Physician Recruitment Agreements

Recruitment of doctors involves a number of financial, business and regulatory considerations. Balancing these factors requires a careful analysis.

Overview

A physician recruitment agreement is a tool used by hospitals and medical practices to recruit physicians to certain geographic areas suffering from a shortage of health care services. In return for the physician’s commitment to practice on a full-time basis in the hospital’s service area for a specified time, a hospital will provide the physician and/or his practice group with certain financial incentives. These may include a signing bonus, relocation expenses, student loan forgiveness, a loan to assist the physician with establishing a medical practice in the community, an income guarantee, and other benefits, all of which combined can amount to a substantial sum. Typically, the hospital’s loan to the physician and/or employing practice is subject to a promissory note often secured by the physician’s collections and/or accounts receivable.  If the physician fails to maintain a full-time practice or if the physician’s privileges are suspended or terminated before the end of the agreement’s term, the hospital is entitled to immediate repayment of some or all of the sums paid as a result of the breach of contract. On the other hand, if the physician and/or practice group fulfill their obligations under the agreement, the loan is typically forgiven over a period of years.

Physician recruitment agreements can be complicated and difficult to navigate as they often involve three parties: the physician, a physician group, and a hospital. Each party has different motivations: the physician has a direct financial incentive to enter into the agreement; the practice group has another pocket to defray some of its expenses in hiring and evaluating the physician; and the hospital benefits from a hoped-for increase in facility fees. Further complicating a physician recruitment agreement is the fact that it must comply with federal Stark and anti-kickback laws as the newly recruited physician will be in a position to refer patients to the recruiting hospital. The documentation requirements can be significant.

Given the complexity of these agreements, it is vitally important to have them negotiated, drafted, and reviewed by experienced health care counsel. ASG Law has extensive experience counseling hospitals, physician groups, and individual physicians with respect to physician recruitment agreements. ASG Law can assist you in negotiating, drafting, or reviewing a physician recruitment agreement to ensure it meets your needs, protects your interests, and, in the event a problem arises, represent you in resolving the dispute.

ASG Law can advise you with respect to physician-facility or physician-practice group agreements.