Ophthalmology Business

APR 2013

Ophthalmology Business is focused on business topics relevant to the entrepreneurial ophthalmologist. It offers editorial, opinion, and practical tips for physicians running an ophthalmic practice. It is a companion publication of EyeWorld.

Issue link: http://digital.ophthalmologybusiness.org/i/115526

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Page 9 of 27

continued from page 9 If a physician is relocating for a job and plans to stay in the area, he should make sure the contract weighs in favor of him staying at the practice as long as possible, Mr. Bogen said. A number of employment contracts include restrictive covenants or limitations on what a physician can do if he is no longer working at the practice, Mr. Keiser said. Some covenants, such as not revealing confidential information about the practice, are usually clear-cut, Mr. Bogen said. Other covenants, such as ones relating to competition, are harder to enforce. "Generally, courts don't like restrictive covenants and will look favorably at arguments against enforcing them," he said. This is because they can appear to be a restriction on competition, he added. For example, a judge may rule in favor of a younger physician who worked at a practice for two or three years and decided to open a new practice in the same city as his former practice, Mr. Bogen said. On the other hand, a judge may not feel the same way about a seasoned physician who has sold his practice to another well-established practice and receives $2 million in compensation for the transaction and the restrictive covenant. If a contract has restrictive covenants regarding the ability to practice in a certain area upon leaving the practice, Mr. Keiser said it would benefit the physician to negotiate for severance pay. Restrictive covenants in employment contracts often address nonsolicitation, or an agreement to not solicit employees to work at a new practice and not solicit former patients to come to the new practice. It can be hard to enforce restrictions that have the effect of dictatingwhether patients can or cannot follow the physician to a new practice, Mr. Keiser said. Restrictive covenants also commonly address limitations on where physicians can set up a new practice—for example, this covenant may state that they cannot participate in another practice within 5 to 10 miles of the existing practice for a two-year period. "This may not be an issue if you don't like the area or plan to leave town, but what if your family is there?" Mr. Bernick said. While this is a standard agreement, Mr. Keiser cautions ophthalmologists to make sure there is still room for the exiting physician to establish a practice within the same general area to avoid having to relocate. Ophthalmology Business February 2013 eZine now online Also, the actual mileage involved in this covenant can vary greatly depending on the geographical area—say a rural area where patients drive longer distances versus a city, Mr. Bernick said. Other areas Ophthalmologists are often involved in outside projects, Mr. Keiser said. This can be as diverse as inventing a new eye drop dispenser to consulting for a pharmaceutical company. Make sure your contract indicates that you are allowed to consult on these other projects in your personal time, he said. Another area to negotiate for clearly in your contract is what it means to be on call. "When can you expect to be on call, how often are you on call versus other physicians in your practice, what does it mean to be on call, and how are you compensated when you are on call if you are compensated for it?" Mr. Keiser said. Unless a practice provides "occurrence based malpractice insurance coverage," physicians nowadays will also want to make it clear who will pay for their tail coverage, which is the coverage for any malpractice claim brought against physicians even after they are no longer with a practice, Mr. Bernick said. Tail coverage may be for 3 to 5 years after leaving the practice, or it can be indefinite. Although Mr. Bernick prefers indefinite coverage, he also said the steep price for this can be tough for a newer physician to manage. This is why it's good to negotiate with the practice over who will pay for this. OB Contact information Bernick: 800-473-0032, dbernick@healthcaregroup.com Bogen: 212-715-1018, Andrew.bogen@aporter.com Keiser: 202-942-6398, matthew.keiser@aporter.com 10 Ophthalmology Business • April 2013

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