ACP 2019: Contract negotiation: What physicians need to know

As more physicians become employed, learning how to successfully negotiate an employment contract becomes a crucial skill to learn. 

A common issue is that many physicians simply don’t negotiate, and just sign what’s put in front of them, says Michael S. Sinha, MD, JD, a Regulatory Science Fellow at the Harvard-MIT Center for Regulatory Science.

Sinha, who is presenting a session on negotiation basics at the American College of Physicians annual conference in Philadelphia, talked with Medical Economics via email to discuss some of the key aspects of negotiation vital for physicians to learn.

Medical Economics: What is a common mistake physicians make when negotiating contracts?

Sinha: Often, physicians will eagerly sign a binding letter of intent or agree to terms of a contract with little or no negotiation-in some cases, they aren’t even aware of what can be negotiated!

The key is to consult a healthcare lawyer early in the process. Find someone who specializes in physician employment contracts in that state. They will have a lot more insight as to what can, and should, be negotiated.

Ultimately, if you don’t negotiate, you’re only cheating yourself.

Medical Economics: What areas in an employment contract are most important to focus on?

Sinha: The first thing to do, before any financial compensation is discussed, is to clearly define the duties and responsibilities in the contract. Get any promises that are important to you in writing. Only when those details have been hammered out can you get an estimate of your true market value.

It will also affect the salary structure that works best for you. Perhaps you have a lot of administrative responsibilities that would cut into meeting pre-defined relative value unit (RVU) thresholds-this may mean you’ll miss out on bonuses under an incentive-based contract, and a fixed salary would make more sense.

Flexibility and vacation time may also be up for negotiation, but at the expense of your base pay. Here, an incentive-based contract may mean that, as long as you’ve hit appropriate metrics, you’ll have more time off with no salary repercussions.

That said, be sure that you have access to the performance reviews or quality metrics that are being used to determine bonuses. Get it in writing!

Medical Economics: One area we regularly hear about from physicians is restrictive covenants/non-compete clauses. What do physicians need to know before signing a contract containing one of these? Is there anything they can do to protect their post-employment career opportunities if they sign a contract containing a restrictive covenant?

Sinha: State-level legal expertise is particularly important here. Some states, like Massachusetts, ban restrictive covenants in physician contracts. Others have limits on what these clauses can entail. The lawyer you hire should know the standard for a particular area and can push for compromises in duration and geographic distance.

That distance can be very important. For instance, a 20-mile restrictive covenant may be reasonable in rural Tennessee but would be unreasonable in New York City. Negotiate favorable terms for a restrictive covenant prior to signing the contract; if you don’t, disputes over restrictive covenants could take a few years and several thousand dollars in litigation fees to resolve. Don’t ignore the clauses just because you think you’ve found your “dream job.” And don’t be afraid to ask around. Other physicians in your practice group may have a covenant of shorter duration or distance-or may not have one in their contract at all.

Medical Economics: What are some items physicians can/should negotiate for that many physicians tend to overlook?

Sinha: I would start with student loan repayment. Some newly-minted physicians are coming out of residency with $200,000 to $300,000 in student loan debt. There are usually ways to get the hospital to pay some of it off. They may be reluctant to pay a lump sum directly to you, but may be happy to write a check straight to the lender. They’re also less likely to pay any of it up front, but may agree to annual installments, payable after each year of service.