Doctors, read your contract with the private hospital carefully

Most private hospital doctors are actually independent contractors with practising rights in the hospital, and not the hospital’s employee. —

When I entered private practice and joined my current private hospital in Melaka in 1994, I was only 34 years old.

The management of the hospital gave us a contract and all of us who joined the hospital, being young and naive, just signed it without much thought – we were just happy to have a place to practice.

When the hospital changed owners in 1999, the new management took the bold move of terminating all our contracts and giving us new ones.

We were all very upset with the way we were treated, but the management thought that this was the best way to move forward as they had bought the hospital and wanted a fresh start with all the doctors.

We engaged a lawyer to look at all our contracts.

Constrained by clauses

One clause in that contract that has always bothered me is that I am not allowed to practise anywhere else unless I get prior approval from the management.

I don’t think any of us have ever violated this clause and many doctors have been practising here for more than 20 years.

I have always wondered about the unfairness of this clause.

We are not allowed to practise elsewhere, but the management can bring in anyone into the hospital without even informing us!

Bringing in another specialist in my field would definitely eat into my patient load, and thus, lessen my earnings, but I am not allowed to go out to practise elsewhere to supplement my income?

This, I have always felt, was unfair.

Many of my colleagues in private practice are in a similar predicament.

Another friend of mine had a contract that stated that if he left that practice, he could not practise within 15km of the old practice for the next five years.

Some contracts have clauses preventing doctors from practising in the same city if they leave a practice!

I have always wondered whether such contracts are valid and legal.

Of course, the hospital will say that we signed the contract willingly, and so, should abide by it.

There are actually two issues at hand:

  • If a doctor, who has signed a contract with a hospital stating that he will not work elsewhere, is caught violating the contract, can he be penalised?

  • If he leaves the hospital/practice, can he open his own clinic/practice/hospital within the vicinity of that hospital, despite having a clause in his contract stating he is not supposed to do so?

Most contracts between private hospitals and doctors prohibit the latter from practising elsewhere while they are with the hospital. — FilepicMost contracts between private hospitals and doctors prohibit the latter from practising elsewhere while they are with the hospital. — Filepic

Limiting practice

Almost all specialists in private practice are not employees of the hospital; they are independent contractors with practising rights in the hospital.

If they are resident doctors, they will all have a clause stating that they will not be able to practise elsewhere.

Very few hospitals are confident enough of themselves or magnanimous enough not to have such a clause.

This clause does not have a time frame; it is effective until the doctor leaves the hospital or changes his status to visiting or part-time practitioner.

The idea is that, as you are a new resident doctor, you will be promoted and “advertised” by the hospital.

As the hospital is bringing patients to you, you are not allowed to take patients away from the hospital.

This sounds very logical and may be true at the beginning of your practice, but after some time, when another specialist in your field is contracted to the hospital, then all resources will be given to promote this new doctor.

You will then have to fend for yourself; you will have to do your own marketing to get patients to your practice.

If your income has reduced as a result of this competition, is it fair for the hospital to not allow you to go elsewhere to practise to supplement your income?

I know of a friend who opened a clinic while working as a specialist in a private hospital.

His clinic provides similar specialised services to what he provides in the hospital.

He was pulled up by the hospital management and finally had to pay a fine for the “offence”.

Private hospitals mete out such punishments to ensure that other doctors will toe the line.

An ‘illegal’ clause

As for the second issue, I asked an experienced lawyer for some advice.

She said that according to section 28 of the Contracts Act 1950, this is a violation of the right of a doctor to earn a living.

The law prohibits an employer or a party to the contract to restrain the trade or profession of another.

Over the last few months, many doctors have approached her with such contracts and she has always advised them that these contracts cannot hold up in a court of law.

She has only come across one case where the doctor was sued for violating his contract by opening his own practice in contravention of the “non-competition” clause, but this was overturned in the Court of Appeal in favour of the doctor.

The silver lining is that these “non-compete” clauses cannot be legally enforced by the hospital against the doctors.

Do your part

The question to ask is why most private hospitals and private practice groups include such clauses in their contract.Doctors should take their time to read through their contract with a private hospital or group before signing it, preferably with the help of a lawyer. — AMITA SEVELLARAJADoctors should take their time to read through their contract with a private hospital or group before signing it, preferably with the help of a lawyer. — AMITA SEVELLARAJA

Most private hospitals feel that as they are investing in you, they own your professional life entirely while you are working in that hospital, and even after you have left the hospital.

You work for them and only them.

These clauses are placed to deter you from thinking of leaving and opening your own practice within their vicinity.

It works all the time. Doctors, being trained to be obedient servants, always comply and are rarely confrontational.

So, when joining a private hospital, read through every line before signing a contract.

Get a lawyer to assist you.

At the least, understand what you are signing.

I too hate to read every line of a contract, but in this case, the time you take to do this will be well spent.

In most circumstances, you won’t have a choice about the contract as it is usually a “take it or leave it” situation.

As many other doctors have already signed a similar contract, the hospital is not going to change it for you unless they consider you an exceptional case.

As you are giving your entire professional life to this hospital, you need to at least be aware of what you are signing, so that you have a clearer picture of what lies ahead in your career.

Dr S. Selva is a consultant obstetrician and gynaecologist, and fertility specialist, in private practice in Melaka. This is the seventh article in a weekly series about surviving private practice in Malaysia. For more information, email The information provided is for educational purposes only and should not be considered as medical advice. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information.

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