Understanding Nurse Practitioner Contracts: Important Terms and Actual NP Contracts

Important terms found within Nurse Practitioner Contracts

As with any other type of employment contract, the nurse practitioner employment agreement should clearly outline all the details of the job. The nurse practitioner should know exactly what to expect before taking the position. The following components should be a part of the employment contract.
Duties: The duties of the nurse practitioner must be clearly outlined. Unless otherwise stated, duties follow the standard of care for a practitioner in that area or specialty. In some situations, the employer will specify that the nurse practitioner follow certain rules or standards. If the nurse practitioner is employed at a hospital or in a similar setting, the hospital bylaws could be applicable, as could the American Nurses’ Association Code of Ethics. For example, the employer may require the nurse practitioner to follow the ANA Code of Ethics when considering the conflict of interests and limitations of practice.
Compensation and Benefits: Every employment agreement must set out the compensation due to the employee in exchange for services performed. A nurse practitioner should expect to be paid a salary and any bonuses that are promised by the employer. Bonuses are often based on production , patient satisfaction or other metrics. If an employment agreement states that a bonus will be paid, that promise must be kept. If the amount of the salary is not spelled out, the agreement should state a standard range for the position. If the employer can afford to pay more than the low end of the range, the nurse practitioner should be compensated appropriately.
Benefits can vary from one employer to another. Some of the standard benefits that should be included in the employment agreement are:
Work Schedule: The last component of a nurse practitioner employment contract addresses the schedule. The employer should clearly outline whether the nurse practitioner will be required to work weekends, holidays or evenings, and how often. If called into work at an inconvenient time, the employer can be required to compensate the nurse practitioner for his or her time. A flat rate or an hourly rate can be specified for if the nurse practitioner must come in on off-hours.

Negotiating Salary and Benefits as a Nurse Practitioner

The common salary scale for nurse practitioners interested in hospital or other institutional employment is from approximately $85,000 to $105,000. While that should be the high end for new grads with little or no experience, there are always exceptions for more experienced NPs. Bonuses are also common for full and part-time employees. These bonuses typically range from 5% to 20% of salary, but all too often are tied to metrics and difficult to earn if not impossible to reach.
Benefits generally include malpractice coverage, health insurance (usually family coverage with the hospital picking up the bulk of the premium), disability insurance, life insurance, retirement plans, and paid time off. New grads should be wary of contracts which provide "signing bonuses" or tuition reimbursement programs which require employment in excess of 1 year. Although hospitals state that the tuition program is an incentive to join their team, it is really a veiled way to try to "borrow" the employee’s income tax refund. They hope that by enticing you to sign a 2 year contract at a salary below market rates, you’ll be eligible for this benefit after 1 year (or 2 years) of employment. So imagine being an NP earning a net income of $50,000 per year who signs a 2 year employment contract for just $90,000. After 1 year, you learn that your taxes will be about $40,000, putting you at a higher tax bracket than your actual earnings, often rendering you ineligible for tuition assistance. For example, if the contract had read $105,000, instead of $90,000, you would be eligible. So, do not be fooled. Even if you weren’t affected financially, if you borrow a few pennies from your income tax refund the hospital collects a substantial amount of additional Medicaid/Medicare reimbursement money, which they do not share with employee NPs. While a small number of employers do provide assistance after the 2 year contract term, the vast majority use this common ploy to get you into the hospital as a "borrower". Salaries and benefits can vary greatly from one hospital to the next, although they are very similar on average, depending upon the municipality and supervision requirements. Health insurance with large deductible options and low premiums or premiums equal to or less than the co-pays for a family of four at a typical practice make the full package more difficult to appreciate.
The key to successful salary and benefits negotiations is to understand what is being offered and how to negotiate improvements, if they are necessary. I am increasingly seeing contracts where the hospital lists the benefits with their costs, and the signature block above them. There is nothing wrong with this approach for employees and it is a common way to present the offer. The problem is that the contract may not tie the signature block to a specific compensation offer. This can lead to confusion and disputes later. Make sure that the offer is clearly tied to any listings of specific benefits. A seasoned contract lawyer can help to make certain that your agreement accurately reflects what the hospital is offering and what you are accepting. Negotiations will most often occur between a hospital employee or department head and the NP. When the NP expresses her or his objections to terms that are considered unfair, the hospital will often tell the NP to speak with a lawyer. A sincere desire to protect your rights and income will have that effect.

Non-Competes Explained

Non-compete clauses often represent a point of contention for nurse practitioners as they can be onerous in their scope, length and scope. The typical non-compete clause will read something like this: The NP shall not, during the term hereof or for a period of twelve (12) months from and after the date of the expiration or termination of the Agreement, either directly or indirectly, engage, or assist others to engage, in any way in competing practices or businesses within a fifty (50) mile radius of the practice site. Non-compete clauses are used in health care employment contracts to protect the business aspects of the practice. This includes minimizing competition for patients, practice revenues, and general business/market share. Many NP non-compete clauses dictate a period of 9-12 months from the date of termination, in addition to a geographic area, typically around 25 miles. Most NP employers are looking to protect their investment and some derive terms from provider agreements. This makes them very ’employer friendly’. Unless you have leverage to negotiate on either side, you need to be prepared to accept what’s offered, or be prepared to walk away. Consider the consequences if you have been there 1-2 years, and then move on to another position? Those restrictions could potentially jeopardize your next job opportunity, if it is within the non-compete provisions. NPs are paid substantially less than physicians, who are often able and willing to pay for non-compete clauses. NPs need to think through the financial implications as well as where they want to practice from a location standpoint. For example, say a NP is paid around $85K per year in Salem, Oregon, but an employer in Roseburg, Oregon is offering $80K. Each way looks good on paper, until the NP realizes that 280+ miles is much more than the distance suggests. Many factors come into play in this example. What type of accommodations are you willing to make to ensure your future success? NPs spend considerable time and money on education and training. It’s recommended that you get time in the new practice contracts to protect your financial investment. Consider negotiating for ownership interest or and increased salary after a certain number of years on the job. You need to determine what’s most important to you, and be able to communicate those objectives. By prohibiting you from working for anyone else, an employer has the ability to keep you under their thumb to ensure that you are loyal throughout the duration of your employment.

Termination and Renewal Provisions

Nurse practitioners should read for the termination and renewal clauses in their employment contracts to know how to protect their livelihood, finances, relationships, and position at work.
When an employment contract is honored, it serves as a protection against wrongful termination. This is because employers must respect the terms of the contract even if those terms are different from what would be expected in the absence of a contract. A termination clause defines the nature of the obligations in the event of termination or resignation, and may include notice periods or severance. An employer may require the employee to give a certain amount of notice before they resign. If the employer is terminating the employee without cause, the notice required may be up to 8 weeks or more. Termination clauses are important in determining the character of the obligation to provide notice, but will not dictate the right of the employer to dismiss its employee without cause.
In the event of dismissal for poor performance, insubordination, willful misconduct, or some other grounds for just cause, the employment will be terminated. Just cause means that the employee has failed their fundamental obligations, and they have diminished their relationship of trust with their employer to such a degree that the relationship cannot reasonably continue. The burden of proof is on the employer to show that there is just cause , and this is high bar to meet. If an employer is able to identify the misconduct, it must be shown that the misconduct caused the loss of trust. The more serious the misconduct, the less serious the misconduct must be in order to cause the loss of trust. Where the conduct occurred over the course of time, the employer must show that prior misconduct was known to the employee, and that the employee was warned that the trust was broken.
Short notice is a specific contractual term that states that the employer can terminate the employment at a given number of hours, days, or weeks without notice. On termination of an employment contract by either party, the employer is liable to pay any compensation to which the employee is entitled.
Some employment agreements include automatic renewal. If an employment contract is for a fixed term, it automatically ends after that term, unless either party agrees to extend it. In the absence of an extension, the employment ends on the last day of the term. Many agencies will inform their staff if the contract will be renewed, and when. If there is no formal system for informing staff of the end of the contract period and the renewal of their employment contract, the renewal is considered to occur automatically upon the same terms.

Legal Issues in NP Contracts

Employment contracts for nurse practitioners translate the business arrangement of the contract into legal obligations for both nurse practitioners and their employers. Contracts are legally binding and enforceable by civil courts, below we discuss several legal considerations surrounding these contracts.
Defining Scope of Practice
It is helpful for a nurse practitioner to clarify the scope of practice within his or her employment contract. Most employment contracts for nurse practitioners, in healthcare systems where scope of practice is designated by law and regulation, will refer to the state’s Nurse Practice Act. Clarification of scope of practice is especially important to pursue through an employment contract if you practice in a state where scope of practice is not defined in law or regulation.
Clarifying Duty to Supervise
The duty to supervise is another area where employer intent is often expressed through an employment contract. It is important to clarify whether you supervise others as a nurse practitioner and whom those individuals are. This is especially important if you will be supervising unlicensed individuals, mid-level or other licensed practitioners. It is also important to clarify your duty to supervise as it pertains to the provision of care to patients by other providers due to delegation or referral, or substitution on your part.
Clarifying Non-Compete Obligations
Most employment contracts contain covenants or clauses that prohibit you from practicing in direct competition with your employer for a certain period of time, or within a specific geographic area after your employment ends. Most states permit reasonable covenants not to compete, however some states disallow non-competes altogether, so you will need to get an opinion about the legality of your non-compete in your state.
Clarifying Termination Provisions
Employment contracts can and should outline the reasons for termination that are permitted by the contract. If your employment can be terminated without cause, the obligations of the parties after employment ends should be explicitly outlined in the agreement. The parties should also agree in advance on the timeframe for providing notice of termination.
Important to Consult a Legal Professional
It’s always important to enter into any agreement with full knowledge of the obligations that you are undertaking and the rights that may be forfeited when you sign an employment contract. The exact terms and timing of consulting an attorney with knowledge of contract law, health law and organization law, will depend on the individual circumstances surrounding each contract. Even before signing, you may want to seek legal advice if you have contractual obligations to your prior employer.

Sample NP Contracts

Part-Time Practice Agreement:
Strengths: The compensation structure is clear and tied to production, providing the nurse practitioner with an incentive to work more patients in the office. The provisions requiring at least three months’ written notice to terminate provide adequate time to wind down patient care should the relationship end.
Weaknesses: There is no provision specifying the allowed productivity before the per-patient compensation begins. This could result in the practitioner working for extended hours without additional compensation until productivity reaches that level. I generally recommend that these agreements include a clause stating that the per-patient payment terms will not be triggered until at least 15 patients have been seen in each week. Having no limits on the number of patients seen in a single day can result in exhaustion and burnout. Care should be taken to develop a reasonable schedule balancing coverage needs with the provider’s desire for time off.
The second agreement I’ve chosen is a straightforward full-time model:
Nurse Practitioner Employment Agreement
This EMPLOYMENT AGREEMENT ("Agreement") dated this ___ day of _______, 20___, between ____________________________, M.D., a physician, of ____________________________ (hereinafter referred to as "Physician"), and ______________________________ (the "NP") , a registered professional nurse licensed to practice in the State of _____________ and educated as a nurse practitioner (hereafter referred to as the "Nurse Practitioner" or "NP") at ________________ ____________________________________________ (hereinafter referred to as "NPs Place of Practice"). NPs Place of Practice and Physician may hereinafter be collectively referred to as the "Employer".

1. Employment: Physician agrees to employ and the Nurse Practitioner agrees to accept employment at NPs Place of Practice in a manner consistent with the terms and conditions contained herein. Physician may refer to NPs Place of Practice as ______. Such employment shall commence on ____________, 20___, and will continue until terminated as herein provided.

Strengths: This agreement offers a reasonable salary along with a standard benefits package commonly offered by many hospitals and medical groups. It balances institutional requirements for physician supervision and consultation (to assure consistent patient care), while also allowing the nurse practitioner to practice independently (which is the reason many NPs pursue this career path).
Weaknesses: Like the preceding example, this agreement may be missing one or two provisions restricting excessive patient loads or long hours. With physician-supervised NP positions, many hospitals will require greater clarity in regards to the degree of supervision required, including specifying whether the Physician must be present when the NP treats patients. Not all NP employment agreements need to contain this provision, but it’s worth reviewing when seeking employment with a hospital or medical group that will require this level of supervision.