7 Physician Employment Contract Red Flags You Should Never Ignore

An attending physician signs her contract in March. Internal medicine, suburban hospital system, $265,000 base salary. The number is real. So is the welcome packet, the orientation date, the new badge.

What she does not check, because nobody taught her to check it, is the relationship between the wRVU threshold buried in Section 4.2 and the $/wRVU rate referenced in Schedule B. The threshold is set high. The rate is set low. By the end of year one, she has produced more wRVUs than the median internist in the country and earned roughly $52,000 less than that median internist's compensation. Over the four-year initial term, the structure costs her about $215,000.

This is not a contract problem. The contract is enforceable. It is a literacy problem. Physicians sign exploitative financial structures because medical training never covered how to read them, and most contract reviews focus on legal enforceability rather than financial fairness.

Here are the seven red flags that cost employed physicians the most money — and how to spot each one before you sign.

Red flag #1 — wRVU threshold at 75th percentile, $/wRVU rate at 35th

This is the most common and most expensive trap in physician contracts.

What bad language looks like:

"Physician's annual compensation is contingent on production of 6,400 wRVUs. Production above this threshold shall be compensated at $38 per wRVU."

For family medicine, 6,400 wRVUs is the 75th percentile — the level only top-quartile producers reach. $38/wRVU is roughly the 35th percentile rate. A physician hitting this threshold is doing top-quartile work for below-median pay.

What to ask for instead:

Production thresholds at the 50th-60th percentile. Compensation rates at the 50th percentile or higher. If the employer insists on a high threshold, the rate must rise to compensate for the intensity required to hit it.

The dollar consequence:

For family medicine, the gap between the 75th/35th structure and a fairly aligned 50th/50th structure is approximately $48,000-$52,000 per year. Over a five-year contract: $240,000-$260,000 of unpaid intensity. For a detailed breakdown of how this structure is deliberately constructed and what fair alignment looks like, see The wRVU-to-Salary Mismatch.

Red flag #2 — Vague call language with no defined limits

Call burden is one of the easiest places for employers to hide unpaid work.

What bad language looks like:

"Physician shall participate in call coverage as needed and as scheduled by the department." Or: "Call shall be shared equally among the physicians in the group."

Neither clause defines a maximum frequency, separates compensation, or accounts for what happens when the group shrinks due to turnover.

What to ask for instead:

A defined maximum number of call shifts per month or per quarter. A separate per-shift compensation amount for any call beyond a baseline. A clause specifying what happens if the group falls below a certain size.

The dollar consequence:

Uncompensated call in markets where similar roles pay $1,500-$3,000 per shift can quietly absorb $30,000-$80,000 of annual compensation. For ICU, ED, and OB call, the gap is often higher.

Red flag #3 — Below-market $/wRVU rate

Even if your wRVU threshold is reasonable, a suppressed compensation rate caps your long-term earnings.

How to check:

Find the $/wRVU rate in your contract — usually in a compensation schedule or appendix. Look up the median rate for your specialty using MGMA data, FastRVU benchmarks, or specialty-specific surveys. If your rate is more than 10% below the 50th percentile, that is the red flag.

The dollar consequence:

A $7/wRVU spread (roughly the difference between the 35th and 65th percentile) translates to $35,000-$70,000 per year for most full-time physicians. Over a five-year contract, that is enough to change what your career compounds into.

Red flag #4 — Non-compete radius over 15 miles

Geographic non-competes determine where you can work after leaving. Most are negotiable. Many start unreasonably broad.

What bad language looks like:

"For a period of 24 months following termination, Physician shall not practice medicine within a 50-mile radius of any office or facility owned by Employer."

A 50-mile radius from any facility in a multi-site health system can effectively bar you from your entire metropolitan area.

What to ask for instead:

A radius of 5-15 miles from your primary practice location only. A duration of 12 months or less. Some states (California, North Dakota, Oklahoma) significantly limit physician non-competes — know your state's rules before negotiating.

The financial consequence:

A broad non-compete can force a relocation or career interruption that costs $200,000+ in lost income and moving expenses if the position does not work out.

Red flag #5 — Tail insurance responsibility undefined

Tail insurance covers malpractice claims filed after you leave a position for incidents that occurred during your employment. It is required for claims-made policies, which most physicians have.

What bad language looks like:

No mention of tail coverage at all. Or: "Physician shall be responsible for tail coverage upon termination."

What to ask for instead:

Employer-paid tail coverage if you leave after a defined tenure (often 3-5 years), or if termination is without cause. Specific dollar caps if you are responsible.

The dollar consequence:

Tail policies cost roughly 150-200% of your annual malpractice premium. For most physicians: $30,000-$80,000. For high-risk specialties: $100,000+. Leaving this undefined means you absorb the full cost if you ever change positions.

Red flag #6 — No annual wRVU threshold review clause

Productivity targets that do not adjust over time become traps as your practice grows.

What bad language looks like:

A fixed wRVU threshold that applies for the entire contract term, with no provision for review or adjustment.

What to ask for instead:

An annual review clause. If you exceed the threshold consistently, the rate should improve or the threshold should be re-benchmarked. Without this, your reward for productivity gains is more work at the same rate.

The long-term consequence:

Physicians who outperform their threshold without a review clause typically earn 15-25% less over a five-year term than peers with adjustment provisions.

Red flag #7 — 2026 CMS efficiency adjustment not accounted for

This is the live red flag for any physician signing a contract right now.

In January 2026, CMS finalized a 2.5% reduction in wRVU values for nearly all non-time-based CPT codes — surgical, procedural, imaging, and diagnostic services. A contract drafted using 2025 wRVU benchmarks may now have thresholds that are 2.5% above the actual current work value of the clinical activity.

What to ask:

Directly: Has the wRVU threshold in this contract been updated to reflect 2026 wRVU values? If the answer is unclear or the contract was last revised before 2026, request that the threshold be reduced by 2.5% — or that the $/wRVU rate be increased proportionally.

Who is most affected:

Procedural specialists. Surgeons, interventionalists, radiologists, anesthesiologists, and any specialty performing procedural codes will see the largest gap if the contract was not updated.

What to do before you sign

The pattern across all seven red flags is the same: contracts hide financial structure inside language that physicians were never trained to evaluate. The base salary number is real. The wRVU mechanics, the call language, the tail responsibility — these are where the actual money lives.

Before you sign anything, run the numbers against your specialty's benchmarks. If you are not sure where to start, FairRVU does this analysis on your specific contract in under 60 seconds.