News from Mark Weiss/Advisory Law Group - Avoid the Slowdown; Not So Obvious Use for Employment Agreements

In the colloquial words of the old folk song Dry Bones (and as I hope my physician readers recall!) "The hip bone connected to the thigh bone."

In the same manner, I just can't say enough about the concept of interrelatedness in respect of how medical groups operate, and about how operating issues can hamper or support overall business success.

In this article, I'd like to focus on the relationship between the group and its employed or subcontracted physicians. For ease, we'll refer to the doctors as if they are all employees.

Many group leaders fail to understand that the way that the group relates to its employees affects many other elements of the group's business.

Not to be exhaustive, interactions between the group and its members impact the cohesiveness of the group, which in turn impacts job satisfaction, which in turn impacts the way that group members interact with patients and with referring physicians. Of course, all of these elements impact the group's success.

The common view is that the purpose of the an employment agreement is to set out the work hours, substantive duties, and compensation to be paid the employee.

However, when viewed in the larger strategic context, an employment agreement serves as one of the main links in the relationship between the group and its employed physicians. It's role is not simply to deal with work hours, substantive duties, and compensation, but also to impact, cajole, incentivize and disincentivize the employee's actions in a manner designed to further the group's ends.

The agreement also serves to protect the group both during and following the employment period. Some states permit the enforcement of covenants not to compete. Others, such as California, do not. However even in jurisdictions in which covenants not to compete are not enforceable, in many instances, restrictions may be placed on the way in which a former employee competes. Often, those restrictions have an impact that mimics a covenant not to compete.

Importantly, an employment agreement should also serve as the conduit to supra-agreement efforts. For example, a strategically focused employment agreement facilitates the employees' cooperation in marketing, community service and other group initiatives, all in coordination with the group's overall business strategy. Because it would be impossible to identify all of the specific areas of cooperation in advance, an agreement should identify the requirements in broad strokes, to be "filled in" later on an extra-contract basis.

In conclusion, reviewing your group's employment agreements simply for legal compliance is not sufficient. To be complete, the group must make certain that it's fully utilized the opportunity of the employment agreement to take advantage of its role in synchronizing the employee's actions to the achievement of the group's overall business goals.

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