Ask the expert: What is the purpose of restrictive clauses in physician-hospital contracts?

The purpose of restrictive clauses in physician-hospital contracts is to protect an organization’s monetary investment in recruiting a physician or a group of physicians to the community and helping the individual or group build a practice. Organizations often offer loan forgiveness, signing bonuses, and financial assistance for the first year or two of practice, which translates into tens of thousands of dollars, says Richard A. Sheff, MD, CMSL, chair and executive director of The Greeley Company. If a physician chooses to leave the organization before it has recouped the losses, the hospital would have no way of regaining that investment if it didn’t protect itself with appropriate contract language.

This week’s question and answer are adapted from “Five steps to crafting foolproof contracts with independent groups” in the October issue of Medical Staff Briefing.