This survey captures how healthcare organizations are utilizing provider employment agreements and whether these practices changed due to the pandemic.
In recent years, healthcare has been combating the effects of a provider shortage. Prior to the COVID‑19 pandemic, provider organizations were cognizant of the difficulties associated with recruiting and retaining physicians, advanced practice providers (APPs), and other clinicians (hereafter collectively referred to as “providers”). Then COVID‑19 hit, and finding and retaining providers became even more challenging. Burnout associated with the pandemic and lasting impacts from the “Great Resignation” have led to what is now a pivotal moment for healthcare provider staffing.
One strategy organizations can use to address recruitment and retention concerns is to utilize an employment agreement. Employment agreements are a contract between a provider and an organization and typically outline expectations, such as work requirements and citizenship expectations, compensation levels, noncompete or nondisclosure clauses, and termination provisions (e.g., termination with and without cause).
ECG recently conducted a rapid survey of 76 provider organizations to gain insight into how healthcare organizations are utilizing provider employment agreements and whether these practices have changed due to the pandemic.
Physician Employment Agreements
Nearly all survey respondents (99%) said they use employment agreements for physicians. This isn’t a new practice, as virtually all those organizations have been using them for more than three years. Most organizations (93%) said they use employment agreements for more than three-quarters of their physician population. For organizations that don’t offer employment agreements to all physicians, there is some slight differentiation by specialty or specialty grouping.
- Of those groupings, more than 85% of respondents said they utilize employment agreements for primary care, medical, surgical, and hospital-based specialties.
- Urgent care (65%) was the only specialty from our survey that was noted as regularly not being employed through a contract.
The most common notification period for termination without cause for physicians was 90 days, but participants’ responses varied from immediate termination to 180 days. Of the responding organizations, 77% also use noncompete clauses in their employment agreements. Most survey participants reported noncompete periods of 12 to 24 months, but a small number extend that period to 36 months.
Additionally, some noncompete clauses specify the radius from the current place of employment within which a physician cannot accept a new role. For urban physicians, this radius was most commonly more than 5 miles, while most rural organizations indicated their radius was more than 25 miles.
APP Employment Agreements
The responses for APPs were mixed, relative to their physician counterparts, although they represent a significant increase in recent years as more organizations appear to be using employment agreements for their APPs than in the past.
Our survey finds that 55% of organizations use employment agreements for APPs, compared to nearly 100% for physicians. Many of those respondents have been using employment agreements for some portion of their APP cohort for more than three years, but there has been an uptick in the use of employment agreements for APPs over the past few years (which may have resulted from the pandemic). For organizations that use employment agreements for APPs, like those for physicians, the agreements typically:
- Cover a large portion of the provider population (e.g., more than 75%).
- Use similar specialty groupings.
The termination-without-cause periods for APPs were also in line with those for physicians, and the most common period was 90 days’ notice. Noncompetes for APPs were far less common than for physicians, but for organizations that did have noncompetes (60%), the noncompete geographic radius for APPs was similar to the physician noncompete radius.
Organizations indicated many reasons for utilizing APP employment agreements:
- Improving alignment with their physicians (89%)
- Protecting patient panels (56%)
- Implementing a longer termination period notice (52%)
- Improving retention rates (41%)
- Keeping up with local market precedents (22%)
Employment Agreements Are Here to Stay
Nearly all respondents who currently use employment agreements for either physicians or APPs said they plan to continue doing so in the coming years. Whatever the reason may be, this much is clear: employment agreements can be a useful tool for healthcare provider organizations and are likely to remain relevant as the provider labor market continues to tighten.