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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