Reading an Ophthalmology Employment Contract: Non-Competes, Tail Coverage and the Partnership Track

1. The compensation formula, not the guarantee

Most first contracts guarantee a base for one to three years and then convert to production. The guarantee is a bridge. The formula is the destination, and it decides your income for years three through ten. Look for:

• What is the base measured against? Net collections (what the practice actually receives for your work), wRVUs (a productivity unit independent of payer mix), or a profit-share. Collections-based formulas expose you to the practice’s billing competence and payer contracts; wRVU formulas expose you to the conversion rate. In 2026 self-reported data, the median ophthalmology wRVU rate is about $48 and median production about 9,700 wRVUs a year.
• Percentage and threshold. “35 percent of net collections above $1.1 million” and “40 percent above $1.5 million” can produce very different incomes at the same volume. Model it at realistic year-two and year-three volume for the panel you will inherit.
• Overhead allocation. Some private practices pay a percentage of collections minus an allocated share of overhead. Ask how overhead is allocated (equal shares, by collections, by square footage) and what is in it. Partner salaries and partner-owned real estate rent should not be in your overhead.
• Ancillaries. Do you share in optical, ASC facility fees, co-management, premium IOL upgrade revenue, or injectables you perform? Associates usually do not. Make sure the contract says what you do and do not get, so the partnership conversation later starts from a written baseline.
• Reconciliation. If you are paid a guarantee against production, is any shortfall forgiven, carried forward, or repaid? A “guarantee” that becomes a loan if you leave is a retention device, not a guarantee.

2. The non-compete, and the state you are in

Non-competes in physician contracts are changing faster than any other clause. The FTC’s 2024 nationwide ban never took effect; it was struck down in federal court in August 2024 and the FTC dropped its appeal in 2025. The action moved to the states, and in 2025–2026 several moved decisively:

Indiana, Colorado, Minnesota, Louisiana, Massachusetts, Rhode Island, New Hampshire, Delaware and others already ban or sharply limit physician non-competes, and Iowa and Maine had bills pending in 2026. This table is a starting point, not legal advice; the law in your state may have changed since this was written.

Where non-competes remain enforceable, courts generally uphold one to two years and a radius tied to where you actually practiced. Three years is regularly challenged successfully, and a 25-mile radius that covers an entire metro area is vulnerable. What to negotiate:

• Radius measured from the office(s) where you actually see patients, not from every location the group owns or acquires later.
• Duration of twelve months.
• A buyout amount stated in the contract (in Texas it cannot exceed your annual salary).
• The non-compete falls away if the practice terminates you without cause or fails to offer partnership on the written schedule.
• A patient-notification right, so patients may be told where you went.

Breaking a non-compete is expensive. Ophthalmology litigation has produced seven-figure judgments against departing surgeons, and even a successful defense costs tens of thousands in fees. Negotiate it before you sign; after you sign your leverage is gone.

3. Malpractice: claims-made, occurrence and tail

Two kinds of policy:

• Occurrence covers any incident that happened while the policy was in force, no matter when the claim is filed. No tail is needed. Less common and more expensive.
• Claims-made covers claims filed while the policy is active. When you leave, coverage for your prior work ends unless someone buys tail coverage (an extended reporting endorsement). Most employed physicians are on claims-made policies.

Tail is the clause associates most often miss, and it is the one that can cost the most on the way out. Tail premiums are commonly quoted as a multiple of the expiring annual premium, often in the range of one and a half to two and a half times; for a surgeon whose annual premium is $15,000 to $25,000, that is a $25,000 to $60,000 check. Contract language to look for:

• Who pays tail if you leave voluntarily? If the practice terminates you without cause? If you leave after partnership is denied? The fair answer is that the practice pays in every scenario except a voluntary departure in the first year or two, and many practices agree to split or pay in full after a defined tenure.
• Does the new employer’s policy offer prior-acts (nose) coverage? If so, tail may be unnecessary. Ask before you pay for it.
• Are limits specified ($1 million / $3 million is standard for ophthalmology in most states)?

4. The partnership track

“Partnership track” in a job posting means nothing until the contract says four things:

1. When. A date or tenure (“eligible for partnership consideration after 24 months”) and what “consideration” means. Is it a vote? By whom? With what criteria?
2. What you are buying. The practice entity only, or also the ASC, the real estate, the optical and any management company? These are often separate entities with separate buy-ins and separate waiting periods. The ASC is frequently where the money is, and frequently where associates are told “later.”
3. How the price is set. A formula (a multiple of EBITDA, a book-value method, an appraisal) stated now, not “to be determined.” Ask what the last two partners paid and how it was financed.
4. What happens if it does not happen. If partnership is not offered on schedule, your non-compete should end and your compensation should step up. Otherwise the practice has every incentive to keep you an associate forever.

Private-equity-backed groups rarely offer true equity in the operating practice; they may offer management-company equity or rollover units with very different economics. Understand which entity you would own, how it is valued, and when it becomes liquid.

5. Termination and everything downstream of it

• Without-cause notice. 90 to 180 days is standard. Shorter notice for the practice than for you is a red flag.
• For-cause definitions. Loss of license or hospital privileges and felony conviction are fair. “Failure to meet productivity expectations” or “conduct detrimental to the practice” without a cure period converts every without-cause termination into a for-cause one.
• What travels with termination. Does the non-compete still apply if they terminate you without cause? Who pays tail? Is your unpaid bonus pro-rated or forfeited? Is any signing bonus or relocation repayable, and does it pro-rate?
• Patient records and notification. Who owns the chart (the practice, almost always) and whether you may notify patients of your departure.

The rest of the contract, quickly

• Schedule and call. Clinic days per week, surgical block days, number of locations, and call frequency (1-in-4 is very different from 1-in-2) in writing, with a limit on new locations added later.
• Benefits. CME allowance and days, licensure and DEA fees, society dues (AAO, ASCRS, state), board certification costs, health, disability, retirement match, PTO.
• Signing bonus and relocation. Taxable, often repayable pro-rata if you leave in the first one to two years. Confirm the schedule.
• Outside activities. Moonlighting, expert witness work, industry consulting, teaching: permitted or not, and who keeps the income.
• Intellectual property and marketing. Can the practice use your name and likeness after you leave? For how long?

What to ask before you sign

Ask the practice for: the last two years of collections for the surgeon whose panel you are inheriting (or the location’s volume if it is a new site), the current partners’ buy-in terms, the practice’s payer mix, and the names of the last two associates who left and permission to call them. A practice that will not share any of that is telling you something.

Then hire a healthcare attorney licensed in the practice’s state. Expect $1,500 to $3,000 for a thorough review and redline. It is the best money you will spend this year.

Denali Recruiting represents ophthalmologists and optometrists in searches nationwide and sees the offers side by side. We do not give legal advice, but we will tell you when a term is outside what the market is offering. Register as a candidate or book a confidential call.

This article is general information, not legal advice. Non-compete law changed in several states in 2025 and 2026 and continues to change; confirm the current rule in your state with counsel.