Reading a First Contract

Part of The Money the Job Makes. This one is a long way off, and it is on the site because the far end of the path should be visible from the near end. The first employment contract you sign is the largest financial document of your life so far, it is usually presented as a formality, and the most expensive thing in it is a clause almost nobody reads.

The short version

An offer arrives as one number. It is really four: what you're paid to show up, what you're paid to produce, what you're paid to take call, and what it costs you to leave.

The fourth one is where the money is, and it's the one that gets skimmed. A single clause about malpractice insurance can cost you fifty to a hundred thousand dollars on the day you resign, and it won't look like anything when you read it.

If you take one thing from this page: pay a lawyer who does physician contracts to read it before you sign. It costs a fraction of one clause.

Why this page exists on a site for premeds

Because the decade makes more sense when you can see the end of it.

Most of The Money is about a bill. This is the page where money starts moving the other way, and reading it now tells you two things early. The gap between two offers with the same headline number is enormous, which is the whole argument of What Doctors Actually Make. And the skill that closes that gap isn't clinical. It is reading a document carefully and asking for changes, which is learnable and which nobody in medical training teaches you.

The number on the offer is four numbers

Base salary. What you're paid to exist. Sometimes it's the whole thing for the first year or two, and sometimes it's a floor that gets recalculated against production once a guarantee period ends. Find out which, and find out exactly when the guarantee ends.

Production, usually in wRVUs. Work relative value units are the standard measure of what you generate. Your pay is a conversion factor multiplied by your wRVUs, above some threshold. Three numbers decide whether that is generous or not: the conversion factor, the threshold, and who is allowed to change either of them. If the employer can revise the formula at its discretion, what you have is a promise rather than a production contract.

Call, and everything scheduled. Whether call is included in the base, paid separately, or expected without pay. How many nights, how many weekends, how it is distributed among partners, and what happens when someone leaves and the pool shrinks.

Benefits, which are money. Health coverage, retirement match, continuing education allowance, licensing and society fees, moving costs, and paid time off measured in actual days rather than a category. Two offers $20,000 apart can be identical once a retirement match and a CME allowance are counted.

Before any of those four means anything, check which kind of offer it is. A 1099 quote has none of the benefits attached and none of the payroll tax paid, so it isn't measured in the same unit as a salary, and Two Offers, Same Number, Different Jobs is the arithmetic.

Tail coverage: the most expensive line nobody reads

Malpractice policies come in two shapes. Occurrence covers anything that happened while the policy was live, whenever the claim is filed. Claims-made covers only claims filed while the policy is live, which means the day your employment ends, your cover for everything you did there ends with it.

Closing that gap requires an extended reporting endorsement, universally called tail coverage. It's a one-time purchase priced as a multiple of your final annual malpractice premium. AMA Insurance puts it at as much as twice the annual premium; brokers who sell it quote a wider band, commonly 150% to 300%.1

Which means the dollar figure is entirely a function of what your specialty pays for malpractice in your state. A low-risk outpatient practice can be a few thousand dollars. A high-risk surgical or obstetric practice in an expensive state can run past a hundred thousand. Neither number is the one to plan around; the multiple is.

So the question is one line in the contract, and it is: if I leave, who pays for tail? There are three common answers.

  • The employer pays it. Best case. Get it in writing rather than in a conversation.
  • The employer pays it if you stay a certain number of years, and you pay it if you leave earlier. Common, and reasonable, as long as you know the date.
  • You pay it. Which converts your resignation into a five-figure bill, and quietly makes leaving expensive in a way that has nothing to do with your next job.

If the policy is occurrence-based, none of this applies and you can stop worrying about it. Ask which it is. It's one sentence in the contract and it can be worth more than your signing bonus.

The clawback on the signing bonus

Signing bonuses and relocation payments are almost always conditional. Leave inside a stated period and you repay some or all of it, sometimes on a schedule and sometimes in full.

That isn't unfair. It becomes a problem when nobody notices it, spends the money, and then finds that the job is wrong at month fourteen of a twenty-four-month clawback. Read the repayment schedule, and treat a signing bonus as a loan that forgives itself over time rather than as money.

The non-compete, and what it actually restricts

A non-compete says where and for how long you can't practice after leaving. Two numbers matter: the radius and the duration. A ten-mile radius in a large city may be nothing. A fifty-mile radius in a rural area means moving your family.

The legal landscape here has been moving for several years, enforceability varies enormously by state, and non-profit employers sit differently under some rules than commercial ones. That is a genuine "check the current position where you live" situation rather than something this page can settle for you. What this page can tell you is what to look for: the radius, the duration, what counts as competing, and whether the restriction applies if they terminate you. That last one is the tell. A non-compete that binds you after a without-cause termination is a much harder document than one that doesn't.

Termination, and why the notice period is the real term

Almost every physician contract can be ended by either side without cause, on notice. So the contract's real length isn't the number of years on the front page. It's the notice period, usually sixty to a hundred and eighty days.

Read whether the notice is symmetric. If they can end it on sixty days and you owe a hundred and eighty, name that asymmetry and ask them to change it, which is a normal thing to ask.

If it says "partnership track"

Ask three questions and get the answers in writing: when, on what terms, and how many people on that track have actually made partner in the last five years.

A partnership track is one of the most valuable things in medicine, and the difference between the employed tenth percentile and the owner ninetieth percentile in the same specialty is enormous, which is the central figure on What Doctors Actually Make. It's also a phrase that can appear in a contract without committing anyone to anything.

The part that is specific to us

You're more likely than your co-residents to sign the first thing you're handed.

Not because you're less capable. Because nobody in your family has negotiated a professional contract in front of you, because "they're already doing me a favor" is a reflex that runs deep when you're the first one here, and because paying a lawyer several hundred dollars to read a document feels like an extravagance when you have spent a decade counting money carefully.

Negotiating is expected. The first offer is an opening position, and every employer who hires physicians knows that. Asking for changes doesn't make you difficult, and it very rarely costs you the job.

A lawyer for this isn't a luxury. A physician-contract review costs a small fraction of a single tail-coverage bill, and much less than the difference a wRVU conversion factor makes over three years. This is the cheapest insurance you'll ever buy.

You don't have to be adversarial to negotiate. The whole thing can be one email: "I'm excited about this. Before I sign, I have questions about the tail-coverage provision, the wRVU conversion factor, and the notice period. Would you be open to discussing those?" That is the entire technique.

What this page cannot do

It can't be legal advice, and it isn't. Contract law varies by state, non-compete enforceability is genuinely unsettled, and the specifics of your document are the only thing that matters in the end. Everything here is what to look for and what to ask, so that when you pay someone to read it you know what you're paying them to find.

It also names no firms and recommends no vendors, deliberately. Contract review, disability insurance, and refinancing are the three most heavily marketed things in physician media, and this site doesn't participate in that.

What belongs to other pages

Why two offers with the same number are different jobs, and the five levers that set physician pay, is What Doctors Actually Make. What actually reaches your account after taxes and benefits is A Resident's Paycheck, and the same subtractions apply at this scale. How much the debt should be allowed to steer the choice is Debt, Specialty & the Life You Want. What the first two tax years after training do to that number is The Refund, Then the Bill.

Five questions to ask about any offer

  1. Is the malpractice policy occurrence or claims-made, and if claims-made, who pays for tail?
  2. What is the wRVU conversion factor and threshold, and can the employer change either one unilaterally?
  3. Is the signing bonus subject to a clawback, and on what schedule?
  4. Does the non-compete apply if you terminate me without cause?
  5. Is the notice period the same in both directions?

References

Employment contract terms, malpractice market pricing, and the enforceability of restrictive covenants vary by state and change. Nothing here is legal advice, and no page can substitute for having your own document read by a lawyer who works on physician contracts. This is educational information. Last reviewed: 2026-08-03

Footnotes

  1. Tail coverage, formally an extended reporting endorsement, extends a claims-made malpractice policy to cover claims filed after the policy ends. It is a one-time cost priced as a multiple of the final annual premium, and only claims-made policies need it. AMA Insurance states it "can cost as much as two times the amount of your annual professional liability insurance premium" and that responsibility for paying it depends on the employment contract: https://amainsure.com/advice-resources/our-thinking/what-is-medical-malpractice-tail-coverage/ · Brokers and contract-review firms quote a wider 150%–300% band, with the dollar total varying by specialty, state, and policy limits: https://www.sermo.com/resources/tail-coverage-malpractice-insurance/ and https://contractdiagnostics.com/blog/medical-malpractice-insurance-uncover-your-financial-blind-spot/ ↩