After a competitive bidding war, three-time MLB All-Star and two-time American League MVP Shohei Ohtani agreed to a 10-year, $700 million deal with the LA Dodgers in what is the largest sports contract ever signed. Ohtani, known for his impressive pitching and hitting, which has been dubbed his two-sword style, has agreed to an annual salary of $2 million, deferring $68 million each year to be paid out between 2034 and 2043 so that the Dodgers can have greater financial flexibility and continue to sign other star players.
Contract negotiations are important for the parties involved to reach an agreement regarding how their relationship will operate and what their obligations will be. Ohtani’s negotiation is notable in that his decision to defer much of his salary helps his new team financially, thus giving everyone involved a better shot at winning the World Series.
As clinical leaders of health care teams, physicians often must make similar considerations when negotiating their own contracts. AMA Code of Medical Ethics Opinion 11.2.3, "Contracts to Deliver Health Care Services" provides guidance to help physicians navigate the challenges of entering into contracts to deliver health care services. The Opinion states, “Physicians have a fundamental ethical obligation to put the welfare of patients ahead of other considerations, including personal financial interests. This obligation requires them to consider carefully the terms and conditions of contracts to deliver health care services before entering into such contracts to ensure that those contracts do not create untenable conflicts of interests.”
Employed physician contracts should ideally include detailed descriptions of expectations including the number of hours they are expected to work, their availability and on-call hours, and outpatient care duties or administrative duties. Employed physician contracts are typically either a fixed compensation model with a set salary or a variable compensation model that includes a productivity component that relies on performance-based formulas to calculate part of the salary. While physicians should be aware of and understand the type of compensation model offered by a contract, other elements such as signing bonuses, administrative duties, and noncompete clauses should also be considered.
To further explore the AMA Code of Medical Ethics, please visit AMAethicscode.org.
Published on January 12, 2024