Physician Letter of Intent: Should You Sign It?

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Many times, a letter of intent is the first step toward acceptance of a job offer. This short document seems very simple and straightforward but signing this before you fully understand the ramifications is not wise.

Even if you are anxious to begin work, and you feel certain that you want to accept the said position, you should proceed with caution. Signing the letter of intent could feel like a routine part of the negotiation process, but it can come with a price.

There are some key elements of a Letter of Intent that you should review. Preferably with the help of a physician contract negotiation specialist to ensure you don’t back yourself into a corner before the negotiation even begins.


What is the Purpose of a Letter of Intent?

When an employer sends you a letter of intent, you should feel confident that they are serious about offering you a position. A letter of intent is only sent out to those who meet their requirements.

This letter of intent is an official job offer. Just as it is serious from their end, it shouldn’t be signed unless you are serious about potentially accepting the offer.

Understandably, many physicians and employers consider the signing of a letter of intent as a mere formality of the hiring process, but it is much more than that and shouldn’t be taken lightly.

For the physician, the letter of intent helps them understand the offer without it being overwhelming. Many physicians aren’t versed in the legal jargon of contract negotiation, and receiving a hefty document with technical terms that they might not understand can halt the hiring process.

In other words, a letter of intent is the first step to begin the negotiation of terms. Once signed, an employment contract negotiation begins quickly.

The letter of intent also lets the physician know if this position is not meant for them. If the terms are way off or the compensation is too low, you can skip the lengthy and complicated process of contract negotiation and tell the employer upfront that the position does not meet your expectations.


What Should be Stated in the Letter of Intent?

Most prospective employers write very succinct and detailed offer letters. To ensure that you’re aware of all the necessary major terms, there are a few key areas that should be addressed.

Compensation Range

A letter of intent should give you an expected pay range based on different situations. This doesn’t mean that you need to stick strictly to this compensation in the contract, but it will give you a ballpark range of numbers to begin your negotiation process.

This compensation range should match the market rate for physicians with your background and accomplishments in the area that the practice resides.

Length of Employment

In this offer, you should also have an identified length of employment. If you aren’t looking for short term employment but a stable long term commitment, the letter of intent should reflect this.

A contract generally lasts for a year with automatic renewal of the terms, if both sides agree. However, a physician’s letter of intent can also outline the expected years that a contract is to be renewed.

Employment Begin Date

Of course, you need to know when you are expected to begin working for the employer so that you can get your affairs in order.

The start date can make a big difference in the urgency of the matter. If the employer needs you on staff within a couple of months, and the job is several states away, you may not have the desire or ability for such a quick relocation.

Duties and Responsibilities

The physician letter of intent should explain the duties and responsibilities that you will be expected to fill.

This should include whether you will be full time and what full time entails. For some employers, full time is a minimum of 30 hours per week; for others, you need to meet the 40-hour workweek mark.

It should also include your on-call duties. For example, the position could include a rotation of on-call duty one week each month.

The letter of intent should list all expected duties such as making hospital rounds, hiring support staff, or procedures to be performed.

If a physician is looking for opportunities to become a managing partner of the practice, the offer letter should mention the possibility of future ownership or partnership and identify a typical buy-in procedure.

Benefits

An important term that should be outlined in the letter of intent is that of included benefits of employment.

This includes health insurance for the physician and the physician’s family. It would also include how much malpractice insurance coverage the employer will pay for.

Another often forgotten benefit — that would be a good thing to negotiate for — is to secure payments for continuing medical education (CME). You will not only have more to offer your employer, but you will be increasing your own value through CME.

Also, your prospective employer may require certain CME to stay on staff. Without this provision from your contract, you will most likely have to pay out of pocket for these — adding to an already expensive medical education.

Related: How to Work With a Physician Recruiter


What are the Dangers of Signing Before the Contract Agreement?

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The question is a valid one. Why not just sign the letter of intent and get on to the important negotiations of the contract? Isn’t that where the real decisions are made?

While it’s true that the final terms will be met during the negotiation of a physician employment contract, signing the letter of intent hastily could lead to less negotiation power for that very contract.

What dangers are you opening yourself up to by signing a letter of intent that hasn’t been properly analyzed?

Excessive Workload

Without having your expected duties and workweek defined in the letter of intent, you could be signing onto more than you can handle.

It is all too easy to see a great compensation rate and jump on board. This can be a big mistake if you don’t yet know what is expected in order to earn that pay. After receiving the contract, you may find that the hours and workload are excessive for the position.

While it is nice to start out at a higher compensation, in this case, it actually masks what an effective annual compensation should be on a normal increasing projection.

Restrictive Covenants or Non-Compete

Also, be wary of any lack of definition within the restrictive covenants or non-compete clauses in the letter of intent.

Even with a great compensation package, these terms can render the physician employment contract inadequate if they are too restrictive.

Learn more here: Restrictive Covenants in Employee Contracts: What They Mean for You

Lack of Malpractice Insurance and Malpractice Tail Coverage

As a practicing physician, it is imperative that you have good malpractice insurance to protect you. A good employment contract will include this in the benefits package, but if you don’t see it in the letter of intent, you might be surprised to find it lacking in the proposed contract.

It’s also important that the malpractice coverage includes tail coverage or coverage that remains after termination.

If the physician’s letter of intent lacks this provision, you will want to address that before signing.

Learn more: Full Guide to Physician Malpractice Tail Coverage

Lack of Benefits

Benefits really can make or break a contract. Great compensation can’t possibly cover the expenses of health insurance.

For a good coverage plan, you can expect to pay as much as $20,000 for your family. Having your employer pay for a good portion of that will help a lot with your finances.

Are You Signing an LOI Template or One Made to Fit Your Needs?

Some employers are so nonchalant about sending a letter of intent that they use a template or cookie-cutter LOI for all their prospective physicians.

You can easily spot if you’ve received one of these because some of the terms won’t fit your particular position or situation at all.

When this happens, it’s best to really scrutinize the letter of intent for any missing terms or discrepancies.

If they didn’t take the time to write up a letter of intent tailored to you — you can expect to find a lot of missing pieces of the puzzle.


Is a Letter of Intent Non-Binding or Conversely Binding?

A physician’s letter of intent is usually nonbinding, but some states and circumstances are an exception. It’s always best to protect yourself by making sure that the letter of intent is written in a way that makes it legally non-binding.

In order for this to be so, it must specifically state “non-binding” in easy to read terms and an all-encompassing way. It should not use the suggestive language of a binding agreement, such as “agree,” “acceptance,” or “offer.”

This LOI should also include a statement that negotiations could be terminated by either party at their own discretion. Otherwise, simply signing the letter of intent could hold you liable to fill that position at any measure.

Even with the right language and non-binding statements, some parts of the LOI can still be considered binding.

Two that are commonly considered binding when signing a letter of intent are confidentiality of the employer’s information and practices, and a standstill agreement, where the employer expects to have your exclusivity for a period of time.

Even if you sign a nonbinding LOI, employers can expect you to stick to it and be less flexible when negotiating your contract.


Terms in LOI are Still Negotiable

It’s important to know that even though it can be dangerous to sign a letter of intent without careful consideration of its language, inclusions, and exclusions, many of the terms in the letter of intent are still negotiable during the contract negotiation process.

Some employers consider your signature to mean your agreement to all the terms, but you can still negotiate terms when you have ensured that your LOI was non-binding. Contract negotiation should go on as normal and not be taken lightly.

Related: Physician Contract Termination: How to Protect Your Interests

Benefits of Hiring a Physicians Employment Contract Specialist Before Signing

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Many physicians consider bringing on the help of experienced physician employment contract review specialists to help them with the negotiation of the contract.

But there are some benefits of hiring specialists at this earlier stage.

A contract review attorney can help protect you from signing a letter of intent that could be damaging to your employment opportunity. The letter of intent is certainly a simpler document than the contract itself, but it is still a legal document. These attorneys understand the legal language included in the letter of intent and can guide you in your decisions.

Contract review financial planners know the market because they deal with many physicians and their employment contracts. They can help you decide whether your offer is a good one or if you should expect more compensation or better benefits.

They may even know the employer from past negotiations. This means that they could have insider knowledge of their tendencies when negotiating and their culture and reputation. If the employer has been fair in the past, your specialists can let you know.

A good specialist’s knowledge and experience can save you time and money in negotiations as well as save you from agreeing to terms before its time.

Physicians Thrive contract review specialists are teams of financial planners and lawyers. Ensure your bases are covered by learning more about how we can help you.


As stated, receipt of a letter of intent is an expected and even beneficial beginning to the hiring process.

Its statements can help you make an informed decision before wasting your time through a lengthy and complicated negotiation process that cannot come to agreeable terms.

When faced with a letter of intent, it is important to communicate with a potential employer that you are not fully settled on the terms contained in the offer letter or letter of intent until you see the entire picture.

Ensure that you are signing with the contingency of receipt and review of a satisfactory employment agreement.

It is important to realize that you start negotiating when you first meet your prospective employer, long before a contract is even presented.

We recommend you connect with an experienced physician contract review team early in your search, even before you’re in contract discussions.

Our team can coach you through each step of the process and help guide you to the strongest negotiation position possible.

Contact Physicians Thrive now to get started.

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