Physician Employment Contract Review: RVUs, Tail Coverage and Non-Competes

What should a physician employment contract review cover?

Start with the money, then the exit. Most disputes between physicians and employers arise when the relationship ends, so the termination, tail coverage, non-compete and repayment clauses deserve as much attention as the salary. A useful order is: compensation and productivity formula, duties and call, malpractice coverage, termination, restrictive covenants, then repayment obligations and anything that survives your departure.

Read every exhibit. Compensation formulas, call schedules and bonus metrics often sit in schedules attached to the main agreement, and the schedule controls the money. If a schedule says it can be updated by the employer "from time to time," your pay formula is not fixed.

How does wRVU compensation work, and what should you check?

Many employed physicians are paid a base salary plus a productivity bonus measured in work relative value units (wRVUs), which assign a value to each service you personally perform. A typical formula pays a set dollar amount per wRVU (the conversion factor) above a threshold. Federal law shapes these formulas. Under the Stark Law's bona fide employment exception at 42 CFR 411.357(c), pay must be consistent with fair market value and not determined in a way that takes into account the volume or value of your referrals, though a productivity bonus based on services you personally perform is allowed.

• Conversion factor and threshold: are they fixed for the term, or can the employer change them?
• Reconciliation: if your base salary is an advance against production, can the employer reduce future pay or claw back money when you fall short?
• Data access: can you see the wRVU reports, and who controls coding and charge capture?
• Credit rules: do you get wRVU credit for work done by advanced practice providers you supervise, and for services during a ramp-up period?
• Guarantee: is there a guaranteed salary for the first one or two years while you build a panel?

Who pays for malpractice tail coverage when you leave?

This is the clause physicians most often regret not reading. An occurrence policy covers incidents that happen during the policy period regardless of when a claim is filed. A claims-made policy covers only claims made while the policy is in force. If your employer provides claims-made coverage and you leave, you need "tail" coverage (an extended reporting endorsement) for claims filed later about care you provided while employed. Tail is often priced as a multiple of the annual premium and can be very expensive in high-risk specialties.

The contract should say who pays. Common structures are: the employer always pays; the employer pays unless you resign or are terminated for cause; costs are split based on years of service; or you always pay. Ask for the employer to pay in all cases, or at least whenever it terminates you without cause or does not renew. Also check for "nose" coverage of prior acts if you are moving from a claims-made policy at a previous job.

What termination terms should a physician employment contract have?

Most physician contracts allow either side to end the agreement without cause on written notice. Check whether the notice period is the same for both sides, whether the employer can pay you in place of notice and end your work immediately, and whether termination without cause still triggers the non-compete and your tail obligations.

For-cause termination lists should be specific: loss or restriction of your license, exclusion from federal health programs, loss of hospital privileges or board certification, or serious misconduct. Push back on vague items like "conduct detrimental to the practice," and ask for a written notice and a cure period for anything that can be fixed. Also check whether termination of this agreement automatically ends your medical staff privileges, which affects your ability to work elsewhere locally.

Are physician non-competes enforceable?

It depends heavily on the state, and the law has moved quickly. Texas, under Business and Commerce Code section 15.50 as amended by SB 1318, limits physician non-competes in agreements entered or renewed on or after September 1, 2025 to one year and five miles from the primary practice location, requires a buyout no higher than your annual compensation, and voids the covenant if you are discharged without good cause. Pennsylvania's Fair Contracting for Health Care Practitioners Act, effective January 1, 2025, makes physician non-competes longer than one year unenforceable and bars enforcement when the employer dismisses the practitioner.

Other states go further. Physician non-competes are void in Wyoming for agreements from July 1, 2025, and California voids almost all employee non-competes. Several states, including Massachusetts, Colorado and Delaware, have specific limits for physicians. Elsewhere, courts apply the general reasonableness test, often weighing patients' interest in continuity of care. See our guides on how long a non-compete can last and whether yours is enforceable for the general rules.

Dr. Kim, a new cardiologist, is offered a three-year contract in Texas with a guaranteed salary for 18 months, then wRVU pay. The draft makes her pay tail coverage if she leaves for any reason, imposes a two-year non-compete covering ten miles around every system clinic, and requires full repayment of a signing bonus if she leaves within three years. Because the agreement is signed after September 1, 2025, Texas law limits the non-compete to one year and five miles from her primary practice location, with a buyout no higher than her annual compensation. She asks for those terms to be written in, for the employer to pay tail if it terminates her without cause or does not renew, and for the bonus repayment to be pro-rated. The employer agrees to the first two and to pro-rating after 12 months.

Common physician contract clauses: risky vs fairer wording

What about signing bonuses, loan repayment and outside work?

Signing bonuses, relocation payments and student loan repayment are usually tied to a commitment period. Check whether repayment is all or nothing or pro-rated by months served, and whether it is waived if the employer terminates you without cause. State law matters here too; California's AB 692 restricts many repayment terms in agreements entered on or after January 1, 2026, with narrow exceptions such as government loan repayment programs and tuition for a transferable credential that meets strict conditions.

Look for clauses that claim all professional income. Many contracts assign income from moonlighting, locum work, expert witness work, lectures or writing to the employer. If any of that matters to you, ask for an explicit carve-out. Also check call obligations: how many nights and weekends, whether call is shared equally, and whether extra call is paid.

Finally, read the duties section closely. A vague promise to perform "such other duties as the employer may assign" can add clinics, sites or administrative work without extra pay. Ask for your primary location, expected clinical hours and any supervision of advanced practice providers to be stated, along with how changes are agreed.

What happens to your contract if the practice is sold?

Health care consolidation means many physicians end up working for an employer they never chose. Check the assignment clause. If the employer can assign the agreement to any buyer or affiliate without your consent, your non-compete, call duties and compensation formula may transfer to a new owner with different priorities. Ask for assignment only to a successor that takes on all of the employer's obligations, and for the right to terminate without the non-compete applying if the agreement is assigned.

If you were promised a path to partnership or ownership, get the terms in writing: the timing, the buy-in price or formula, and what happens if the practice is sold before you become eligible. A promise to "discuss partnership after two years" is not a commitment.

Should a physician get a contract review before signing?

Yes. A health care attorney who reviews physician agreements regularly knows market terms for your specialty and region and how your state's non-compete and corporate practice rules apply. Use your time with the attorney well: run the employment contract through an automated review first to see the risky clauses flagged in plain English, then bring a short list of questions. For a sense of how a standard offer is structured, compare yours with an employment offer letter template, keeping in mind that physician agreements are longer and more specialized.

• Get compensation data for your specialty and region before negotiating, and ask how the employer set its rate.
• Ask for every verbal promise, such as a start date for partnership or a reduced call schedule, in writing.
• Confirm what happens to the contract if the practice or hospital is sold, including whether it can be assigned without your consent.