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Physician Contract Negotiations: Letter of Intent (LOI)

If you’re reading this, it’s probably because you have an exciting new job prospect, and your potential employer just asked you to sign a letter of intent (LOI). You may have had a great interview and want to show interest, but you’re not sure what the implications of signing a letter of intent may be for the rest of the physician contract negotiations process. This is a situation that members of our physician community often find themselves in and often post questions about. While a letter of intent is not legally binding, it’s still important to be cautious before signing one. This article will discuss what to know about the letter of intent, and when it’s important to get a physician employment contract attorney involved.

Disclaimer: Please do your own due diligence before making decisions based on this page. Nothing on this page constitutes formal or personalized legal advice. Laws vary based on location and while this information is accurate to the best of our knowledge, may not be up to date or apply in your location.  We are not formal financial, legal, or otherwise licensed professionals, and you should consult these as appropriate. To learn more, visit our disclaimers and disclosures.

Key points highlighted below about the letter of intent (LOI) in physician contract negotiations

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What is a letter of intent in regards to physician jobs? Is it a contract?

The letter of intent (LOI) is a non-binding contract, but it signals that the contract should be drafted as the intention between both parties is to work on executing a legally enforceable physician employment agreement. It is the equivalent of a job offer, and will outline the major terms and conditions under which the physician and the employer have agreed to move forward. This will include salary and other major aspects of the compensation agreement, including the physician’s position, the start date and term of employment, how many hours they’ll be working, and what they are being hired to do. Some LOIs may be more detailed than others and also include information about benefits and responsibilities. It may even include information about on-call duties, CME funds, malpractice coverage, loan repayment, life and disability insurance, and partnership tracks. Overall, it serves as the starting point for the more formal, more detailed, legally binding contract, but includes key terms of negotiation that both parties have tentatively agreed to.

What is some language that your LOI should include?

Before you sign the LOI, make sure that the words “non-binding” are in the agreement, so that there’s nothing there that constitutes or suggests a binding contract or binding terms. You also want to make sure that it specifies that either party can walk away from the agreement and terminate negotiations after a good faith attempt to come to terms. 

LOIs may also include nondisclosure agreements, which generally are binding, as both parties may be revealing confidential information during the contract negotiation process. 

FAQ: If I sign the LOI, do I need to stop looking at and negotiating with other jobs?

The LOI shows that both parties are serious about going forward. This means that the employer intends to hire the physician and that the physician intends to take a job with the institution or employer. Once you sign it, the employer will assume that you will stop entertaining other positions (and hopefully, your potential employer will stop interviewing other candidates). Some LOIs will even have a provision outlining this, stating that you should not be negotiating with other jobs while you are negotiating the contract. This is sometimes referred to as the standstill agreement.

FAQ: If I want to negotiate my salary, should I sign the LOI?

You should be careful here. The LOI will typically indicate a salary or a salary range. Although this isn’t a legally binding physician employment agreement, once you sign the LOI indicating a particular salary or range, the other party (the potential employer) will be counting on that. As above, once you both sign the LOI, they will also likely stop interviewing other candidates. If you go back and ask for a 30% increase in salary during the contract negotiations process, this may be a dealbreaker for them, and they will be upset that they had made plans based on what they perceived as you accepting a lower salary. It would also be unfortunate for the other candidates who may have been interested in the job. Remember that the physician job market is a small world, particularly in specialty fields, and how you conduct yourself in this process will affect future employment prospects as well. The professional thing to do is to stay close to your word.

Therefore, you should make sure that you do as much due diligence about what an acceptable offer looks like before signing off on the salary amount. This includes talking to others who are employed there, looking at physician salary compensation data, considering your other offers and coming down to a number that you are satisfied with, and likely consulting a physician contract attorney.

If they are pushing you to sign the LOI but you plan on negotiating the salary, make sure you let them know that you are planning on negotiating the salary and ideally indicate that on the document so that it’s clear to everyone that you have not yet agreed to the salary. Better yet, ask them if you can defer on signing the LOI because you have to see what the rest of the compensation package and terms of employment look like before deciding what salary you’re willing to accept and whether you’ll be able to accept the offer.

FAQ: Can I really sign a Letter of Intent (LOI) without knowing everything about the job?

This is a tricky question. While everybody knows that contracts can fall through between the LOI and the formal contract, and while both parties likely want a soft commitment prior to investing so much time in the contracting process, people on both sides of the physician contract are making plans based on this accepted tentative job offer. If you know ahead of time that there are certain dealbreakers that will make or break your decision to take the job, make sure these are discussed and agreed upon prior to signing the LOI. Similarly, if there are portions of the LOI that you are hesitant to commit to, ask for those to be taken out of the LOI prior to signing it.

FAQ: When should I get a physician employment attorney involved in the contract process?

Most physician contract attorneys recommend that once you have an LOI in hand, you get them involved. This is because it’s always harder to negotiate once you have tentatively agreed to something. Doing this is like negotiating with one hand tied behind your back, and you may end up short changing yourself as a result, or committing to things that you might not want to commit to. Some examples include benefits, PTO, or other aspects or terms of the compensation package, such as a restrictive noncompete clause or unfavorable termination clauses

Assuming you use an attorney specialized in reviewing physician contracts, they will likely have access to salary databases such as MGMA data, and they can help you determine whether the offer you have is fair before you sign the letter of intent. They can also review all the other aspects of your compensation package, including things like benefits, as well as point out any red flags that they see before you get further down the process. You should also become familiar with these yourself by reading our guide to physician employment agreements and contract negotiations and by accessing our physician salary and negotiation databases, which list what others in our physician communities have been able to negotiate. 

Ultimately, we as physicians may not know a red flag when we see one, or not know the questions we should be asking when accepting a particular set of terms. You’ve spent a lot of time and energy getting to this point in your career, and it’s worth the due diligence to make sure you take the contract across the finish line as favorably to your goals as you can.


While signing an LOI is not a legally binding document, it sets the stage for all future negotiations. Do not take it lightly, as what you agree to will impact the final result of the contract negotiations. Get your physician contract attorney involved as early as possible in the process. 

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