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Negotiations 101

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What you need to know about getting what you want.

IN 2020 JACQUI O’KANE, D.O., SPOKE WITH SIX OR SEVEN HOSPITAL systems as she looked for her first non-military job. She did what her colleagues recommended and hired an attorney for physician contract negotiations.

She wanted to be sure she understood what she was agreeing to. Since she had just left the military, she had access to Judge Advocate General’s Corps (JAG) attorneys. One of them told her, “Yes, I do physician contracts. I can help you.”

Relieved, she showed him the contracts she’d received. She asked him to help her figure out what the terms meant. He answered her questions and reassured her that the clauses were common ones. “This is typical,” he told her. She left feeling that the contracts were standard and that she couldn’t negotiate much. She accepted one of the jobs without asking for much beyond loan repayment.

Fast forward a year. O’Kane attended a webinar presented by the American Medical Women’s Association, of which she is a member. After the eye- opening presentation, she realized her attorney might not have been as well-versed in physician contracts as he thought—and that there were clauses she could have negotiated. O’Kane doesn’t blame anyone at the hospital for securing the best contract for the organization. She only wishes she’d negotiated more of the terms.

The negotiations process

Generally, when people talk about negotiations, they’re referring to the employment contract terms. But negotiations begin long before the contract phase, according to Logan Ebbets, MS, CPRP. Ebbets is a senior physician recruiter and advanced practice provider recruiter with Cooley Dickinson Health Care in Northampton, Massachusetts. She says most organizations start with a verbal discussion, followed by a written letter of intent. This is “essentially an expression of terms, which basically lays out start date, compensation, benefits, clinical hours, schedule and all that jazz,” she explains. “It is recommended that you negotiate off of that [letter of intent] to really hash out all the terms prior to getting to the contract piece.”

After letter of intent negotiations, the contract is typed up to be signed. Ebbets says this is a mere formality. Employers iron out contract terms before printing the actual document. “The contract is generally a very long document. And it is less efficient when providers have questions about pieces in the contract. That holds things up,” Ebbets says. “It always runs smoother if that stuff is hashed out ahead of time.”

As a recruiter, Ebbets says her style is “to be transparent and open from day one and really encourage the candidate, as well as my hiring teams, to have these conversations ahead of time so everyone is on the same page.” When that happens, she says, “There really shouldn’t be any surprises when the offer comes.”

That is the ideal situation. However, Ebbets says up to half of candidates wait until the contract stage to negotiate or ask questions. “They think, ‘Once I get the contract, since it’s more formal, that’s when we’ll start talking about what I really want,’” Ebbets explains. This can create trouble

Technically, a letter of intent is nonbinding, but it becomes the contract template. If you aren’t happy with the terms in the letter of intent, Ebbets says, “You should not sign it.” Many physicians don’t realize that waiting until the contract stage to negotiate has a ripple effect. It can push back your start date, which then pushes back your first paycheck.

Ebbets explains, “When I’ve drafted that letter of intent, I’ve
assumed [with a Massachusetts-licensed provider] that we have a 120-day credentialing timeline. So I’m going to put a start date that is four months out .” However, when a candidate tries to negotiate the contract later, it has to go back for revisions. This can take weeks, which delays the credentialing process. It can sometimes push a start date back a month. “I’ve never had a provider be happy when I tell them I have to push back their start date,” Ebbets says. “We try to prevent that at all costs.”

So what can physicians do to make their job search and negotiations easier? Recruiters offer some advice.

How to approach negotiations

“Negotiating a contract has devolved into the Wild Wild West,” says Steven Jacobs, MA, CPRP, manager of physician recruitment at Einstein Healthcare Network in Philadelphia. He says physicians sometimes think “everything’s up for grabs.” Experienced physicians may begin negotiations with a clear sense of the negotiable elements, according to Kenny Deari, who does physician and health care talent acquisition at Ironside Human Resources. However, many newer physicians start out unaware of what might be negotiable and what absolutely is not. It is extremely rare for everything in a letter of intent or contract to be negotiable. Jacobs explains that it’s important to understand the employer’s organizational structure. An academic center will have different negotiable terms than a private practice. The type of position you’ve applied for also makes a difference.

“In an academic center, you have to realize that everybody in the same rank as you — professor, assistant professor or whatever—is getting the same deal. We have to have what’s called internal equity,” Jacobs says. Everyone in a certain position earns roughly the same amount. Any variations stay within a tight range. “So for you to come in and ask for 10 times that or even two times that, you’re going to get a ‘no,’” he says.

Jacobs adds that there’s more room for negotiation in private practice. It’s a different environment with different norms.

New physicians lack experience with contract reviews and negotiations. However, Deari has witnessed a shift in their approach to the process. He’s found today’s new physicians to be more candid and open-minded. They’re willing to speak with a wide range of practices before making a decision. They’re also much more willing to share information.

“Candidates coming out of fellowships and residency programs are very transparent,” Deari says. These physicians share everything from which programs have provided offers to what types of offers they’re receiving. That contrasts with physicians who have been in the field for 15 or 20 years, he explains. More seasoned providers tend to keep information close to the vest. They hesitate to share details that might put them at a perceived disadvantage.

“I definitely prefer the transparency,” Deari says. It allows both physicians and practices to make fully informed decisions. It reduces wasted time on both sides, and it helps candidates make their best choice faster.

If you want to ask questions or make changes after you receive a letter of intent or contract, you should do so early. Ebbets says to bring up contract terms you’d like to modify as soon as possible.

You should also consider the language of the contract and its component parts. “Each section of the contract is there for a reason,” Jacobs says. Few sections can be removed entirely, but you may be able to revise the terms. First, you need to understand what each section addresses and how that impacts your job.

Most contracts address compensation, billing, what you can and can’t do during time off, restrictions regarding your next job and what happens if you do something wrong, Jacobs explains.

Compensation questions

One of the touchiest and most uncomfortable topics for physicians is often compensation. “The thing I run into the most is: Physicians are uncomfortable advocating for the compensation they’re seeking,” Ebbets says. To avoid standoffs in which each side tries to get the other to throw out the first number, Ebbets asks candidates about compensation early on. She explains that she wants “to make sure that we are hopefully aligned in the range for the position.”

Ebbets is surprised by the number of physicians who share their current pay as justification for the one they’re requesting. In Massachusetts, it’s illegal to ask what a candidate is currently making. She recommends candidates only share what they want to make. Fortunately, most physicians already have a number in mind.

That doesn’t mean that their number is based in reality, however. Sometimes Ebbets has to educate providers about reasonable compensation expectations in the Northeast. It may be quite different— by as much as $100,000 or more— from what employers in other parts of the country pay. The Northeast is a popular place to put down roots. For that reason, starting pay can be much lower than in other locales.

Deari strongly recommends that providers review Medical Group Management Association (MGMA) rates. These provide insight on regional salaries, trends, production and industry news. That way, candidates can make sure they have the right expectations. “[They] don’t undersell themselves and [can confirm] they’re not asking for too much,” Deari says.

Becker’s Physician Leadership is another great source of salary information. So is Reddit. “There are a lot of provider subreddits,” Deari explains. Physicians often share their interview and negotiating experiences on these boards. Deari recommends checking them out to see what people say about a facility or practice. It’s also a free resource for insights on the general work environment.

Salary is negotiable to some degree. But according to Deari, the three most negotiable terms are sign-on bonus, relocation and paid time off.

Sign-on bonus

Right now, Jacobs says, “Sign-on bonuses are bizarre.” They vary greatly based on location and competition — as well as how desperate the facility is. Jacobs has seen offers ranging from $10,000 all the way to $100,000.

Sign-on bonuses are actually part of some practices’ recruitment strategy, he says. Rural employers often entice physicians with above- market rates, sign-on bonuses and student loan repayment.

Relocation

“A relocation allowance is also something that is often included and can be negotiated,” Jacobs says. The offer can range anywhere from $5,000 to $25,000. Jacobs explains that these allowances often come with “a whole bunch of limitations.” For example, a hospital may not agree to move an art or wine collection.

Paid time off

Vacation time may also be negotiable. O’Kane didn’t know what was typical, so when her employer offered 20 days, she didn’t counter. “I took what I got,” she says. Later, she learned that many of her colleagues had negotiated quite a few more.

Student loan repayment

Another frequent request is help with student loan repayment. As many as 89 percent of physicians carry student loan debt. The average amount is $241,600, according to the Education Data Initiative. It’s no wonder new physicians often ask for help covering monthly payments.

As Deari explains, however, not every facility can help equally with loans. Federally accredited hospitals receive funding allocated for their providers’ student loan repayments. This means they can do more for their employees. They typically provide direct repayment assistance to physicians on a monthly basis. This can range from $2,000 to $4,000, Deari says. The amount provided varies based on several factors, starting with location. Typically, the more remote an employer, the higher the payment.

Private practices are less likely than nonprofit facilities to qualify for federal money. It may be more difficult to negotiate student loan repayment with a private employer. “They can help out of pocket,” Deari clarifies. But the facility may not receive federal funds to recoup that payment.

Noncompete terms

One of O’Kane’s biggest concerns after loan repayment was the noncompete agreement. Initially, she didn’t think too much about the stipulation: a 50-mile radius within two years of contract termination for any reason. She assumed she would stay where she was long-term, so the agreement didn’t raise any red flags.

Looking back, however, she sees it differently. She now recognizes she lost leverage for future negotiations with her employer, and she would need to move far to comply with the noncompete radius. Had she received different counsel, she says she would have tried to negotiate a smaller radius or a shorter time period. The current agreement is very limiting, although she has no plans to leave.

Ability to moonlight

Another term O’Kane didn’t think much about originally? The moonlighting clause. “I didn’t realize it was a potential point of negotiation to not require that I get written permission from HR to do any kind of moonlighting or side gigs or anything else related to medicine,” she says. She thought she knew what the clause meant and assumed it wasn’t modifiable. She has since learned that several of her colleagues were able to get it removed. “I had no way of knowing at the time [when negotiating the contract] that this would even be relevant to me,” she says.

Work environment

Deari says another big consideration for physicians is workload. That’s not just a question of how many patients you’re expected to see and what your schedule looks like. It also depends on your coworkers and team structure. How many other providers will you be working alongside? Will those providers be PAs and NPs or other physicians? “Many physicians don’t want to be the lone soldier,” Deari explains.

O’Kane looked carefully at that section of her contract. She understood she would initially practice solo. One year later, she was able to secure an NP to offset her burgeoning workload. She earns a flat monthly midlevel supervision payment for this. Although O’Kane is immensely grateful to have the NP on staff, it’s had unanticipated results. She’s having difficulty increasing her own RVUs because supervising the NP takes up time.

“Regardless of how many patients the NP manages, my compensation is the same. Actually, as she sees more patients, I could ultimately earn less,” says O’Kane. “I do not get RVU credit for her office visits, even though I am ultimately responsible,” She wishes she had asked for more specific language around her earning potential and support for the startup practice.

Training or support

It’s important to ask what kind of onboarding and training you’ll receive. When O’Kane started in civilian practice, for example, she could have used some pointers on coding. She was accustomed to the Military Health System’s modified coding methodology. She had to familiarize herself with an array of E&M and CPT codes she rarely used before. “The hospital system provided me with packets of coding information, which was valuable but difficult to translate into practice. Specific examples of common coding pearls and pitfalls within my organization would have been immensely helpful,” explains O’Kane.

Malpractice insurance

Another contract term to look at carefully is malpractice coverage. There are two types: claims-made and occurrence. Claims-made policies cover you during a specific contract term. This means you’ll also need to purchase tail insurance to cover any claims made after you leave that employer. Tail insurance covers claims made about events that occurred at your previous employer.

Occurrence-based coverage, on the other hand, covers events that happened during employment at any point. You’re covered even after the claim is filed years afteryou’ve left the job. Jacobs says these types of policies are rarer these days. It’s generally more expensive to cover physicians on an ongoing basis.

Always ask

The key elements of a contract will always be present. But the specific details are often negotiable. It’s important to understand each and every contract term and how it will affect you. Adjusting those terms to make your career a good fit for your life is what negotiations are all about.

That said, politeness goes a long way. Stay cordial and respectful as you negotiate. Understand that you won’t get everything you want.

Ultimately, Ebbets says, “You can always ask. I can’t guarantee they’ll budge, but you can always ask.”

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Marcia Layton Turner

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