Overview of Oregon physician employment
The format of your Oregon physician employment contract will vary, of course, among different employers. One might expect there to be substantial uniformity in contract language, but this turns out not to be the case. While large employers tend to use a single contract template for their employed physicians, there are major differences from one employer to the next. Nevertheless, the topics covered in well-crafted physician employment agreements will be substantially similar.
Physicians in Oregon (unlike in California) may be employed directly by hospitals. There are approximately 60 hospitals in Oregon, most of which are non-profits, although there are also several for-profit entities. Some of the larger Oregon healthcare provider entities include Providence, OHSU, Legacy Health System, and Kaiser Foundation Health Plan. But these are just a few of the many – Oregon mirrors national levels of employment in the healthcare field, with 1 in 8 employed individuals working as healthcare professionals or within a healthcare system. See 2020 Oregon’s Licensed Health care Workforce Supply, published in January 2021 by the Oregon Health Authority.
Together, hospital and clinic employment accounts for over 75% of Oregon physician employers, with private practice accounts for another 16%.
Physician’s employment duties
Your physician employment contract will set forth the requirements and expectations for your performance as an employee. By the date you begin employment, you will be expected to have obtained your unrestricted Oregon medical license, along with the necessary privileges and credentials to practice in the relevant location. You will also generally be required to verify you are Board Certified in your practice specialty or will be Board Certified, generally within a set period of time.
The Agreement may require you to confirm that you have not been subject to malpractice or disciplinary actions; and/or that you provide a self-query to the National Practitioners Data Bank (“NPDB”). A quick note if you have been subject to a professional liability claim, i.e. medical malpractice action. This is never good news, but will generally not by itself preclude you from future employment. If you practice long enough, a malpractice action may come with the territory, so to speak. Malpractice actions may be filed which do not result in a finding of liability against the physician or the physician’s employer. The facts surrounding the malpractice suit or allegations will be important, as will the outcome. Multiple malpractice actions, or malpractice actions which are based upon gross negligence or facts indicating performance shortcomings well beyond error or mistake, may be problematic. Fortunately, most residents and fellows will not have this particular issue to worry about.
Your duties also include being available for work. For physicians, this may include a particular number of patient encounters or that you are expected to be working or available for work a certain number of hours per day, days per week, or shifts per month or year. If you are working and compensated on a per shift basis, carefully read the language of your contract and note whether the available shifts are guaranteed.
You will be required to meet all professional standards, including those promulgated by the Board of Medical Examiners, the applicable rules of medical ethics, and your employer’s internal policies. Within those parameters, you will exercise your own professional judgment regarding patient care. Indeed, exercising your own professional judgment is a requirement in your contract to avoid violating the Corporate Practice of Medicine doctrine. See State ex rel Sisemore v. Standard Optical Co., 182 Or 452 (1947); Ore. Att’y Gen. Op. No. 7230 (1975).
Employer’s duties
Not surprisingly, the provisions concerning your employer’s duties will be much briefer than the provisions concerning your own duties as an employed physician. I say, “not surprisingly,” because employment agreements are invariably drafted by the employer’s attorney and, thus, the employer’s interests are paramount in the drafter’s mind – second only, we trust, to patient interests. Nonetheless, the employer’s duties are substantial and are typically summarized in general terms. These include provision of adequate professional staffing, facilities, equipment, administrative support, including scheduling, billing and collections, in addition to providing for physician compensation, benefits, and, generally, professional liability insurance.
Compensation
Compensation is a matter that may be straightforward, such as a guaranteed annual salary, or more complex, e.g. based on productivity, measured in wRVUs, or by some combination of the above. You may also be paid for shift work, with compensation based on the number of shifts completed. Oftentimes, you may begin employment with a guaranteed base salary, and after one or two years, switch to a productivity model (in some cases, this is part of the continuation of your employee status, and other times the change will accompany your achievement of shareholder or partner status).
Obviously, there are many other potential variables to physician compensation plans. If your compensation is based on productivity, or at least partially so, employer transparency is a good sign. My experience has been that most employers are willing to be frank about your earning potential. While a for-profit employer likely may not ‘open the books’ to a new recruit (unlike later when partnership or shareholder status is underway, when they should), the potential employer and your future colleagues are often very forthcoming, and, in any event, fair market value and commercial reasonableness are what you should expect, and are required for Stark Act purposes.
Benefits
Benefits vary from employer to employer, and are summarized or specified in physician employment agreements in a variety of ways. Certain items, such as Continuing Medical Education (“CME”) and payment for professional licenses and organization membership, are fairly standard. Other benefits, such as paid time off (“PTO”), vacations, and various insurance coverages offered, are subject to substantial variation in the industry.
Signing bonuses, relocation expense reimbursement, and educational loan assistance may be part of the package. Where offered, there are generally repayment strings attached, with a tenure-based amortization schedule (see “Termination” below).
Termination
Your Oregon physician employment contract will include provisions concerning termination of the employment relationship.
These typically include a fairly standard set of conditions upon which the employer may terminate the contract immediately, with cause. “Cause” will include the physician’s: loss of a license to practice medicine; inability to receive malpractice coverage; disqualification from receiving payments from governmental and third party payors,; loss of necessary privileges to practice in a healthcare facility; commission of a serious crime such as a felony; abuse of alcohol or use of illegal substances; failure to meet applicable medical community professional standards of patient care; breach of the terms of the contract itself; or other performance shortcomings as determined by the employer. The latter condition is a catch-all; tempering this open-endedness, however, will likely be a ‘right to cure’ provision, whereby the employer must provide notice to the employee of any alleged performance deficiency, e.g. a 30-day notice period in which the employee may correct the performance issue.
If performance deficiency reaches the point of a right to cure notice, there realistically may be insufficient time to address the issue. Failure to timely complete charting can be remedied promptly; the assertion that no one wants to work with you is a fence that may require some time to mend!
In addition to termination “without cause” provisions, your Oregon physician employment agreement will also include a provision whereby either party may terminate the contract “without cause” subject to providing advance notice of the termination date. The notice period varies, with 90 days being common and with 180 days generally being the longest notice period you will find. This notice period is a departure from true at-will employment, pursuant to which either party may terminate the relationship at any time, with or without notice. A significant notice period prior to termination provides both parties with the opportunity to plan for the future. This takes into account that the replacement of a physician takes time. It also takes money, with some industry observers estimating the employer’s cost of replacing a physician in the range of $250,000 to $1 million. Regardless of whether those estimates are high, suffice it to say that it is time-consuming and costly to an employer to lose an employed physician. For this reason, as well as common decency and concerns over ethical issues surrounding patient abandonment, it is important for you to be aware of your notice of termination obligations and you should expect to follow them. Some Oregon physician employment contracts may have built-in (or “liquidated”) damages clauses associated with a failure to provide the agreed-upon notice. An employer could also pursue actual damages in this situation, if there were any.
A terminated-related issue is the potential financial consequences to a newly-employed physician who decides that the employer’s workplace is not a good fit. Built into many physician compensation and benefit packages are repayment obligations for a physician who terminates an employment relationship in the first year or two of employment. For example, many employers provide their recruited physicians with signing bonuses, relocation bonuses and educational loan repayment assistance. Your contract may well provide for repayment of these amounts on an amortized schedule. For example, you may have a three-year earn-out period governing your signing bonus; such a provision will state that each month during the first three years of employment, 1/36th of the bonus will be forgiven. If your signing bonus is $20,000, and you remain employed for 18 months, you will be required to repay $10,000 to the employer. You will want to study these provisions closely as the repayment period is often short, e.g. within 30 days of the termination date (and the repayment terms are almost always cash only).
If you have any questions regarding terminating your employment, and consequences under your contract, you should reach out to an Oregon physician employment attorney.
Restrictive covenants
Restrictive covenants are among the most, if not the most, important provisions of your employment contract. Pay close attention to the details of the restrictive covenant provisions in your employment contact (advice which applies not only to physicians and other healthcare professionals, but to all Oregon employees – be careful what you sign and plan accordingly). Restrictive covenants include noncompete and nonsolicitation agreements, nondisclosure (“NDA”) agreements, trade secret protections, and invention assignments.
Over the past 15 years, there have been numerous amendments to Oregon’s noncompete statute, ORS 653.295, as Oregon has gradually imposed more employee-friendly limitations on the scope of permissible noncompete agreements.
If you have an issue with a noncompetition provision executed prior to January 1, 2022, you will want to discuss your agreement with an Oregon employment attorney who can identify which version of ORS 653.295 applies to your contract. Note that if you need a physician contract lawyer Oregon law differs from other jurisdictions in many respects, including restrictive covenant law, and you may wish to consult with an Oregon employment attorney.
The current Oregon law, applicable to contracts executed on or after January 1, 2022 provides that a non-competition provision is void and not enforceable unless the following requirements are met:
- The employer must advise you in writing at least two weeks in advance of your first day of employment that a noncompete provision will be required as a condition of employment (this requirement is almost always met with respect to physician contracts due to the substantial lead time in the MD/DO/ND hiring process);
- You must be a salaried employee under ORS 653.020 (this requirement is generally met with physician contracts);
- The employer must have protectible interests, e.g. trade secrets as defined in ORS 646.461 (again, this requirement is almost always met; there is some authority from other jurisdictions indicating that protectable interests might not be present in some medical settings, e.g. an emergency room doctor who generally brings knowledge to the employer and does not have repeat patients);
- The employee must earn more than $100,533 in 2022, adjusted annually for inflation, and measured at the termination of employment (not the initial hiring rate);
- The employer must provide the employee with a copy of the signed document containing the noncompete provision within 30 days following the last date of employment (you can’t bank on this failing to occur); and
- The non-competition period must be no longer than 12 months post-employment (this period was previously 18 months, and earlier was 2 years).
Note that the requirements of ORS 653.295 do not apply to non-solicitation agreements, which are contractual promises not to solicit customers or employees of the employer for a period of time. The Oregon statute defines non-solicitation provisions very broadly to include even provisions that prevent a former employee from “transact[ing] business” with the employer’s customers. There is much room for discussion, and has been some litigation in Oregon, about the definition of “customers.” See Oregon Psychiatric Partners, LLP v. Henry, 316 Or App 726 (2022).
If you have questions about how such a restrictive covenant provision might affect your future employment or career opportunities, you should contact an Oregon physician contract lawyer to discuss.
Dispute resolution
Many Oregon physician employment agreements will contain an arbitration provision. While arbitration agreements are ubiquitous, of course. Not every employer of physicians will want to include an arbitration provision. But most do. As an attorney who primarily represents and counsels Oregon physicians, not their employers, I would prefer not to see an arbitration provision in an employment agreement. Several aspects of arbitration agreements are unfavorable to the employees. With arbitration there are: no jury trial, no right to appeal, and arbitrations are by and large confidential (which may not be in the public interest, as bad actors are allowed to remain incognit0).
Nonetheless, if your Oregon physician contract includes an arbitration provision, your employer will not wish to negotiate the issue. The rationale provided by the employer will likely be that all employees are subject to the arbitration clause, and all employees must be treated equally concerning dispute resolution. Were you to engage in a debate with your employer over this issue (which I don’t recommend), the employer (or more accurately, the employer’s attorney) might also suggest that arbitrations are less expensive and quicker than litigation and a jury trial. That may be true in some matters, but that will depend upon the scope of the arbitration.
The bottom line is that you should expect to find an arbitration clause in your Oregon physician employment agreement.
Final considerations
I would be happy to provide a consultation and legal advice concerning your Oregon physician employment contract. The cost is quite reasonable, either on a flat rate or hourly fee basis. In addition, I provide legal advice and representation on other employment law issues beyond contractual considerations, including matters involving medical leave, e.g. FMLA/OFLA, discrimination or harassment, and disability reasonable accommodation issue.
