You + Them: Creating a Deal That Works for Both of You

Understanding what’s negotiable—and what’s not—will help you focus your energy and your conversations.

By Marcia Layton Turner | Fall 2017 | Feature Articles

 

You’ve likely heard that the key to negotiating a physician employment contract successfully is research. That includes learning the industry standards for compensation in your specialty and geographic area, identifying what you bring to the table in terms of experience and expertise, and assessing “the landscape of the organization,” says Jeffrey Vogel, M.D., M.P.H., attending physician in occupational medicine with Cambridge Health Alliance and instructor of medicine at Harvard Medical School in Boston. “People will take you seriously if you’ve done your homework,” he says.

Recognizing that not all aspects of an employment agreement are negotiable is also important. This ensures that you focus on modifying terms that will actually benefit you without coming across as difficult or unrealistic.

Studying potential employers is smart, but it’s only half the equation. It’s also important to consider your priorities, says Bonnie Mason, M.D., retired orthopedic surgeon and founder of Beyond the Exam Room, which educates physicians about business and financial concepts not taught in medical school or residency training. What do you want a position to provide? What’s important to you?

Mason devised a phrase to represent the factors physicians should consider: Your DALAR Profile (pronounced “dollar”). DALAR stands for decision-making; amount of autonomy; lifestyle; altruism or volunteer opportunities; and revenue or income. What do you want in each of these areas? “Employers are clear about what they want [in an employee],” says Mason. It’s important that physicians are equally clear about their professional and personal priorities.

The compensation package

Bonnie Mason, M.D.

Considering negotiating? Start with evaluating your priorities, recommends Bonnie Mason, M.D. What do you want a position to provide? What’s important to you?

Through salary should not be the only—or leading—factor you consider, says Mason, the overall value of the total compensation package is one way to quantify the value a potential employer is offering. It is a way to compare the different employment options you may be presented. The elements of a standard compensation package may include some or all of the following:

  • Salary: Including base pay and bonuses (signing and/or based on productivity)
  • Benefits: Health insurance, life insurance and disability coverage, among others
  • Continuing medical education (CME): Money to pay for required CMEs
  • Leave: Paid or unpaid vacation, sick time, maternity leave
  • Student loan forgiveness/repayment options
  • Moving expenses
  • Cell phone expenses

Start by assigning a dollar value to each item on this list. “Once you understand the basic compensation package, you can try to move the values around,” says Mason. For example, if you don’t need moving expenses paid, you can ask to trade that for something else, like a signing bonus or more vacation time. Or maybe you can ask for more CME money instead of a cell phone plan.

What is not possible to negotiate, says Vogel, are the benefits that are rolled out organization-wide, such as health insurance plan options and 401(k) plans. It is neither feasible nor legal, in some cases, for an organization to create a customized health plan or 401(k) offering just for you. So don’t waste time or energy trying to convince a practice to switch its insurance carrier or up its retirement plan matching percentage. It’s not going to happen.

Know your numbers

You can expect potential employers to be helpful and collaborative because they want to hire you. But that doesn’t mean you’ll get everything you ask for.

Before you start setting arbitrary minimums as far as your desired salary is concerned, it will be helpful to know what the industry standards for compensation are for your specialty, says Vogel. Research what the salary is for the 25th, 50th and 75th percentiles in your specialty to get a realistic framework for what you may be paid. Vogel’s experience negotiating his employment contract was very positive. He was also well prepared for the discussion, having researched appropriate salary expectations for his specialty and the hospital system in advance.

Also find out the hospital baseline average, to know how it compares to other locations. If you discover that the average salary hospital-wide is $300,000, you shouldn’t expect to be offered close to that one year out of residency, Vogel says.

That baseline number can be useful for negotiating if you learn that the organization you’re talking to is currently paying under the 25th percentile. Your goal should then be to try to convince the hospital to pull its entire baseline up in order to increase your potential starting offer. That is an easier sell if your research uncovers that doctors are leaving due to dissatisfaction with the salary.

The conversation might sound something like: “I see that your retention rate is below the national average. Now might be a great opportunity to re-evaluate your baseline in order to retain more of your experienced staff.” That approach turns your recommendation regarding an across-the-board salary increase into a benefit for everyone, including the hospital.

Understand the business side

Understanding how much it costs to recruit and hire you, how much revenue you’ll be generating for the organization, and what you can do to increase that revenue can aid your negotiations with for-profit organizations.

A note about academic contracts

 Jeffrey Vogel, M.D., M.P.H.

Jeffrey Vogel, M.D., M.P.H., suggests researching the industry standards for your specialty’s compensation. Identify the salaries in the 25th, 50th and 75th percentiles to get a realistic framework for what you might expect to be paid.

It is often possible to negotiate an agreement that meets your needs for compensation and benefits and helps you achieve your long-term career goals. The same is true within an academic setting, though the process is different because the role you are applying for is not solely revenue-generating. You’re there to teach and conduct research that elevates the reputation of the hospital or university, in addition to contributing to creating a new income stream for the organization. For that reason, there are fewer elements of the contract that can be modified, less that can be negotiated. But the differences in process are evident from the start.

To begin with, the contract itself is typically issued by the chairman of the department in which you’ll be working, rather than a recruiter. It should outline your responsibilities and the associated compensation, says Virginia R. Litle, M.D., FACS, professor of surgery and chief, division of thoracic surgery at the Boston University School of Medicine. Most initial contracts are for a three-year term and are subsequently renewed on an annual basis.

When applying for your first job in academic medicine, there is not much room to negotiate, says Litle. There are guidelines for what assistant professor positions pay, based on geographic location. There is little room for variation, she says. On the research side, however, it may be possible to request research support on top of your salary. Called “start-up money,” this research funding is a set amount granted for a set period of time, such as $25,000 or $50,000 for three years. Potential new hires can ask for more research funding or for a different length of time, though such funding typically aligns with a professor’s contract term.

You may also be able to ask for more “protected time,” or the time set aside for research. For example, 10 or 20 percent of your workweek may be designated for research work. That’s the protected time. Early in your career, it may be more difficult to be granted more protected time, however, and typically you want to be operating and applying your skills at this stage.

You could also ask for a research coordinator, depending on your research interests. Even if you share the coordinator with others, the role is integral to completing most clinical research for consenting, maintaining databases and processing institutional review board paperwork.

If you’re applying for something other than your first job, you will want to take a step up, which may include seeking a promotion or a program director position. In evaluating your request for a higher salary, more research funding and perhaps more lab space, the university will likely look at your skills and reputation, your research track record, and the number of publications you’ve contributed to, says Litle. “The higher you rise, the more negotiating you can do,” she says.

In academics, some physicians stay at the associate professor level for the remainder of their careers, though 8 to 10 years is more typical, she explains. The speed with which doctors are promoted typically reflects their publication and funding record.

Sometimes to get what you need, you have to make motions to leave. As with any job, you don’t want to do this unless you actually have an offer from another institution that meets all your needs. But having an offer in hand from another university can make you that much more desirable to your current employer and allows for negotiations with both parties, explains Litle. Jumping from one university to another is not considered a negative. According to Litle, “People move around a lot in academics.”

Intellectual property rights

Another difference between academic and hospital or private practice jobs is the rise of contracts demanding rights to supplemental income earned by physicians. It has long been customary in academic settings to include a provision in the contract that stipulates that any supplemental revenue the physician makes while an employee is the property of their employer, says Mason. “However, we’re seeing more private practices, not just universities, writing into contracts that any supplemental revenue that the physician generates—from speaking, intellectual property or stock dividends, for example—belongs to the employer.”

Mason says that [for] “employers [to] collect revenue from work done relevant to clinical responsibilities and patient care is reasonable.”

After all, you are their employee, she points out, and most employment contracts lay claim to new ideas developed during the workday. In the case of an independent idea, however, you may want to claim ownership.

In general, you “want to retain the right to create, innovate and problem-solve” for your own benefit, she says. “Practices are often willing to negotiate this point,” she says, but you need to be aware of it and how best to modify it to meet your personal goals and objectives.

Terms to understand

Beyond the compensation package, there are other elements of your employment agreement that you’ll want to hone in on, says Mason. The big three include duties and responsibilities, noncompete clauses and termination clauses. These are sections that you will be unable to remove completely, but you may have room to ask for minor changes.

Duties and responsibilities. In this section you’ll find information on the amount of time you’ll spend working each week, the frequency of call you’ll be required to take, whether you will have time for research and other specifics about your job responsibilities.

Though you can’t negotiate basic responsibilities, such as seeing patients or teaching hours, you may be able to ask for less call—or more call in exchange for more admin support.

Noncompete. Most practices won’t negotiate this clause out completely. However, you can ask for the terms to be reasonable in scope and duration.

For example, not being permitted to practice within a 10- to 25-mile radius rather than 25 to 50 miles, or having the noncompete in place for one year rather than five.

In many cases, the willingness of a practice to negotiate may hinge on the population density of the area. In larger cities, the scope of the non-compete can be smaller, due to the larger number of patients in a small geographic area, whereas in more rural practices, the non-compete radius may be larger because there are fewer doctors in general and your moving practices could cause a major shift in the marketplace.

Termination. Most contracts reserve the right to terminate you without cause, just as many states are employment-at-will states that require no cause for termination.

You can ask, however, to be given a notice of termination within a certain number of days, just as you may be required to give a 90-day notice before leaving.

You should also ask for payment of tail malpractice insurance to cover any claim made after you leave; payment is typically due within 90 days.

While you may be able to modify some of the specifics surrounding these elements slightly, you will not be able to change them materially.

Tread carefully

Though many aspects of your employment agreement are negotiable, attempting to negotiate every little detail “can make an employer leery,” cautions Steven Jacobs, physician recruiter with WellSpan Health in York, Pennsylvania.

You can ask lots of questions and push back on some requests, but not on all of them. “Three or four requested changes are typical for WellSpan,” says Jacobs. “More than that and we’ve got a problem. That’s a red flag to the practice.”

At that point, you risk coming across as very difficult to deal with, and employers may decide you’re just not a good fit.

“Ninety-five percent of the time, contract negotiations go smoothly,” says Jacobs. Which means that odds are good your negotiation will go just as well, as long as you don’t nitpick.

Pick your battles. When something is truly important to you, make it clear that you’re pushing hard for the change because you intend to remain on staff for many years—so terms will impact you for years to come.

In the end, “everyone wants the same outcome,” says Jacobs. So “be collaborative in the process, not adversarial…. The negotiating process is not there to hurt you,” it’s there to help you get what you need to be successful in your career.

 

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