How to negotiate a physician employment contract
How to negotiate a physician employment contract

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Negotiate like a pro

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Ramona Kwapiszewski, MD, a physician with Muskegon Family Care in Muskegon, Michigan, understands that “it’s all business and shouldn’t be taken personally” when it comes to job negotiations. Kwapiszewski says “What’s important is quality of life, which people don’t tend to write into a contract.”
Ramona Kwapiszewski, MD, a physician with Muskegon Family Care in Muskegon, Michigan, understands that “it’s all business and shouldn’t be taken personally” when it comes to job negotiations. Kwapiszewski says “What’s important is quality of life, which people don’t tend to write into a contract.”

When Ramona Kwapiszewski, MD, left private practice to pursue a position at a community health center in Muskegon, Michigan, she realized job negotiations with a federally qualified health center like Muskegon Family Care would be limited. “I knew what to expect and there wasn’t much to negotiate other than personal preferences,” she says. “I felt comfortable with what I wanted; I clearly defined what I wanted”—and she got it.

Nephrologist Blake Shusterman, MD, in a private practice group in Greenville, South Carolina, has a different story to tell. Although he felt primed for negotiation from instruction he received during his fellowship program at the University of Virginia, he thinks talks fell flat. “I felt I was well prepared going in, but I really did not end up with a lot of negotiating power,” he says. “Maybe I just didn’t do a very good job.”

Negotiation is all business

A number of factors that could have contributed to the different outcomes in Kwapiszewski’s and Shusterman’s experiences, but they both ended up taking the jobs in question—not for lack of options—and both are glad they negotiated. “It’s all business and shouldn’t be taken personally,” Kwapiszewski says. Shusterman agrees. “There really wasn’t much to be upset about in the end,” he says.

A little background goes a long way

Before beginning the negotiation process, it’s important to do your homework and don’t be afraid to enlist help. “Find a mentor—a very good physician you’ve worked with, whom you’ve trusted, and have them go through what they think (the new doctor) would be best suited for,” Kwapisiszewski says.

Learn about the business and clinical reputation of the group that has offered you a job. Find out how much physicians in your specialty and in your area are earning. Figure out what you need from a job and what you want from a job. Although it may seem too early to bring on professionals, contract specialists agree hiring an attorney—preferably one with healthcare experience—as soon as a job is offered will help you navigate the process. Think of the attorney as an adviser; you may still do the negotiating, but you’ll have someone with whom to consult along the way.

According to Marci Jackson, the director of physician and provider recruitment at Southwest Medical Associates in Las Vegas, “Contracts are written to define who is going to do what. They’re not generally constructed to favor either employee or employer, but if the contract is going to favor one party over the other, it’s going to be the employer,” she says. “You need to see if the tradeoff is good enough for you and whether you’re getting enough to offset what you’re giving up.”

It is important, however, to understand that different types of employers may have varying ranges of bargaining capability. “The more complex the structure—the more bureaucracy you have—the less flexibility you’ll have in the contract stage,” says C. Joyce Hall, a health care attorney who is a partner at Watkins & Eager in Jackson, Mississippi. “If a doctor is being presented with a contract [from a group] that has clinics in 20 cities, he’s going to have a lot less bargaining power than with a small group in one city.”

That said, there are basic things to keep in mind when beginning the negotiation process. “The most important thing is that what you’re asking for is reasonable,” says Tommy Bohannon, the senior director of recruiting, development, and training at the Irving, Texas-based physician recruitment firm Merritt, Hawkins & Associates. “If you are asking for something that is out of the ordinary, you need supporting data to back that up. You have to validate your request.”

The second point to remember in negotiating, especially if your requests are out of the ordinary for the potential employer, is to let the employer know you’re ready to accept the job if the employer is willing to accept your requests. “You have to make sure there’s a commitment tied to the request,” Bohannon says. Otherwise, employers might not take you seriously.

Talking salary range

Talk of salary is another potential timing issue. Go ahead and inquire about salary range in the initial stages, Jackson says, but don’t expect to get a firm number until later. “Most people aren’t able to give you an actual number until they’ve met you and see how well you fit what they’re looking for,” she says. However, “they should be able to give you a range that’s within a few thousand dollars.”

Finally, get the biggest points of negotiations taken care of before a site visit. According to Jackson, “The site visit should be the final confirmation that this is the job you want. Everyone should have talked about employer and employee expectations. If everything you have discussed seems within the parameters you have set for yourself, then you should go for a site visit, to see if you can live in this location and work with these people,” she says.

Of course, some physicians find it helpful to have a third party to act as a negotiator. When Thomas Weiss, MD, a psychiatrist in private practice in San Antonio, was offered a research subcontractor position with Radiant Research, he immediately enlisted the help of his brother-inlaw— who happens to be a lawyer. There were certain clauses Weiss’ brother-in-law advised him to request be taken out, such as those that the brother-in-law deemed one-sided in favor of the corporation.

“The in-house legal counsel called me and I pled ignorance,” Weiss says. “I told him these are recommendations ofmy lawyer.” Radiant Research accepted Weiss’ requests and sent him a modified contract. “It actually was not a big wrestling match,” Weiss says. “I fully expected them to pitch a fit, but they agreed to all the changes,” Weiss says.

This begs the question: How soon is too soon to involve an attorney? Hall says that physicians bring in an attorney at the contract drafting stage, but she also says that even by that point negotiations have gone so far that it’s difficult to undo some things. She says that it’s simply sensible to bring in an attorney on the front end of the negotiation process. “These are sophisticated parties,” she says. “It doesn’t say you’re operating in bad faith.” However, an attorney might not be the only professional whose opinion to enlist.

“An attorney’s role is to advise the client on legal ramifications of the contract. An attorney is there to make sure the provisions in the contract comply with the federal and state laws,” Hall says. “The attorney is not there to make business decisions. Therefore the physician may want an accountant involved.” An attorney, especially one specializing in health care, also knows what every contract should contain and the potential pitfalls. Contracts can be lengthy and complicated. An attorney can guide you through the legal jargon, but there are certain components that are common to all of them.

Thomas Weiss, MD, a San Antonio psychiatrist, enlisted the help of his brother-in-law, a lawyer, during negotiations for his current position as principal investigator for Radiant Research.
Thomas Weiss, MD, a San Antonio psychiatrist, enlisted the help of his brother-in-law, a lawyer, during negotiations for his current position as principal investigator for Radiant Research.

Contracts 101

First things first. A contract will typically begin with language that states that the employer wants to employ the employee; that the employee wants to be employed, and there is a mutual agreement between the two parties. It should also state the contract term or duration. “You want to make sure the contract term encompasses the goal of both parties,” Hall says. Weigh security and stability against the freedom to be able to move quickly should the job or location not meet your expectations.

According to Jackson, the contract then usually includes language about the employee being subject to the same rules and regulations as other employees. Typically, there is also a section about whether and under what conditions the physician is able to moonlight.

Work hours, schedule, and call duty are also standard contract elements that are important to consider in the negotiation process. “Time is the number one thing to negotiate in a contract,” Kwapiszewski says. “The most important advice I can give is that you should clearly define what is important to you. I know that sounds very simple— but it’s of the utmost importance.” With contracts, she says, much of the content is standardized, such as patient care responsibilities, “but what’s important is [elements that allow for a] quality of life, which people don’t tend to write into a contract,” she says.

There are a couple major points to remember. It’s a good idea to decide how many days a week you want to work, Kwapiszewski says. It’s also important to read between the lines to assess time you’re likely to spend on the job. Your contract may state that you see patients three days a week, but who determines your patient schedule and what flexibility do you have? What are the other responsibilities and duties? When are meetings? How many vacation days do you have? Are they paid or unpaid? How are they accumulated? When can you take them?

There is a trend in physicians paying more attention to quality of life issues, Bohannon says. “We see it with almost every call we have with a candidate,” he says. “Many candidates are looking for less than a full-time job. They’re focusing more on what the call requirements are like, how much evening or weekend work they’ll have to do, how much vacation time they’ll get.” It’s important, however, Bohannon says, for physicians to remember that the rigorous and unforgiving demands of training are worse than what any work life will be like in the real world.

That said, time-related work duty details should be as specific as possible. Take, for example, call responsibilities. While it may not be reasonable to expect a contract to state that the first Monday of every month, a physician will have call. It is reasonable, however, to set a maximum number of call days per month. According to Hall, “Sometimes general provisions can result in disputes,” she says. “The contract can prevent these by being more specific. I understand that contracts do need to be flexible, but it is easier to negotiate details on the front end.”

Bucks and benefits

Compensation plans can be complicated, but generally, they’re structured so a physician will get a guaranteed salary, an amount based either on billings or collections, or a combination of the two. In these shaky economic times, there has also been a trend toward using the guaranteed net-income model of compensation along with the use of financial incentives like a signing bonus.

“You’ve got a different generation out there looking for jobs right now,” says Bohannon. “They have less interest in running a business and more focus on quality of life.” Bohannon says they see candidates willing to give up a compensation increase in the long-term for more predictability in the short term. Upfront compensation hasn’t suffered, though—85 percent of the physicians Merritt Hawkins & Associates placed in August 2009 received a signing bonus, up from 60 percent in May 2006.

“That’s an indication of a push toward a hospital-employment model,” Bohannon says. “It’s also a function of the uncertainty with the economy. Upfront money is a way to buy someone’s apprehension from them.” For example, if there is a move involved, a bonus may allow a physician in transition to cover the mortgage if it takes longer than expected to sell the house.

Compensation models generally are well-established by dealings with previous physicians in the same specialty, especially for larger employers. It’s unlikely a new physician would have much room in this portion of a contract. It is important, however, that the compensation model is spelled out clearly. For example, a multi-year contract should specify whether the compensation amount will remain the same on a yearly basis or whether it allows for cost-of-living increases, and if so, by how much and when. The contract should also address who pays for malpractice insurance. In many cases, it is the employer.

Even though a job decision is personal to the physician,
the job contract—and the negotiation process—is all business.

Incentive plans should be realistically structured. For example, if a physician’s billings must reach a certain benchmark by year’s end in order to receive the incentive money, the benchmark should be attainable. Other common barometers of physician performance that are tied to incentive compensation are utilization of resources and/or patient satisfaction. Be clear on the details of any incentive pay.

According to Jackson, while bonuses are commonly used as incentive or retention strategies, student loan repayment is less common, at least now. “It is a negotiation point for a lot of physicians, and it can be used for retention,” Jackson says. “Sometimes, instead of a sign-on bonus, an employer will agree to repay student loans, but this is much more common in areas where it is harder to recruit.” The tide, however, may be changing. “It may be coming. I think it is an incentive that may become more important as the (physician) shortage grows,” Jackson says.

Be clear, too, on what should happen with the incentive pay should termination issues arise. Hall says, “Sometimes, bonuses aren’t paid until the end of the year, so if there is a termination before the end of the year, the practice can make the argument the bonus hasn’t been earned.” If the physician has been there six months, will he be entitled to six months’ worth of bonus? Decide on the front end of negotiations.

Finally, long considered a path laced with pitfalls, the path to partnership is another aspect of the job that must be clearly defined in the job contract. Some employers light the way; others prefer to keep the particulars hazy. This is understandable in a way, as it makes sense to wait until the involved parties have had enough time to make sure the fit is right, but this makes comparison shopping difficult, not to mention planning for the future.

When Shusterman was job hunting, he interviewed twice with a group with a great reputation that wouldn’t bring up salary or how the partnership worked. “Those things steered me toward the other practice,” he says. The group he works with now “didn’t hide anything from me,” he says. “They went over everything. They were very open.”

Dealing with recruiters during negotiations

Physicians will often deal primarily with recruiters, whether they’re in-house (employed directly by the entities for whom they recruit) or from a search firm (contracted by employers and paid based on placing physicians with those hospitals or groups), especially early in the negotiation process.

“In most cases, the recruiter has authority to do a great deal of the negotiation,” says Marci Jackson, the director of physician and provider recruitment at Southwest Medical Associates in Las Vegas. It’s worth knowing,  then, how best to work with them.

Recruiters and physicians may find each other during the physician’s job search process. If a physician wants to work in a particular state, for example, she could find a listing of recruiters who work there at the Association of Staff Physician Recruiters website ( The physician could also choose to work with a national search firm.

Or, quite often, the physician—particularly in the residency and fellowship phases of his training—will be contacted by the recruiter. Make that many recruiters. It is not unheard of for a physician to receive 20 to 30 voicemails every week from recruiters.

There are a couple of different types of calls physicians may get while being recruited. Some companies (not recruiting calls at all) phone residency programs to get information about candidates, which they enter into databases and sell to recruiters. Direct contact may come from recruiters themselves, often based on information physicians post to job boards about what kind of job they are looking for.

“I think it’s important for physicians to try to figure out what their parameters are before they start a job search,” Jackson says. She suggests that physicians who are interested in only very specific areas or practice types set up their outgoing message to say that unless a recruiter/ potential employer is calling from a specific hospital and/or specific area, to please hang up. “This could save an inordinate amount of time they’d have to spend sifting through all those messages,” Jackson says.

The recruiter has a direct line to the employer and is well aware of what parts of a deal are negotiable and which aren’t. If something is a deal breaker, make it known up front. There are a variety of things physicians ask for, Jackson says, including no waiting period before tail insurance is paid in the event the physician leaves, certain salary levels, and relocation specifics.

Jackson remembers a story from company she represented previously. One psychiatrist was discussing a site visit to this employer when he asked whether the company would relocate his horses. “I said, I’m sorry, but our policy specifically excludes movement of large animals,  and he said, ‘Well, we’re done talking,’ and he hung up,” Jackson says.

The main thing is knowing what you want, being honest and upfront with the recruiter throughout negotiations, but remembering that the recruiter represents your potential employer, not you.

“You have to be very realistic that this is a business deal,” Jackson says. “No matter how nice you are or how nice the people you’re talking with are, you have to look at it as business.”

Termination troubles

Finally, although it may seem rather worst-case-scenario to examine these details when considering a job, termination issues can be another potential source of heartache. The two types of termination provisions — “with” and “without” cause—although they may seem straightforward, contain intricacies that can complicate matters.

Hall once represented a medical director at a hospital whose job required that he keep medical records up to date. However, he did not have specific authority over the nurses whose responsibility it was to keep the charts current. His contract, which had a 10-year term, stipulated that he could be terminated with cause, including the breach of any agreement.

“Since the contract was so broad in the beginning, he didn’t have a leg to stand on,” Hall says. “Reading those termination agreements is very important. They can terminate you for breach of a minor thing.” Lesson: Avoiding broad generalizations whenever possible.

It’s also necessary to know in advance how the dominos would fall after termination has taken place. Besides determining how a potential bonus would be doled out if there was a termination before the year’s end, it is also worth knowing what would happen with accounts receivable. “You need to negotiate on the front end who will get accounts receivable,” Hall says. Spell out how the money
you generated during your employment but which the practice will collect after you leave will be paid.

Another detail to handle during contract negotiations is tail coverage, which protects against claims filed against a physician after she has left her employer. Tail coverage can cost up to three times the annual premium of claims made and often must be paid within 30 days of canceling the policy. Jackson says some employers will pick up the tab for tail coverage while others won’t. Her company uses tail coverage as a retention tool.

Another potential problem is the restrictive covenant, or covenant not to compete, which governs the geographic area in which a physician is not allowed to practice for a certain time after the physician resigns or is terminated. The general purpose of a non-compete clause is to prevent the physician from taking patients with him. “Non-compete clauses are very state-specific,” Hall says. “There is no federal body of law governing these.” They are illegal in some states and enforceable in others only if they’re deemed reasonable by the courts.

Intellectual property is another issue physicians should expect to see in contracts. Jackson says, “Let’s say a doctor is going to a new employer but he is in the middle of writing a textbook. There should be some language in the contract that deals with that,” she says. “If someone already has an invention in development, he needs to make sure there is protection for intellectual property in the contract.”

Finally, it is worth considering the dispute resolution provisions that would govern any potentially litigious problems encountered during or after the employment period when negotiating the contract. “I typically advise clients that it is good to have mediation/arbitration as the first step,” Hall says. Alternative dispute resolution tends to be gentler—and less expensive—than litigation. Either way, it is good to be aware of what the immediate future might look like should termination occur.

Go ahead and haggle

Don’t forget that even though a job decision is personal to the physician, the job contract—and the negotiation process—is all business. “I think that once you’re at the point where you want the job and you think the other people want you, most people expect some kind of negotiation, so it can’t hurt to ask for what you want, even if you don’t end up making a lot of headway,” says Shusterman.

He says that even though he didn’t get exactly what he asked for, he doesn’t regret going to bat for himself. “I felt better that I tried to negotiate, and I really don’t feel like they took it personally,” he says.



Lori Herring

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