, and how Year 2 compares to Year 1 — is essential before you sign.

What to look for: Is your base salary guaranteed, or is it a draw against future productivity? What does Year 2 look like if your patient panel takes time to build?

Use the Physician Contract Review Worksheet to work through your compensation terms before your review session. Download the Worksheet → Physician Contract Review Worksheet

2. Term and Termination

How long is the contract? How can it end — and under what conditions?

There are two types of termination to understand: without cause (either party ends the agreement for any reason, with notice) and for cause (the employer ends the agreement based on specific misconduct or performance failures). Each carries different financial consequences.

The notice period for without-cause termination is one of the most negotiable provisions in any physician contract — and one of the most overlooked. The standard is 90 days. Less than that leaves you exposed.

What to look for: Is there at least a 90-day without-cause notice period? Does your pay continue through the notice period? Who is responsible for tail insurance in each termination scenario?

3. Non-Compete Clause

If you leave — for any reason — the non-compete defines where you can practice and for how long. Geographic radius, duration, and the specific services covered all matter. So does your family situation, your specialty, and the density of your market.

Non-competes are negotiable before you sign. They are almost never negotiable after.

What to look for: What is the geographic radius? What is the duration? Are there any carve-outs for hospital call coverage or existing patients?

4. Malpractice Insurance

There are two types of malpractice coverage: occurrence-based (covers any incident that occurred during the policy period, regardless of when the claim is filed) and claims-made (covers only claims filed while the policy is active). If you have a claims-made policy and you leave, you need tail coverage to protect against future claims from your time at that employer.

Tail insurance can cost tens of thousands of dollars. Who pays for it — and under what circumstances — is one of the most financially significant provisions in your contract.

What to look for: What type of malpractice coverage is provided? If claims-made, who pays for tail coverage when you leave — and does that change based on how you leave?

5. Benefits and Extras

This section covers health insurance, retirement contributions, CME allowances, licensure fees, DEA registration, and paid time off. These vary widely by employer and are often more negotiable than physicians expect.

What to look for: Is there a retirement match? What is the CME allowance and does it include time off? Are licensure and DEA fees covered?

6. Duties and Schedule

What are you actually agreeing to do? This section defines your clinical responsibilities, call schedule, administrative duties, and any non-clinical obligations. Vague language here can create conflict later.

What to look for: Is the call schedule defined specifically, or does it say "as determined by the employer"? Are administrative duties quantified?

Expert Advice: After reviewing hundreds of physician contracts, the provisions that cause the most pain aren't the ones physicians ask about — they're the ones nobody flagged before signing. Compensation gets attention. Tail coverage, notice periods, and the specific language around "for cause" termination often don't. That's where the exposure lives.

Want a complete review of every section in your contract? Book Your Physician Contract Review → Physician Contract Review

The Bottom Line

A physician employment agreement isn't a formality. It's a business document that governs your income, your schedule, your ability to leave, and your financial exposure for years. Understanding what's in it — section by section — is the foundation of every good negotiation.

If you're not sure you have the full picture, that's exactly what the review process is for.

Related reading: [The Physician Contract Review Program: What It Is, How It Works, and Why It Matters] | [The Year 2 Trap: Why Physicians Earn Less Than They Expected] | [What Is Tail Insurance — And Who Should Pay For It?]