Contracts: The Most Important Document Most Clinicians Treat Like an Afterthought

If you spend enough time in dermatology, one truth becomes obvious. Our training prepares us extremely well to diagnose disease, treat patients, and manage complex clinical problems. What it absolutely does not prepare us for is practicing medicine in the corporate setting. Contracts, compensation models, productivity expectations, and ownership structures. Those pesky, inconvenient details that nonetheless dictate how we practice, where we practice, and our quality of life. America trains exceptional clinicians who ultimately enter an increasingly corporatized industry unarmed and unprepared. 

And make no mistake. Medicine is very much a business.

That gap is why Dermatology Times and I are launching this column.

The Practice Playbook is built around a simple idea: Take real questions from clinicians across dermatology and give them straight answers about the business of practicing medicine. Not theory. Not platitudes. Honest and direct answers grounded in what actually happens when you open the books, staff a clinic, or try to leave a bad deal in a hostile environment.

My perspective comes from both sides of the table. I am a full-time clinician in medical and aesthetic dermatology as well as a practice owner. I have written employment offers, structured compensation models, managed overhead, and enforced contract language when relationships went sideways. Earlier in my career, I was the employee reading the offer letter at midnight, trying to figure out whether the numbers were real or too good to be true. Too many of us are falling prey to blind spots driven by bias. And bias will tank your career.

To launch, the editors of Dermatology Times and I agreed to begin with the document that quietly governs more of your professional life than almost anything else: your employment contract.

The Most Expensive Document You Will Ever Skim

One of the more surprising patterns I see in contract consultation is how casually clinicians treat their employment agreements. A contract that may control 2, 3, or sometimes 4 years of your career often receives less scrutiny than car financing paperwork. Yet that document will determine your income, your schedule, your ability to change jobs, and, in some cases, whether you can keep practicing in your own community.

Over a few years, the financial implications of a dermatology contract can run from hundreds of thousands of dollars for a junior physician associate (PA) to millions for a Mohs surgeon.

The typical review process? Send it to a few colleagues. Post excerpts in a forum. Maybe hand it to a relative who practices family law. Unless those people are health care attorneys who understand employment law in your state, they are sharing personal experience, not legal advice. No different from when a patient tells us, “Google and my aunt, who is a nurse, says.…”

Let me be clear about something.

A contract is not a mission statement, and it is not just about your pay. It is a legal instrument that defines rights, obligations, and consequences if things do not go according to plan. When the relationship is good, nobody thinks or cares about the contract. When it breaks down, the contract is the only thing that matters in a court of law.

And contracts do not operate on spirit. They operate on language, which is why careful review before signing is not pessimism. It is professionalism. The wealthiest people in the country have teams of attorneys negotiating their deals, with fortunes built and lost on contract language. Your career deserves the same attention.

With that, here are 4 of the most common contract questions I hear, drawn from more than 500 contracts I have reviewed and helped negotiate over the past 8 years.

Question 1

Restrictive Covenants

“My contract includes a noncompete that would block me from practicing dermatology anywhere nearby for 2 years if I leave. What is actually reasonable?”

Noncompetes generate more anxiety than nearly any other contract provision, and understandably so. A poorly structured one can determine whether you keep working in the community you live in or start packing boxes after leaving a toxic job.

Now, although we as providers despise noncompete covenants, the employer’s position is not unreasonable. Practices invest real money in recruiting, credentialing, and building their patient panel. No business wants to fund your ramp-up only to watch you open across the street 6 months later. I say this as someone who has written those checks. It adds up fast.

But the scope of many noncompetes goes well past protecting a legitimate business interest, becoming punitive and aimed at trapping providers in a job that was not as advertised.

I routinely see restrictions of 1 to 2 years with radii of 5 to 30 miles or employers insisting on the maximum terms a state allows. Dermatology practices often operate multiple satellites. A 10-mile restriction around 5 sites can wipe out an entire metro area for future employment.

When evaluating a noncompete, focus on these 3 things:

• Duration: One year is more defensible than 2, especially early in a career.
• Geographic scope: Is the radius tied to your primary location or every office the organization operates?
• Specialty restriction: I have seen contracts restrict not just dermatology but “related medical services,” including medical spas, urgent care, and other positions you would be shut out of, which is excessive. Challenge that language.

One more thing. The law around noncompetes is changing fast. Pennsylvania, Indiana, Texas, Maryland, Oregon, and Arkansas have all passed new restrictions within the past 2 years. Courts are increasingly skeptical of broad clauses when patient access to care is at stake. Know the law in your state.

Question 2

Compensation Models

“The compensation section has base salary, collections language, thresholds, and bonus triggers that I do not fully understand. How do I know whether the model is fair?”

This is where clinicians get into the most trouble. Physicians are often paid entirely on productivity; physician associates and nurse practitioners are more commonly paid on a salary base plus productivity. Pure production always pays better because it carries more risk. Most offers include (or not) a guaranteed base for the first year or two, then a transition to productivity-based pay tied to collections, charges, or work relative value units (RVU). On paper, attractive. In practice, the gap between what a contract promises and what you take home can be wide enough to fly a jet through.

Collections-based models tie your income to what the practice actually collects, exposing your paycheck to billing efficiency, payer mix, denial rates, and reimbursement timelines. None of that is under your control. You can see 40 patients a day and still have a rough quarter if the back office is underperforming. RVU-based models may avoid some of these issues but introduce added complexity around conversion factors, tiered thresholds, and which activities count. Those variables are set entirely by the institution. There is a reason why hospitals and large health systems prefer RVU models and why most dermatology professionals prefer not to work in them.

Either way, you need to understand the math. Not the concept. The actual math. 

You should have access to regular production reports showing how your pay is calculated. If a practice will not share those numbers, that is a red flag.

And scrutinize the bonus thresholds. I have reviewed contracts that dangle a generous collections percentage once a certain production level is hit, but the target sits well above what anyone in the practice generates. A bonus nobody has ever triggered is not compensation. It is marketing. Before you sign, ask for historical production data. What are current clinicians generating? How is ancillary revenue allocated? Are there cost-of-goods subtractions or clawbacks? All of it matters.

Question 3

Exit Provisions and Tail Coverage

“My contract says I may owe tail malpractice coverage and requires a long notice period if I leave. What should I be watching for?”

Exit provisions are the part of the contract that almost nobody negotiates. Clinicians focus on salary, benefits, and maybe the noncompete, but then gloss over what happens when the relationship ends. That is a mistake, because the cost of leaving can be surprisingly high.

Start with the notice period. Ninety days is standard in dermatology. Some contracts run to 6 months. Long notice requirements lock you in place if a position becomes untenable.

Then look at tail malpractice coverage. If the practice carries claims-made insurance, which many do, coverage is only active while you are employed. Once you leave, a separate tail policy may be needed for claims filed after departure. The cost typically runs 1.5 to 3 times the annual premium. In dermatology, that means $9,000 to $18,000 or more, due in the middle of a job transition.

Your contract should say who pays. Some employers cover it. Some split it. Some push the full cost onto you. A structure I think is fair: a vesting provision where the employer picks up a larger share for each year you stay, covering it fully after 3 or 4 years.

There is also nose coverage, where a new employer’s carrier assumes liability from your previous position. It can eliminate the tail obligation entirely, though asking a new employer to cover your last employer’s penny-pinching is a massive ask.

Finally, review repayment clauses tied to signing bonuses, relocation, or training. If you leave before the specified period, you may owe part or all of it back.

Question 4

Partnership Promises

“My employer mentions a future partnership opportunity, but nothing about it is in the contract. How should I think about that?”

This comes up constantly, and it is one of the most preventable frustrations in dermatology.

Early-career clinicians hear “partnership track” and picture equity, autonomy, and long-term upside. When ownership works, it can be career defining. But verbal assurances are not contractual terms. I say that as someone on the ownership side who has offered buy-in to clinicians.

If partnership is genuinely part of the opportunity, the details should be discussable now. What is the timeline? How is the buy-in valued? What financial records will you see before putting up capital? Is the track guaranteed, discretionary, or just something that sounded good during the interview? What happens if the practice gets sold first? Assignability clauses can completely reshape the deal you thought you were walking into.

A partnership pathway that lives only in conversation may never materialize. One defined in writing creates accountability. If the employer is serious, putting terms on paper should not be a difficult ask.

Looking Ahead

Contracts are not glamorous. But they govern more of your career than most clinicians realize or care to admit. Understanding yours is not about looking for a fight. It is about making sure the agreement is clear, durable, and fair.

In coming installments of The Practice Playbook, we will get into more contract details, buy-and-bill economics, private equity, supervision models, and where dermatology is heading. If you have a question about the business side of dermatology, send it our way via Dermatology Times’ social media or by emailing [email protected].

For now, one thing. Do not treat the most important document in your career like an afterthought. Once you sign it, that contract will do exactly what it says, whether you read it carefully or not.

Joseph (Joe) Gatti, DMSc, MPAS, MBA, PA-C, is a board-certified dermatology physician associate, West Point graduate, and co-owner of a high-volume dermatology clinic and full-service medical spa. Through Azimuth Consultants, he advises clinicians nationwide on employment contracts, compensation strategy, and practice operations.

Disclosure: Gatti is the founder of Azimuth Consultants and maintains active ownership interests in a dermatology practice and medical spa.