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Restrictive Covenant Negotiating Tips

 
Question:

Hi Jennifer

Hospital are expanding dramatically- purchasing practices and hospitals covering very broad geographical distances.  How can a restrictive covenant be negotiated appropriately when the circles drawn around all of a hospitals affiliations could cover for example, all of Long Island.   Clearly, a negotiation to limit the restriction to a principal practice site makes sense, however, it quite common for physician t hired to work at two locations and possibly do surgery at a third location.  Clearly this is best negotiated before signing. Suggestions?

Thanks, 
Dr. L

Answer:

Absolutely you lose your bargaining power once you sign on the dotted line.  Restrictive covenants must be negotiated prior to execution.  Your assertions of limiting to service locations actually utilized by the practitioner is a wise one.  You can also limit it to sites you provide majority of your services, defined by time.  A broad restriction may not be enforceable, but should you sign and an employer seek to enforce, you will be stuck defending which can be quite expensive.  

At the end of the day your bargaining power is based on your ability to walk away from the contract.  Sometimes that is the best move if the restrictions are too draconian.  

Another methodology not mentioned is, you may want to defer negotiation to your healthcare attorney - sometimes inserting an experienced negotiator, potentially someone with a relationship with the hospital's counsel, can make the difference between a restriction that is unpalatable v. reasonable.  


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