After the whirlwind of selling your practice, the document that lands on your desk—the new employment agreement—can feel like a final piece of administrative paperwork. It is much more than that. This contract is the blueprint for your new reality as an employee within a larger organization.
The shift from being a partner or owner to an employee is one of the most significant Post-acquisition employment structures you will face. Your new agreement will define everything from how you are paid to where you can work if you leave. Understanding its key components is the first step toward securing a successful future.
A Clause-by-Clause Breakdown of Your New Agreement
Acquirers often use standardized contracts, but every term can have a profound impact on your career. Let’s examine the clauses that demand your closest attention.
1. Compensation Arrangements: Beyond the Base Salary
Your income structure will almost certainly change. Most physicians move from a productivity model (eat-what-you-kill) to a more structured arrangement.
- Base Salary and Bonuses: Expect a transition to a guaranteed base salary, often supplemented with bonuses. These bonuses are increasingly tied to group performance or quality metrics rather than individual collections.
- Benefits Packages: Your retirement plans, health insurance, and paid time off will be consolidated into the acquirer’s standard package. Review these carefully to understand any changes in value or coverage.
The new structure must be compliant with fair market value requirements. You can find a deeper analysis in our guide to physician compensation after acquisition.
2. Term and Termination: Understanding Your Entry and Exit
This section defines the length of your commitment and the rules for ending it. Most post-acquisition contracts have an initial term of one to three years, often with an automatic renewal clause.
Pay close attention to the termination provisions.
* Termination “For Cause”: This outlines specific reasons the employer can fire you immediately, such as losing your license or a felony conviction. Ensure this definition is narrow and precise.
* Termination “Without Cause”: This allows either party to end the contract without a specific reason, provided they give adequate notice. Based on 2025 data, a notice period of 60 to 120 days is standard and appears in over 70% of contracts.
3. Restrictive Covenants & Non-Competes: The Shifting Legal Ground
Restrictive covenants, especially non-compete agreements, are among the most contentious clauses. They limit your ability to practice medicine in a specific geographic area for a certain period after leaving your employer.
The legal environment for non-competes is changing quickly.
* FTC Action: A 2024 Federal Trade Commission rule sought to ban most non-compete agreements. While this rule faces legal challenges, the trend is toward greater restrictions on employers.
* State-Level Changes: Many states are enacting their own laws. For example, as of January 2025, Pennsylvania now limits physician non-competes to a one-year duration.
Because of this fluid situation, you must have this clause reviewed by legal counsel familiar with the most current state and federal laws.
4. Malpractice and Liability: Who Covers the Tail?
When you leave an employer, your “claims-made” malpractice insurance policy expires. To remain protected against claims filed after your departure for incidents that occurred during your employment, you need “tail” coverage.
This can be a significant expense. Your employment contract must explicitly state who is responsible for this cost—you or the employer. In recent M&A deals, about 40% of acquiring practices agreed to cover the cost of tail insurance post-merger. Do not leave this term ambiguous.
5. Change of Control Provisions: Your “Out” Clause
What happens if the company that just bought your practice gets acquired by an even larger entity? A “change of control” provision addresses this scenario. It gives you the right to terminate your agreement or renegotiate terms if the practice ownership changes again. Without this, you could find yourself employed by an organization you never intended to work for.
Special Considerations for Former Practice Owners
If you were an owner of the practice, your contract needs additional clauses to address the financial wrap-up of the sale.
- Equity Buy-Outs: The agreement should detail the mechanism for the final payout of your ownership equity. This includes how fair market value was determined and the specific timing of the payment.
- Deferred Compensation: If you had a deferred compensation or practice-specific retirement plan, the contract must state how and when those funds will be distributed following the transaction.
The Balancing Act: How Your Contract Defines Your Autonomy
An employment contract isn’t just about money and legal terms; it defines your day-to-day professional life. Clauses related to your duties, call schedule, and administrative responsibilities can impact your ability to care for patients effectively.
While some standardization is expected, your contract is an opportunity to set boundaries. Negotiating key terms can help you in protecting autonomy in employment contracts and ensuring you have the professional discretion needed to provide high-quality care.
Your Pre-Signing Checklist: A Practical Framework
Before you sign any document, use this checklist to review the most critical points.
- [ ] Compensation: Is the base salary, bonus structure, and guarantee period clearly defined and acceptable?
- [ ] Termination: Are the “for cause” definitions reasonable and the “without cause” notice period fair (ideally 90-120 days)?
- [ ] Non-Compete: Is the restrictive covenant reasonable in duration and geographic scope, and does it comply with current state law?
- [ ] Malpractice Tail: Does the contract clearly state that the employer will pay for tail coverage?
- [ ] Change of Control: Is there a provision that protects you in case of a future sale?
- [ ] For Former Owners Only: Are your equity buy-out and deferred compensation payout terms clearly specified?
- [ ] Professional Review: Have you had the contract reviewed by an expert? This final check is non-negotiable. The role of legal counsel in M&A is to protect your interests in exactly these situations.
In some cases, an acquirer may use a different structure, such as a Professional Services Agreement. It is wise to have a professional help you in understanding PSAs for physicians, as their terms differ significantly from typical employment contracts.
Secure Your Future with an Expert Review
Your post-acquisition employment contract is the roadmap for the next phase of your career. It sets the financial, legal, and professional terms that will govern your work. Given the complexities and the high stakes, having an expert guide you through the process is an investment in your future.
If you are navigating this transition, SovDoc can help. Our team has the M&A and healthcare industry experience to analyze your contract, identify risks, and help you negotiate terms that protect your career and align with your goals. Contact us today for a consultation.
Frequently Asked Questions
What are the most important clauses to review in a physician employment contract after selling a practice?
Key clauses to focus on include compensation arrangements (base salary and bonuses), term and termination conditions, restrictive covenants like non-competes, malpractice and tail coverage responsibilities, and change of control provisions. These define your pay structure, job security, and future options after the sale.
How does physician compensation typically change after a practice is acquired?
Physicians usually move from a productivity-based pay model to a structured arrangement with a guaranteed base salary and bonuses often linked to group performance or quality metrics, rather than individual collections. Benefits such as retirement plans and health insurance are consolidated under new employer standards.
What should physicians know about non-compete clauses in post-acquisition contracts?
Non-compete agreements are becoming more regulated, with recent federal and state-level actions limiting their duration and enforceability. For example, Pennsylvania limits non-competes to one year for physicians. It’s crucial to have these clauses reviewed by legal counsel familiar with current laws to ensure they are reasonable and compliant.
Who is responsible for malpractice tail coverage after a practice sale?
Malpractice tail coverage protects against claims filed after employment for incidents during your tenure. The contract must explicitly state who pays for this coverage—either the physician or the employer. In recent deals, around 40% of acquiring practices cover this cost, but it’s essential to clarify this term to avoid unexpected expenses.
What protections are available if the new owner sells the practice again?
Change of control provisions in the employment contract protect physicians by allowing them to terminate or renegotiate their terms if the practice is sold to a new owner. Without this clause, physicians may find themselves employed by an organization they did not intend to work for.
