The who, what and when of contract negotiations

Your first employment contract may look like it’s written in a foreign language. Here’s a guide to help you know what to look for and what to negotiate.

By Jeff Hinds, MHA | Fall 2016 | Job Doctor

 

Most physicians, particularly those finishing training and looking toward their first practices, have had years of medical training but almost no training about how to find a job—and, once they’ve been offered one, how to determine if contract terms are fair. Here’s some advice on what to look for in a contract and what to know as you head into negotiations.

The Parties Involved

The first step to navigate the negotiation process successfully is to understand who will be involved in the process. From the employer’s perspective, the exact title or role of the individual who handles negotiations will vary by organization—it may be an in-house recruiter, practice administrator, CFO, CEO, attorney or someone else entirely. Regardless of the title or role, it goes without saying that the employer will likely be better versed than you when it comes to the contractual terms within their agreement. It is also worth noting that the agreement was written by an attorney to help protect the interests of the employer. There is too much at risk professionally and personally for you not to ensure the same. Because of this, it is highly advisable that physicians also seek outside assistance from an attorney to help with contract review and negotiation. The investment is minimal when compared to the potential ramifications.

The Proper Timing

It is equally important to know when the actual negotiation process begins. Though certain contractual terms may be introduced early in the process, such as during phone interviews or site visits, formal negotiation of terms should occur later in the process after a contract offer has been made. There may be instances in which employers ask for your feedback on particular terms (e.g., compensation), but it is in your best interest simply to collect the information shared by the employer at that point and hold off on all negotiations until an offer is in hand. Otherwise, you run the risk of being too aggressive and losing a potential offer before it has even been made. Waiting until later in the process will also allow you ample time to collect or research market data, gain feedback from peers or advisers on questionable terms, and assess your overall leverage before determining what to negotiate and how aggressive you can actually be in negotiations.

The Negotiable Terms

Knowledge of which contractual items are actually negotiable is paramount heading into the negotiation process. Though most physician contracts nationwide are similar from a structural standpoint, there are some key provisions/terms that vary by organization and affect the overall quality of the offer. Below are examples of some key items that may be negotiable in any given contract. But again, it is highly advisable to obtain a qualified health care contract attorney to fully assess all terms and determine the most appropriate revisions to seek based on your unique situation.

Base Salary. How does the salary offered compare to published salary surveys and benchmarking data both nationally and regionally for the given specialty? What competing offers exist within the immediate area to determine market value and provide leverage?

Pre-Employment Compensation. What are standard signing bonus and relocation reimbursement amounts for the specialty and region? What is standard when it comes to student loan reimbursement and educational stipends?

Productivity Compensation. What are the metrics used to calculate productivity compensation, and are they reasonably attainable based on the market data available? Will a base salary remain in place for the duration of the contract term, or will compensation transition to productivity-only?

Termination Language. What termination with cause and termination without cause provisions exist, and are they adequately defined? Is there a notice and cure period in place that provides the physician with added protection from termination with cause?

Restrictive Covenant. Does the contract possess noncompete language, and are the time and distance restrictions reasonable? Do the restrictions apply to areas surrounding a single location or to areas surrounding multiple locations that are part of the employer’s network?

Professional Liability Insurance. What type of professional liability insurance will be provided—a claims-made or an occurrence policy? And if applicable, will the employer or the physician be responsible for the full (or partial) expense of acquiring tail coverage?

Scrutinizing your contract, even with a lawyer’s assistance, may seem laborious at first, but it’s time well spent. By negotiating contract terms before you sign, you will reap the benefits of a more advantageous agreement for years to come.

Jeff Hinds, MHA, is president at Premier Physician Agency, LLC, a national consulting firm specializing in physician job search and contracts.

 

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