Before signing a Texas hospital or health system contract, a physician should negotiate compensation and how productivity is measured, call coverage, termination rights, the noncompete, who pays for malpractice tail coverage, and what happens to hospital privileges if the contract ends. Hospital forms are written to protect the hospital. Most terms can be negotiated, but only before you sign.
Who am I actually contracting with?
Texas generally prohibits lay corporations from employing physicians, a rule called the corporate practice of medicine doctrine. So a “hospital job” is often with an affiliated nonprofit health organization, a medical group, or your own PLLC under a professional services agreement. The contracting entity affects who controls your practice, who owns your patient relationships, and how you can leave.
What terms matter most?
| Term | What to look for |
|---|---|
| Compensation | Base salary, wRVU productivity rate, quality bonuses, how often they are reconciled, and any clawback |
| Raises and equity | Scheduled increases, and any path to ownership or partnership |
| Call coverage | How often, at which facilities, and whether extra call is paid |
| Termination | Without-cause notice periods on both sides, and what counts as “cause” |
| Noncompete | Since September 2025, limited by Texas law to one year and five miles, with a capped buyout |
| Malpractice tail | Who pays for tail coverage when you leave. It can cost a large share of a year’s salary |
| Privileges and records | Whether privileges automatically end with the contract, and access to your patient records |
| Recruitment loans | Income guarantees and their forgiveness period, and what you owe if you leave early |
Why are there compensation limits?
Federal laws, including the Stark law and the Anti-Kickback Statute, require physician pay from hospitals to be consistent with fair market value and not tied to referrals. Hospitals use these rules to resist some requests. Others are negotiable. Knowing the difference helps.
What if the relationship goes wrong later?
Disputes over unpaid bonuses, termination, peer review or privileges are much easier when the contract was negotiated with them in mind. Physicians facing a Texas Medical Board complaint should get counsel immediately, because a licensing matter can trigger contract termination.
From our case files
- Raises and an equity earn-in. We negotiated and drafted a physician practice agreement with a Texas hospital that included an escalating raise clause and an equity earn-in arrangement (2019).
- A foundational hospital-chain contract. We formed a five-member neurosurgery PLLC and negotiated its foundational contract with one of the largest national hospital chains (2020).
- Protecting a captive practice. We negotiated a captive-practice arrangement with a hospital and revised the hospital’s documents to protect our physician client (2020).
- License protected. We represented a physician in negotiations and disciplinary proceedings before the Texas Medical Board, preventing license revocation (2024).
- Privileges restored. We sued and obtained restoration of staff privileges for a neonatal specialist against the largest hospital in the area (1998–1999).
Client names are withheld for confidentiality. Every case turns on its own facts, and past results do not guarantee a similar outcome. See more representative results.
The Burk Law Firm represents physicians across Texas in hospital, group and locum tenens contracts and disputes. Call (512) 306-9828.
Related: What Happens When a Texas Medical Practice Breaks Up? · Physician Practice Disputes
This article is general information, not legal advice. Reading it does not create an attorney-client relationship.