Physician Recruitment Agreement

Sample One: Physician and Hospital Contract

This Agreement is entered into this DATE day of MONTH, YEAR by and between HOSPITAL, a NAME OF STATE nonprofit corporation ("HOSPITAL"), and ______, M.D., an individual physician ("Physician").

WHEREAS, HOSPITAL provides health care services in the State of NAME OF STATE in the geographic areas covered by the counties of NAME OF COUNTIES (the "Service Area"); and

WHEREAS, HOSPITAL has determined that the health care needs of the residents of the Service Area would be better served by attracting additional physicians to the community, and HOSPITAL desires to ensure that adequate medical care is available to residents of the Service Area through the recruitment of qualified physicians;

WHEREAS, in particular, there are an insufficient number of physicians in Physician's specialty of ______to meet the needs of the residents of the Service Area and HOSPITAL desires to ensure that adequate medical care is accessible and available throughout the community through the recruitment and retention of ______to the Service Area, and

WHEREAS, in order to attract and retain such physicians, HOSPITAL has explored alternative methods of recruiting physicians and has determined that the only feasible way to accomplish its goals is through the use of recruitment incentives and assistance to physicians, including but not limited to, financial assistance with the costs associated with establishing a practice within the Service Area;

WHEREAS, Physician is duly licensed and qualified to practice medicine in the State of NAME OF STATE and Physician desires to relocate to the Service Area;

WHEREAS, HOSPITAL, in order to recruit Physician to relocate to and remain in the Service Area, has determined that the incentives and assistance provided for herein are reasonable and appropriate in light of the benefits to the residents of the Service Area of recruiting Physician to establish a medical practice;

WHEREAS, Physician is willing to make a long-term commitment to practice in the Service Area, and to become and remain a member of the active medical staff of HOSPITAL NAME (the “Hospital”); and

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

I. OBLIGATIONS, QUALIFICATIONS AND REPRESENTATIONS OF PHYSICIAN

1.1. Establishment of Practice. The Physician agrees, upon execution of this Agreement, to initiate the necessary steps to relocate to the Service Area and establish a medical practice in NAME OF CITY, NAME OF STATE, pursuant to the terms of this Agreement. Such steps shall include, but shall not be limited to, obtaining office space, leasing or purchasing appropriate equipment, leasing or employing appropriate office personnel, and any other steps to begin a medical practice so that Physician may begin practice on or about ______, YEAR (the actual date on which Physician begins rendering patient care services is referred to as the "Commencement Date").

1.2. Full-Time Practice. Physician agrees to practice medicine on a full-time basis in the Service Area during the term of this Agreement and to maintain Physician's sole professional office in NAME OF CITY, NAME OF STATE or at another location within the Service Area which is approved by HOSPITAL in its sole discretion upon the showing of adequate community need for the relocation. Physician's primary area of practice will be in ______, and Physician will provide appropriate medical care to all persons presenting themselves for treatment regardless of race, age, religion, national origin, handicap, ability to pay, third party payor or participation in any federal or state health care program. The parties agree that "full-time" as used herein shall mean at least forty (40) hours per week for forty-six (46) weeks per year.

1.3. Medical Staff Membership. Physician agrees to maintain, at all times during the term of this Agreement, membership on the Medical Staff of HOSPITAL NAME, consistent with HOSPITAL NAME’s regular requirements and process for such application and membership, and to obtain and maintain such clinical privileges as are necessary and appropriate to carry on the practice as contemplated hereby. During the term of this Agreement, Physician shall undertake all ordinary services and obligations expected of members of the Medical Staff and the Hospital, including on-call services on a rotating basis with other staff members, if required, and participation on Medical Staff committees as reasonably requested by the Hospital and approved by the Medical Staff and shall at all times comply with all bylaws, rules and regulations of the Medical Staff and with the corporate bylaws and policies of the Hospital.

1.4. Maintenance of Books and Records. Physician agrees that, during the term of this Agreement, he shall maintain accurate books and records regarding the Practice, and the Physician shall make the same available to HOSPITAL for inspection and copying within ten (10) business days of a request by HOSPITAL.

1.5. Professional Fees. Physician shall promptly charge and collect all professional fees for services rendered by Physician, or under Physician's direction, to individual patients and/or their third party payors, including but not limited to, those patients seen as inpatients and in emergency rooms, outpatient departments, clinics, and Physician's office.

1.6. Medicare and Medicaid. Physician agrees that, during the term of this Agreement, Physician shall maintain eligibility to, and shall participate in, the Medicare and Medicaid programs and such other third party payor programs designated by HOSPITAL. Physician further agrees that during the term of this Agreement, he shall accept as patients any persons seeking medical services who participate in the Medicare and Medicaid programs.

1.7. Compliance with Legal Requirements. Physician agrees that, during the term of this Agreement, the services to be provided by Physician hereunder will be provided in accordance with all applicable federal and state laws, regulations, and rules governing the services, rules and regulations of the Hospital and its Medical Staff, all as may be amended from time to time.

1.8. Professional Liability Insurance. Physician agrees that, during the term of this Agreement, Physician shall maintain professional liability insurance coverage in compliance with the bylaws of the Medical Staff. In the event such coverage is terminated or canceled for any reason, and if coverage is on a claims-made basis, Physician agrees to purchase a reporting endorsement to permit coverage of claims arising prior to the termination of coverage, but not reported during the period of insurance coverage.

1.9. Professional Licensure. Physician shall at all times during the term of this Agreement maintain an unrestricted license to practice medicine in the State of NAME OF STATE and shall maintain all necessary licenses, registrations, certifications and other approvals necessary for the practice of medicine as contemplated hereunder, including federal and state registration to dispense and prescribe controlled substances.

1.10. No Revocation or Suspension. Physician represents and warrants to HOSPITAL that Physician's ability to provide professional medical services in any state, commonwealth or other jurisdiction has never been revoked, limited, suspended or otherwise restricted in any manner. Physician further represents and warrants to HOSPITAL that Physician is not currently and has never been suspended from participation in or subjected to any type of criminal or civil sanction, fine, civil money penalty, debarment or other penalty by any private or public health insurance program, including Medicare, Medicaid or any other federal or state health insurance program.

1.11 Confidentiality of Agreement. Except with the prior written consent of HOSPITAL, Physician shall not disclose the contents of this Agreement to any third party, except as may be reasonably required for Physician to obtain the services of their respective professional advisors or as may be required by law. Physician shall notify any professional advisor to whom Physician discloses the contents of this Agreement of the nondisclosure requirements of this Agreement. This Section 1.11 shall survive the termination of this Agreement.

1.12. Duration of Obligations. The Physician’s obligations as set forth in this Section I. and elsewhere in this Agreement shall continue as long as any loan amount remains outstanding and unpaid (or not forgiven) as provided in Sections II and III. of this Agreement.

II. SIGN ON, RELOCATION AND INCOME GUARANTEE LOANS

2.1. Sign-On Loan. Upon execution of this Agreement by all parties, the HOSPITAL shall loan to Physician ______Dollars ($______) as a sign-on loan (the "Sign-On Loan") to enable Physician to pay for other reasonable expenses related to relocation to the service area.

2.2. Relocation Loan. In consideration of Physician's establishment of a medical practice in the Service Area and Physician's agreements hereunder, upon execution of this Agreement by all parties, the HOSPITAL shall

(i) loan to Physician up to Twelve Thousand, Five Hundred Dollars ($12,500) to be used to reimburse Physician for certain relocation and other expenses that Physician has actually incurred as a result of relocating Physician's residence to the Service Area and establishing a medical practice pursuant to Section 1.1 hereof (the "Relocation Loan"). The Physician shall obtain three (3) bids from qualified moving companies and shall utilize the company providing the lowest bid unless HOSPITAL consents otherwise in writing, and

(ii) loan to Physician up to three thousand six hundred dollars ($3,600.00) for the actual rent paid by Physician to house Physician and his family for a period not exceeding ninety (90) days

The Physician must submit or cause to be submitted to HOSPITAL receipts evidencing the payment of such relocation expenses prior to receiving any disbursement of the Relocation Loan.

2.3. Income Guarantee Loan. Beginning with the first month following the month in which the Commencement Date occurs, HOSPITAL shall, for a period of not more than twenty-four (24) consecutive months thereafter (the “Loan Period”), lend to the Physician on or before the 15th day of each month, an amount by which the Physician’s Net Collections during the preceding month are less than the amount of the Physician’s Approved Operating Expenses for the month.

(i) The term “Net Collections” shall mean the total cash amount actually received after payment of all costs of billing and collection.

(ii) The term “Approved Operating Expenses” shall mean the actual costs paid by Physician up to a maximum amount of $______per month, including but not limited to the Physician’s salary and benefits; the salaries and benefits of any personnel hired, leased or contracted for by the Practice to work exclusively with or for Physician; Physician’s insurance; and rent for space and equipment used by or for Physician.

(iii) In the event the Physician’s Net Collections for any month during the Loan Period exceed the Physician’s Approved Operating Expenses for that month, the amount by which the Net Collections exceed the Approved Operating Expenses shall be carried forward to the next succeeding month and counted as Net Collections in the succeeding month solely for the purpose of determining whether any loan shall be made for any for the succeeding month.

(iv) Physician will report and certify to HOSPITAL as true and correct, on or before the tenth (l0th) day of each month, the amount of Net Collections collected by Physician during the preceding month in such form as HOSPITAL shall direct. HOSPITAL shall have the right, during normal business hours, to inspect or cause its auditors to inspect, at its own expense, the books and records of Physician, from time to time, to verify such collections and expenses.

(v)Notwithstanding any provision of this Agreement to the contrary, HOSPITAL shall not be obligated to make any further loan advance if any Event of Default (as defined in Section 4.1 hereof) shall have occurred.

(vi)In no event shall HOSPITAL have any obligation to loan any amounts to Physician for a period of more than twenty-four (24) consecutive months beginning with the Commencement Date, unless HOSPITAL determines in its sole discretion that it is necessary to lend additional funds to Physician to enable Physician to establish a medical practice in Service Area. Any additional funds provided to Physician shall be on such terms and conditions as HOSPITAL deems reasonable and appropriate in its sole discretion.

(vii) All payments under this section 2.3 shall be made by HOSPITAL to Physician.

2.4. Documentation. Contemporaneous with the execution of this Agreement, the Physician shall execute and deliver to HOSPITAL (i) a secured promissory note substantially in the form of Exhibit B attached hereto (the “Note”) evidencing the amount loaned to the Physician pursuant to Section 2.3. above, and (ii) a security agreement substantially in the form of Exhibit C attached hereto (the “Security Agreement”) securing the obligations set forth in the Note.

2.5. Repayment of Note Except as otherwise provided under the Agreement, the Note or the Security Agreement, the outstanding principal amount of the Note, together with accrued interest thereon, shall be payable by Physician to HOSPITAL in forty-eight (48) equal monthly installments (each a "Monthly Installment") commencing on the first day of the nineteenth (19th) month following of the Commencement Date, or the first day of the month following the month in which the last loan payment is made to Physician if HOSPITAL determines that additional funds should be loaned to Physician in accordance with section 2.3.(vii) above, and continuing for forty-eight consecutive (48) months thereafter. Physician shall pay simple interest on the outstanding principal amount of the Note at the per annum rate equal to the "prime rate" as published in the Wall Street Journal on the Commencement Date, plus one percent (1%). The Note may be prepaid at any time, in whole or in part, without penalty.

III. FORGIVENESS OF NOTE

3.1. Forgiveness of Note. Notwithstanding anything herein to the contrary, HOSPITAL agrees to forgive the debt owed by Physician to HOSPITAL as evidenced by the Note, by forgiving each monthly payment thereunder as each payment becomes due, as long as the Physician complies with all the terms and conditions of this Agreement and is continuing to practice medicine in the specialty of ______in the Service Area as of the due date of each payment, and is not otherwise in default of any provision in this Agreement.

3.2. Event of Default or Termination. From and after the occurrence of an Event of Default, or if this Agreement is terminated for any reason prior to the repayment or forgiveness of all amounts due pursuant to the Note, no further amounts shall be forgiven under the Note pursuant to Section 3.1; but to the extent permitted under applicable law (including laws applicable to HOSPITAL by reason of HOSPITAL's tax-exempt status) any amounts forgiven under the Note pursuant to Section 3.1 prior to such Event of Default or termination shall remain forgiven.

IV. DEFAULT

4.1. Events of Default. The occurrence of anyone or more of the following events shall constitute an "Event of Default" under this Agreement:

a)Any representation or warranty of Physician contained in this Agreement, the Note, the Guaranty, the Security Agreement or in any agreement, instrument or certificate related thereto (collectively, the "Loan Documents") shall prove to have been false or misleading in any material respect at the time it was made or delivered; or

b)Physician fails or neglects to perform, keep or observe any material term, provision, condition, obligation or covenant contained in this Agreement which is required to be performed, kept or observed by Physician, and the same is not cured to HOSPITAL's reasonable satisfaction within thirty (30) days after HOSPITAL gives Physician written notice identifying such default; or

c) Any action or conduct of the Physician which would be grounds for suspension, restriction or termination of Physician's Medical Staff membership or clinical privileges at HOSPITAL NAME, or other disciplinary or corrective action, pursuant to the HOSPITAL NAME Medical Staff Bylaws, regardless of whether such disciplinary or corrective action is actually taken; or

d)Conduct by Physician involving unethical conduct, moral turpitude or fraud, including, without limitation, any violation by Physician of any law or regulation relating to Medicare, Medicaid or other governmental programs; or

e)The suspension or revocation of Physician's license to practice medicine in any state or Physician's federal or state registration to prescribe or dispense controlled substances; or any other formal disciplinary action taken by any regulatory or licensing agency, or

f)An application is made for the appointment of a receiver, trustee or custodian for by Physician; a petition under the federal Bankruptcy Code or any other federal or state bankruptcy, insolvency or other similar law or regulation is filed by Physician; a proceeding or case is commenced against Physician under the federal Bankruptcy Code or any other federal or state bankruptcy, insolvency or other similar law or regulation, and such proceeding or case is not dismissed or stayed within sixty (60) days of filing or Physician makes an assignment for the benefit of his creditors.

g)HOSPITAL fails or neglects to perform, keep or observe any material term, provision, condition, obligation or covenant contained in the Agreement which is required to be performed, kept or observed by HOSPITAL and the same is not cured within thirty (30) days after Physician gives HOSPITAL written notice identifying such default.

4.2. Effect of Default. Upon the occurrence of an Event of Default:

a) If there is an Event of Default by Physician, HOSPITAL may

i)at its option add all unpaid accrued interest to the principal of the Note for purposes of calculating interest and, in addition thereto, at its option, may accelerate the payment of all unpaid and unforgiven principal and accrued interest on the Note in which event the entire unpaid or unforgiven principal of the Note, and all accrued interest shall be immediately due and payable in full;

ii)pursue such other remedies as may be available to it under this Agreement and the other Loan Documents; and

iii)take whatever action at law or in equity may appear necessary or desirable to collect payments then due (to the extent not previously forgiven) or thereafter to become due and to enforce performance of the any covenant, condition or agreement of Physician under this Agreement.

b)If there is an Event of Default by HOSPITAL which remains uncured, Physician may

i)elect to terminate the Agreement in which event all amounts previously loaned to Physician, and all accrued interest, shall be forgiven in full, or