Physician Employment Agreements & Post-Close Retention Architecture
Structure impervious physician employment contracts, navigate evolving state and federal non-compete regulations, and align doctor incentives through defensible wRVU productivity models and retention escrows.
The single greatest risk in healthcare private equity transactions is post-closing physician attrition. If founding physicians receive massive cash windfalls at close without continuing economic alignment, productivity collapses or providers depart to launch competing practices across town. Furthermore, regulatory scrutiny surrounding physician non-compete covenants (state restrictive covenant statutes and FTC antitrust rulemaking) has rendered standard non-compete clauses legally vulnerable. Kompanie LLP designs post-close physician governance architectures: pairing market-rate wRVU production formulas with tiered retention escrows, sale-of-business goodwill protections, and secondary equity incentives that secure long-term provider commitment.
Deliverables
- Drafting post-acquisition Physician Employment Agreements compliant with Stark Law FMV standards.
- Sale-of-business goodwill non-competition covenants insulated against general employee non-compete bans.
- Tiered deferred compensation and retention escrow release schedules (years 1–5).
- Production wRVU compensation tier calibration balancing practice operating margins against physician earnings.
Frequently asked questions
How do private equity buyers enforce non-competes against selling physicians?
Even in states that restrict employee non-competes, courts broadly uphold non-compete covenants executed in connection with the bona fide sale of a business or practice goodwill. We structure restrictive covenants directly into the Equity Purchase Agreement and MSO Membership Agreement rather than standalone employment contracts.
What happens to physician compensation after private equity acquisition?
To create normalized EBITDA, the physician’s pre-deal owner profits are replaced with an employment package. Market standard is typically 30% to 35% of personal professional collections or an MGMA median per-wRVU conversion rate, supplemented by rollover equity dividends.