Contract negotiation – what recruiters want you to know

Understanding the ins and outs of contract negotiation can make the process smoother for everyone involved.

By Anayat Durrani | Fall 2018 | Feature Articles

 

“I called at least 30 hospitals and recruiters just inquiring about the need, compensation and getting a real feel for what my market was,” says Adam Parker, M.D. -photo by Andrew Welch

“I called at least 30 hospitals and recruiters just inquiring about the need, compensation and getting a real feel for what my market was,” says Adam Parker, M.D. -photo by Andrew Welch

Contract negotiations aren’t taught in medical school or residency, so many young physicians feel unprepared. With a lack of negotiation experience, they may hesitate to make requests. But experts say new physicians shouldn’t feel shy about asking questions or negotiating for better terms. Read on for answers to a few common questions about contract negotiation.

What terms are up for negotiation?

One common mistake young physicians make is accepting the first offer, even when there are points you’d like to discuss. Certain parts of your contract could be up for negotiation —or at the very least, raised in conversation.

“The most obvious components deal with salary, signing bonus, moving expenses, but several more subtle aspects can be discussed—including length of contract, expectations regarding number of patients to be seen daily or RVU goals,” says Zachary P. Castle, D.O.

Castle worked with an in-house recruiter to land his current position as an outpatient family medicine physician for a branch of Midland Health in Texas. He says the experience was terrific but adds that not everything is negotiable. “There are sometimes where things are not able to be changed due to legal reasons or possibly hospital and/or company policy,” he says.

Of course, what’s up for negotiation varies among hospitals and health care systems.

At Columbus Regional Health in Columbus, Indiana, physician recruiter Kaelee Van Camp says term length and compensation are both negotiable. Term lengths start at five years, but the health system will consider terms as short as three years.

Nicola Frugé, a physician recruiter at Rush Health Systems in Mississippi, says Rush considers requests to adjust base salary, fixed compensation, RVU, encounter rate, sign-on bonus and loan repayment terms. However, Frugé says Rush will not negotiate vacation days, standard benefits, relocation reimbursement, contract lengths, the non-compete clause or termination rules.

“For contracts, most physicians have used an attorney to review their contract, so we have received minor changes to the wording. Generally, we do not change much with our contracts. They are standard,” says Frugé.

Cheri Spencer, physician recruiter for West Tennessee Healthcare, says her organization doesn’t negotiate on the medical education loan repayment program or relocation allowance. “We would be open to negotiate the transition bonus or salary if the physician can make a strong case for a higher amount. Our goal is to reach a fair agreement where both parties feel satisfied with the results,” says Spencer.

If an employer isn’t willing to explore the clauses most important to you during a negotiation, it may be a sign that the position isn’t a good fit. The opposite can also be true: If an offer looks too good to be true, it probably is. “Beware of a salary that is much higher than other offers received,” explains Van Camp. “Is it a number you will be able to maintain when you convert to a productivity model?”

How should physicians prepare for negotiation?

When you’re applying for a position, it’s important to learn as much as you can about the organization and the department ahead of time. Maycie Elchoufi, M.D., says preparation is key in advance of a negotiation. Elchoufi, who is board certified in internal medicine, says you can learn a lot through a few well-targeted internet searches. Get an understanding of the organization so that you can ask questions in person about the organization’s leadership, its strengths and weaknesses, goals, challenges, competitors, funding and turnover rate.

“These types of questions are important because you need to have a clear understanding of whether this organization’s trajectory is aligned with your own professional and personal goals,” she explains.

Frugé says this background research shows when candidates respond to offer letters. She says some candidates are “very savvy on business and economics of hospital vs. private employment models” while others are not. She recommends that physicians read about compensation models and try to understand RVUs, contracts and other pertinent details. (See page 47 for a start.)

Adam Parker, M.D., just completed his internal medicine residency. He prepared for his job search by first getting a feel for the landscape: “I started early in the fall of my last year in residency and began by using PracticeLink and other such websites to find available jobs for my field in my area and in adjacent states.”

“I cast a wide net to get the best possible offers,” Parker says. “I called at least 30 hospitals and recruiters just inquiring about the need, compensation and getting a real feel for what my market was.” Parker worked with Frugé and began a position with Rush Foundation Hospital this summer.

Spencer suggests physicians just coming out of training speak with a colleague in a practice setting similar to the one they’re targeting. She often works with residents or fellows who only get advice from physicians in academic settings, and she says this advice does not always transfer well to private practice or hospital employment models.

Spencer says she always reminds newly trained physicians that they are not expected to know contract language. She encourages them to hire attorneys if they are uncomfortable negotiating. “I also tell them to know their worth and pay attention to the need of the practice or hospital,” she says, adding, “Negotiation is largely supply and demand.”

Elchoufi says she’s always hired an attorney review her contracts. “[Attorneys] can point out items that might become problematic later, language that may need to be modified and areas in which [employers] may be more or less amenable to negotiation,” she says.

However, Elchoufi didn’t ask her attorney to attend the actual negotiation process, as she felt prepared to do so on her own. Researching salary data was an important part of this preparation, and Elchoufi says physicians should know their numbers. It’s not enough to tell an employer that your friends and colleagues are getting offers in a particular range.

“Use data from sources such as MGMA [Medical Group Management Association],” recommends Van Camp. “Be willing to share the details of an offer you have already received. Know how compensation in your particular specialty is commonly calculated.”

Elchoufi says that in her experience almost everything is negotiable. But in order to negotiate, physicians need to know their own value—and how other physicians in similar positions are typically compensated.

“For example, if you are offered a salary of, say, $250K but you really wanted $400K, you need to know ahead of time what salary range is the industry standard for that position,” she explains. “If the salary that you have in mind is not in that range, then what is it about your experience and skill set that makes you feel the additional $150K is a reasonable request?”

Spencer says that before every negotiation, she tells each physician two things: what items are not negotiable, and what requests can’t be accommodated. That way, candidates know if trying to make both sides happy is like trying to fit a square peg in a round hole.

Ultimately, Elchoufi says, physicians should remember negotiation is just a conversation. “Getting a ‘no’ to your request is not necessarily a dead end,” she says. “Ask open-ended questions. Try to get the other party to share what it is that they need, what problem are they trying to solve. Then you can gear your responses accordingly.”

As Andrew Gowdey, M.D., prepared to leave training and find a urology practice, he turned to a health care attorney, other physicians and an in-house recruiter. -photo by Savannah and Philip Kenney

As Andrew Gowdey, M.D., prepared to leave training and find a urology practice, he turned to a health
care attorney, other physicians and an in-house recruiter. -photo by Savannah and Philip Kenney

How long does the hiring process take?

From interview to contract review to negotiation and more, the hiring process involves several different steps. The timeframe for each can vary depending on the size and type of employer—as well as how much negotiation you end up doing.

Castle interviewed in early November. He received a letter of intent outlining basic terms shortly after. “I signed and submitted this in January and received the full contract a couple weeks later,” says Castle. “From that time, I believe it took about a month to sign it. So the total process from start to finish took about four months.”

According to Spencer, a draft contract typically arrives two to four weeks after the interview. She recommends that physicians complete negotiations within a week to 10 days.

Once when Elchoufi was applying for a new position, she says she went from initial phone call to seeing patients in under three months, but she adds that this is uncommon. In her experience, four to six months is more typical.

“It really depends on how much the employer needs someone with your qualifications, as well as logistics such as obtaining state licensure, getting credentialing completed, etc.,” Elchoufi explains. “In any case, don’t be in too much of a rush, even if you end up needing to do locums for a while. If you’re rushed, you’ll have a tendency to jump to something that may not necessarily be an optimal fit.”

Frugé says every candidate is different. Typically if she gets good feedback from the specialty group and the rest of her administrative team after an interview, they extend an offer letter within a two-week timeframe, but it can vary.

“Once the offer letter is signed, we begin on the contract which usually takes about two weeks,” she says. “The actual contract negotiations can go quickly or slowly depending on the candidate and his or her attorney. Overall, I would say the whole process can take four to six months from beginning to end.”

Van Camp and her team make it a goal is to provide an offer within 48 hours of any interview, but this doesn’t always happen. When multiple candidates are interviewing for one position, her team can’t get back to every candidate as quickly as they would otherwise.

“We will always communicate that to all the candidates,” she adds. Don’t be afraid to ask what the timeline is for the decision-making process if it is not given.

In Parker’s experience, the process typically takes between two to four months. He says this timeframe gives physicians enough time to “search out several options, talk to several different recruiters and get an idea of what situation fits you the best before making a hasty decision.”

How do in-house recruiters work with physicians and attorneys?

Of the hospitals Parker spoke to during his job search, he says only two (including his future employer) were represented by in-house physician recruiters. He says he preferred working with in-house recruiters because they have a vested interest in recruiting applicants who are good fits for their hospital systems.

“In addition, since they were local to the area of the hospitals, they were able to provide in-depth, special and more appealing responses about their local areas,” says Parker. “I felt the larger recruiting firms just Googled a town and told you about it or told me to do that myself for research.”

When it comes to the negotiation itself, both Van Camp and Frugé say they like working directly with candidates when they can. Though Frugé sometimes works with candidates’ attorneys and reviews contracts with attorney edits, she generally prefers to communicate directly with the candidates. Frugé says candidates often email her questions or ask questions about their contracts via conference call.

She adds that she never minds if a candidate asks lots of questions about the contract, saying it’s “better to be thorough and understand everything upfront rather than be surprised by something after the deal is done.” In fact, she appreciates when candidates show thoroughness and attention to detail.

Van Camp advises physicians to do the negotiation themselves. “Your attorney is an excellent resource for the data to back up your request, but you should understand the contract and your requests well enough to negotiate yourself,” she says. “The negotiation process is one more opportunity to see if the employer is someone you can work with.”

Spencer says she always tells a physician to make all of their requests in the first pass and encourages them to use an attorney at least when negotiating their first contract. Spencer says she tells candidates that this is a time where they won’t know everything but that she’s there to help.

Castle says he spent a lot of time carefully reading through the details of his contract. He regularly discussed the terms with his wife. After familiarizing themselves with the contract, they asked an attorney to read it. He says the attorney explained things they did not understand and suggested potential changes.

“After discussing our thoughts with my employer, they made most of the changes to make us more comfortable with the contract, and we moved forward from there,” says Castle.

Andrew Gowdey, M.D., who is in his fourth year of urology training, signed a contract with Rush Hospital where he will begin working next year. He consulted an attorney to review the initial contract and also spoke with practicing physicians who had been through the process.

“I made specific changes and then went over with my attorney on the details of the contract that were not evident to me upon first review,” he says. “Personally, I think it is important to consult an attorney and be actively involved in the process of contract negotiation.”

Parker for one did all of the negotiation himself and didn’t think an attorney was necessary. “It is an added cost, and in general, they do not understand what a particular physician brings to the table, so to speak. And I felt I was better suited to sell myself than they were,” he explains.

What can’t an in-house recruiter help you with?

In-house recruiters are invaluable resources, but you’ll still have to do some additional research yourself.

“Recruiters in general—including in-house recruiters—may not necessarily know that, say, the community wellness department at their organization is in need of someone to spearhead employee health initiatives,” says Elchoufi. “Or that there might be talks of starting a pre-op clinic for the orthopedic department to streamline referrals and efficiently clear medical patients for surgery in order to increase revenue, decrease wait times and increase patient satisfaction scores.”

That’s where a little legwork on the physician’s part is valuable. Elchoufi suggests physicians talk to recruiters at various organizations. Sometimes speaking with one recruiter will spark questions to ask other recruiters in the future. And if there’s a particular hospital or a city you’re interested in, Elchoufi says to reach out directly to an in-house recruiter there and find out what opportunities might exist for your specialty.

Remember, negotiation is about give and take

No matter what terms you hope to negotiate, it’s important to establish a strong working relationship with your future employer. Good communication habits will also improve the negotiation process.

Gowdey says recruiters help build a bridge of trust between employers and prospective employees. When he negotiated his compensation allocation and specific day-to-day obligations, he says the hospital was very receptive to his requests. And the terms they asked him to agree to in turn were also reasonable.

“If a recruiter and hospital can be transparent on the front end of negotiations, then it will make the process much easier,” says Gowdey. “I would encourage physicians to be upfront with their concerns.”

Frugé agrees that a good negotiation is all about communication. She says the process “helps to build trust and helps [physicians] to get to know their employer better as well as for me to get to know them better.”

She likes to hear back from candidates after interviews, even if they choose jobs elsewhere. This keeps the communication lines open for employment opportunities in the future.

 

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Congress renews Children’s Health insurance program

CHIP is funded primarily by the federal government; states operate the program following federal guidelines.

By Jeff Atkinson | Fall 2018 | Reform Recap

 

Concept of insured house, family and car

Congress renewed the Children’s Health Insurance Program (CHIP) for an additional six years in January. The program provides free or low-cost insurance for 8.9 million children in low- and moderate-income families. Those families earn too much to qualify for Medicaid, but have difficulty affording or accessing private insurance.

The Medicaid program covers 26.8 million more children. At the states’ option, CHIP also can provide coverage to pregnant women.

Bipartisan support

CHIP was enacted in 1997 during the Clinton presidency with strong bipartisan support. The program helped reduce the percentage of children in the United States without health insurance from 14 to 4.5 percent.

Although both Democrats and Republicans support CHIP, the program became a bargaining tool in 2017 and early 2018 as members of Congress fought over other issues including immigration, Obamacare and the federal budget. Long-term funding of CHIP was suspended for more than three months before the six-year deal was reached.

Federal funding

CHIP is primarily funded by the federal government with some contribution from the states. In fiscal year 2016, the federal government spent $14.8 billion on the program; $2.1 billion came from other sources.

States manage CHIP, including eligibility requirements. A state’s programs can be freestanding, folded into the Medicaid program, or a combination of both. In 46 states, CHIP is available to families with income up to 200 percent of the poverty level; 24 of those states provide coverage up to 250 percent of the poverty level or higher. The federal government will give a state matching funds for coverage up to 300 percent of the poverty level.

For a family of four, 200 percent of the federal poverty level in the contiguous 48 states and D.C. is $50,200. The poverty level dollar amounts are higher in Alaska and Hawaii.

In most states, there is no waiting period to enroll a child in CHIP. Federal regulations allow states to impose a waiting period of up to 90 days, and 15 states have exercised that option. An advisory commission to Congress has proposed eliminating waiting periods in all states.

Scope of benefits

The federal government established guidelines for what must be covered and then gives states leeway regarding additional details of coverage. Services that must be covered include: routine checkups, doctor visits, immunizations, prescriptions, dental care, vision care; inpatient and outpatient hospital care; laboratory, X-ray and emergency services.

Routine well-child visits and routine dental visits must be available at no additional charge to families, but states may require copayments or deductibles for other services, provided the total amount for those charges and premiums do not exceed 5 percent of a family’s income for a year.

To determine the details of coverage, states are directed to use what the federal government calls “benchmark coverage.” The benchmarks are: the standard Blue Cross/Blue Shield preferred provider option service benefit plan offered to federal employees; state employee coverage plan; or the HMO plan that has the largest commercial, non-Medicaid enrollment within the state. In addition, a state can provide coverage that is “actuarially equivalent” to the benchmarks, or the state can ask the Secretary of the U.S. Department of Health and Human Services for a waiver to provide a different type of coverage.

Cost savings for families

A commission that advises Congress about CHIP, the Medicaid and CHIP Payment and Access Commission (MACPAC), notes that CHIP provides substantial savings for low- and moderate-income families. Using data from 2015, the commission said that the average premiums and cost-sharing per child under CHIP was only $158 per year, whereas the cost per child in an employer-sponsored plan was $891.

In addition, CHIP provides for more coverage for dental, vision and audiology services than most employer-sponsored plans.

Looking to the future, the commission advocates using CHIP funds to promote innovation, some of which may be similar to changes in health care for the adult population. Innovations might include focus on treatment of chronic conditions, obesity, managed care and alternative payment models. In addition, the commission urges more seamless coverage when children transition between different health insurance plans, including between CHIP and Medicaid.

Support from AAP and AMA

The American Academy of Pediatrics and the American Medical Association supported extension of funding for CHIP, both calling it a “vital program.” The Pediatric Academy’s policy statement would go a step further. The academy urged coverage not only for children through age 18, but added that all children, adolescents, and young adults to the age of 26 “should be covered by an affordable, quality health insurance plan that allows access to comprehensive essential care.”

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Physician with a following

A robust media approach has helped this physician share his expertise—and passion—outside of medicine.

By Marcia Travelstead | Career Move | Fall 2018

 

"I got sick of watching doctors make the same financial mistakes over and over again" said Jim Dahle, M.D.

“I got sick of watching doctors make the same financial mistakes over and over again” said Jim Dahle, M.D.

Name: James M. Dahle, M.D.

Employer: Utah Emergency Specialists, Salt Lake City, Utah

Education:

Undergraduate: Brigham Young University

Med school: University of Utah School of Medicine

Residency: University of Arizona, Tucson

In residency, James Dahle, M.D., developed an interest in personal finance and investing. In 2011, he started The White Coat Investor, now the most widely-read physician-specific personal finance and investing website in the world. In February 2014, he published a bestselling book, The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing. He also runs a successful podcast, videocast, CME conference, newsletter, forum and scholarship program. Most recently, he launched the online course “Fire Your Financial Advisor: A Step by Step Guide to Developing Your Own Financial Plan.” He is a father of four and enjoys skiing, climbing, mountain biking, canyoneering, and wakesurfing.

Why did you become a blogger and start a podcast?

I got sick of watching doctors make the same financial mistakes over and over again and felt a bit of missionary zeal to try to get basic financial information into the hands of those who have dedicated their lives to the healing of the sick and injured. Second, I was interested in business and passive income and wanted to learn more about online entrepreneurism.

The blog was born in May 2011 and has grown by leaps and bounds ever since. Over the years, people have slowly trended from blogs to podcasts to videocasts, and we’ve tried to move along with them.

What do you like about blogging?

As a kid, I had three potential career interests: being a physician, being a writer, or operating heavy machinery like huge dump trucks and excavators. I’ve managed to do two of the three, and that’s not too bad.

Besides the writing, I love the interaction with the readers. If you write something wrong, readers will let you know in a hurry. I went into medicine because I like to help people. This blog is just another way to help some of the best people in the world. It’s a bit like practicing medicine in the military. You’re serving those who serve, which is particularly rewarding.

Podcasting is OK. I don’t enjoy it nearly as much as writing. I don’t particularly like hearing the sound of my own voice. I have an assistant that runs the most painful parts of running a podcast; otherwise, there wouldn’t be a WCI podcast at all. I do enjoy the back-and-forth with a guest on the show, and I enjoy answering reader questions on the podcast.

From a business aspect, I love the scalability and passiveness of some of the income sources. It’s a lot of fun to make money while I’m sleeping or skiing.

What are the most challenging aspects?

Blogging is fun; I’d do that for free. But blogging isn’t a business. The blog is just the front door to the business. The business might be selling ads, marketing other people’s products, selling your time, or selling your own products. Some aspects of running a business aren’t very fun, so I’ve been trying to hire and outsource what I can.

Was there anything about doing this that surprised you?

First, I didn’t think it would ever generate more money than my practice, but I think that’s pretty atypical for a blog. The vast majority of for-profit blogs make less than $10,000 a year; it is quite a remarkable one that generates a six-figure income.

Second, I didn’t think I would ever be able to help. That’s been very rewarding.

Third, I didn’t expect quite so much opposition from the people whose business I’m hurting, like whole-life insurance salesmen. You wouldn’t believe some of the hate mail and comments we see.

Do you have any advice for physicians who want to start a blog or a podcast?

Make sure it is something you feel passionately about because you probably won’t ever make a significant amount of money—and even if you do, you’ll basically be working for free for at least two years. But the barrier to entry is low. You could do it for $50 for your first year, so you’re really just wasting your time if it doesn’t work out. You won’t go broke.

Anything you’d like to add?

If I could only give five financial tips to doctors, they would be:

  1. Live like a resident for two to five years out of residency to pay off your student loans, save up a down payment on your dream home and catch up to your college roommates with a retirement nest egg.
  2. Maxing out retirement accounts reduces your taxes, boosts returns, facilitates estate planning and protects your assets.
  3. Whole life insurance is a product made to be sold, not bought. It’s frequently sold to physicians inappropriately, never necessary and almost never appropriate.
  4. Put 20 percent of your gross income toward retirement throughout your career, and you’ll retire wealthy.
  5. If you use a financial adviser, make sure you’re paying a fair price for good advice.

 

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