Physician recruitment agreements are utilized when a hospital, device-maker or other health care service or equipment provider wants to incentivize the relocation of a physician to a geographical area that is underserved in their specialty.
Such agreements typically include a guarantee of a minimum salary provided by the hospital or other health care service/equipment provider, as they start a new practice in a new locale, coupled with a requirement that the physician stay in the area for a certain amount of time. To accomplish this, the guarantee is structured as a loan, and to the extent that the receipts attributed to the physician during the guarantee period fall below the guaranteed amount, that difference is categorized as a loan. If the physician leaves the area before the commitment period (usually longer than the guarantee period) ends, the physician owes the loan back. If they stay the entire commitment period, the loan is ultimately forgiven.
Both an employment agreement and recruitment agreement are necessary.
The physician has to sign two agreements here, a recruitment agreement with the hospital or other provider offering the incentive and an employment agreement with the medical group that is hiring them. The recruitment agreement has set terms, which you can either choose to accept or not. There is a much lower potential for the negotiation of this agreement. However, careful review and negotiation of the employment agreement with the medical group can prove extremely beneficial.
• In negotiating or evaluating the employment agreement with the medical group, a physician needs to understand that this agreement is in large part how he or she can protect against the potential outcome of being without a job in the geographical area and thus experiencing difficulty paying the loan back. In this context, you want to (1) negotiate an employment term that matches as closely as possible or even exceeds the commitment period of the recruitment agreement and (2) minimize the ways in which the medical group can terminate you for cause. In general, you want the employment agreement that you sign to give you some protection so that you will be able to have the loan ultimately forgiven by ensuring you a job with the medical group in the geographical area throughout the defined commitment period.
• There is also an issue of shared risk – the medical group may receive their own incentive through guarantees of payment for their office expenses related to the physician, and they will have reporting requirements so the incentive-provider can calculate the guarantee. You will want the medical group to assume some risk in this exchange, so that you are not responsible if something goes wrong with the recruitment arrangement through no fault of your own.
• You will also want to make sure you are negotiating the other, more common parameters of a physician employment agreement, such as scheduling, on-call practices, scope of practice, insurance, and limiting subjective provisions that increase the likelihood of your accidental breach.