In connection with the transformation of many hospitals and other medical facilities into capital companies it has also become fashionable to offer the physicians employed there a more “modern” approach to hiring medical personnel, i.e. contracts. But this phenomenon is not due only to the transformation of hospitals into companies.   In truth, this stems from the need to make savings (improve the financial result) in hospitals and from stricter regulations applying to the working hours of employees at medial establishments. 

Consequences of the change

What is this switching to contracts, then?  This is nothing more than offering doctors to give up their existing contracts of employment and concluding contracts for the provision of medical services, colloquially known as medical contracts.  Contracts for the provision of health services are civil law contracts for the provision of services which are governed by the provisions of the Civil Code and various medical regulations, above all, the Medical Activity Act of 15 April 2011.  What does it mean in practical terms for a physician who still wants to work (provide services) at the hospital?  Above all, it means that he or she must become an economic operator and register as a trader.  The medical contract can shift the entire risk associated with providing health services onto the doctor.  This situation is the opposite of a contract of employment where this risk rests upon the employer.

In the case of a medical contract the entire third party liability for damage caused to the hospital or a third party (patient) may rest upon the physician, despite the fact that the Medical Activity Act provides for joint and several liability of the medic and the medical facility (hospital) for damage caused by the provision of medical services or by unlawful omission to provide such services.  Consequently, the physician becomes fully liable to the patient for the damage caused and this liability is not limited to three times the salary of the physician employed full time on the basis of the Labour Code.  Contracts may also provide for high liquidated damages based on the Civil Code which the physician will be obligated to pay the hospital in the event of non-performance or undue performance of contractual obligations. However, it is possible to draft the contract so that this liability is at least partly limited. 

Less stability

A contract of employment also offers much greater security when it comes to employment protection.  Many contracts of employment currently concluded with physicians have long notice periods provided under the Labour Code (usually three months).  Moreover, in order to dissolve such contract it is necessary to indicate a justified and real reason for the termination which is not easy bearing in mind the high level of professionalism of the medical personnel.  If the contract of employment is terminated due to the liquidation of the post (department, hospital) it is necessary to the statutory severance pay.   A medical contract can be terminated very easily and there is not severance pay. It can be terminated practically overnight, without giving reasons.  Most such contracts are concluded for a specified time (often not exceeding one year). This means that after a year the hospital has the right not to extend the contract or may try to renegotiate its conditions before renewing the contract for another term. Moreover, in the case of medical contracts there are practically no time/hourly limits set for providing medical services (standard working hours, on-call, work at night), which gives rise to concerns of the audit authorities (e.g. Supreme Audit Office and State Labour Inspection) regarding patient safety. In the case of contracts of employment these working time restrictions, breaks, etc. are strictly regulated in the Medical Activity Act.  

Nothing but advantages

For hospitals which are transforming into companies and offering medical contracts instead of contracts of employment this means nothing but advantages.  Apart from those already mentioned above, it is worth pointing out that the hospital is not obligated to grant the physician a paid rest leave in a given calendar year on the basis of the Labour Code. In the event of the medic’s illness the facility can expect that a replacement will be arranged at the expense of the physician. Alternatively, it may allow the medic not to provide medical services during that time, while reducing the remuneration by the period of absence.   The same applies to pregnancy and parenthood. There is no protection afforded to women during that period, including the prohibition of contract of employment termination, night-time work and overtime, and there is no right to a paid feeding break.

Role of the remitter 

What is more, by entering into a contract with a physician who is an economic operator, the hospital does not have to pay social insurance contributions or income tax advances for that physician.  He or she must pay taxes and social insurance contributions. Switching to contracts with physicians also often means that the penalties imposed by the National Heath Fund on the medical establishments (e.g. hospitals) or the consequences of a failure of the National Heath Fund to pay hospitals for the services rendered are shifted onto the physician to a certain extent. 

Quarterly report

In order to monitor possible attempts at circumventing labour regulations when switching to contracts, the Medical Activity Act obligates the manager of the medical facility to submit a quarterly information to the State Labour Inspection and the competent medical professional self-governments on the number of persons at a given medical facility who practise medicine on the basis of civil law contracts or as interns working on the basis of such contracts.

Titbits

- the interest in contracts on both sides (medical facility and physician) is high and gradually increasing.

- according to a report of the Supreme Audit Office (of July 2015) at 22 audited hospitals 2/3 of physicians were employed on the basis of contracts. In the 2011-2014 period their number increased by almost 15 per cent.

- July’s report of the Supreme Audit Office also indicates that the average hourly rate paid to physicians during normal working hours and on duty was between PLN 37 and 140 and for being on call between PLN 13 and 25.  

In the author’s opinion:

Is switching to medical contracts with physicians equitable and fair? It seems that from the business point of view this is rather unavoidable in view of the development of economic relationships also in this sector of commercial activity.  It offers physicians more freedom and possibilities to manage their time, earnings flexibility, arranging duty hours, flexible working hours – all this cannot be offered by a full time job.

In connection with shifting the burden and scope of liability, and the imposition of many new duties on the physician the contractual pay rates are decidedly higher than in the case of contracts of employment, which in the final reckoning may be economically advantageous to both sides. However, it is necessary to seek contractual clauses and formulate medical contracts so that the number of disputes between the medical facility and the physician is minimised and that neither party is unfairly treated.   This is possible, but both sides should pay particular attention to the contractual provisions they sign.