Crafting Non-solicitation Provisions in Physician Employment Contracts

When reviewing or drafting physician employment agreements, one item on which to focus attention is the prohibition against solicitation, which impacts the terminating physician. Like any other contract provision, a non-solicitation provision should be carefully tailored to the particular practice and there is no “one-size” approach for everyone.

1. A non-solicitation provision may be considered overly broad if it prohibits a physician from soliciting any patient ever seen by the practice. I typically recommend that a non-solicitation provision prohibit solicitation of patients with whom the terminating physician had contact during the 12-month period prior to the termination. This limitation will most directly impact the physician since it captures most active patients. To the extent the practice is more specialized, there may be other applicable exceptions as well which should be discussed with counsel.

2. What is solicitation of a patient? I like to describe solicitation to my clients as an actual effort made to convince, coerce, or direct a patient to obtain services which are competitive with the practice, from anyone other than the practice. It is quite clear that general advertisements, mailings to certain zip codes and other general marketing activities are not “solicitation.”

3. Contacting a patient to offer services not offered by the practice typically fall outside a non-solicitation provision. This is why it is important to broadly define the practice’s services and to update your contract regularly as the practice’s services expand. Additionally, keep in mind that the actual list of the practice’s patients should be protected by a separate confidentiality/non-disclosure provision and should not be available to the terminating physician.

4. I am always bothered by agreements that state a physician may not “treat” a patient previously seen in the practice. A patient always has a right to seek out a physician, and to obtain treatment by any physician of the patient’s choosing. A physician who has not solicited a patient cannot, and should not, be stopped from providing treatment to a patient.

5. Another item to consider is what to do if a physician joins a practice with an established patient base. May the physician solicit those patients following termination? If this is the plan, don’t forget to include it in the non-solicitation provision. Additionally, it is always a good idea to have a strategy concerning how to inform patients when a physician does leave. Including the agreed upon approach in the employment agreement can allow for a much smoother transition when termination occurs.

6. Non-solicitation of employees and contractors is a great provision to include in the employment agreement to avoid losing a manager, nurse, or other physicians. Take note, however, that the non-solicitation provision should only apply to people who worked in the practice while the terminating physician was present.

7. Non-solicitation of referral sources is a tough issue to address but can be included in the non-solicitation provision. Physicians often have loyal and developed referral sources and when a new physician joins the practice, he or she may benefit from such referrals as well. There is little a practice can do if the referral source likes the terminated physician and desires to continue referring to such physician following termination, as long no solicitation is involved.

8. It is also common to restrict physicians from interfering with the contracts and relationships of the practice during and following termination. This may mean the physician may not take any action to cause a hospital to terminate an exclusive agreement with the practice (i.e. to hire a new group in which the terminating physician is an owner or employee). It may also mean not interfering with the practice’s relationships with contractors, vendors, and others with which the practice does business. Sometimes these same concerns can also be addressed through a non-disparagement provision.

As with all contract provisions, the practice should talk with counsel to make sure its non-solicitation provision is enforceable and tailored to meet the practice’s needs. For the incoming physician, counsel is needed to make sure the provision is reasonable and clear. Although the start of a relationship is not when either side prefers to discuss termination, having a mutual understanding of what occurs upon termination will minimize conflict down the road.

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