Crushing contract negotiations

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Nothing takes us out of our comfort zone faster than navigating an employment contract with a potential employer or a hospital. Most of us need to gain business or legal skills to prepare or negotiate with the confidence that we are being appropriately represented. Before providing suggestions for contract negotiations, I want to state that it is always best to have legal counsel for this process.

For many doctors, talking about how much money we make is paralyzing, like a deer looking into the headlights. (I have previously described the importance of price transparency in an article: Baum, N. (2020). Doctor, Get Your ACT Together. The Journal of Medical Practice Management: MPM, 36(2), 77-80..) Doctors often feel overwhelmed by the process, making signing the first contract daunting and stressful. I know this process can be accompanied by anxiety and discomfort, but the following these suggestions can help you through it with less stress.

Our medical training is deficient in helping us with the basics of business, including contract negotiations. It's natural to feel uncomfortable during this process. Even physicians with a business background and MBAs experience butterflies negotiating their contracts. This blog will provide three tips on negotiating the best contract regardless of your situation.

Tip #1: Be willing to walk away

Doctors are an asset to a hospital or when added to a medical practice. You do have the power to ask for what is important to you in your practice and life. You can walk away from the offer. Here's a suggestion on how to put yourself in the strongest position.

Don't put all your eggs in one basket during your job search. It's a common misconception that newly minted physicians need the power or leverage to navigate a job offer. This causes doctors to leave hundreds of thousands of dollars on the negotiating table, causing buyer's remorse after signing a contract. That's why I recommend getting more than one job offer. Having multiple job offers will give you the confidence to negotiate the best deal rather than being underpaid for your skills, training, and future contributions to the practice.

You may experience a potential employer pressuring you to sign a contract quickly. That's when it is appropriate to hit the pause button and ask for more time (five days to a few weeks).

Tip #2: Do your homework

Many new and as well as seasoned doctors may initiate their search by asking friends or attendings how much they might expect for early contract negotiations. This is an ill-advised strategy and often results in doctors leaving money on the table. Your department chairman is not likely to be a good resource as they have probably not negotiated a contract on behalf of newly minted physicians.

Many resources are available to help you understand what salary range you expect based on your geographic region, specialty, sub-specialty, care setting, employment/ownership status, and leadership responsibilities. There are resources that can help you with finding starting salaries of doctors in a similar situation as yours.

Several resources to find current salaries of physicians include:

1. Medscape Physician Compensation Report: An annual report that provides detailed salary information across various specialties, regions, and practice settings.
2. MGMA: Offers compensation data and benchmarking tools.
3. Doximity: Provides a comprehensive salary report that includes data on various specialties, and regions of the country.
4. Salary.com and Payscale.com: These sites offer salary data for physicians. They can provide a general sense of compensation trends.

By availing yourself of these resources, doctors can gather current data to support their contract negotiations, thus ensuring they receive fair and competitive compensation.

Tip #3: Pay down the debt

Most recent medical graduates will have debt repayment as a significant issue that must be addressed during contract negotiations. In 2023, the Association of American Medical Colleges reported that physicians finishing training incur an average of $230,000 in educational debt. This debt can be a barrier to living the lifestyle that you've worked so hard for. Debt repayment is a topic seldom included in contract negotiations but is an issue you want to consider when signing a contract. The future employer is unlikely to bring up this issue, therefor it is imperative that you broach the subject early in the negotiation.

Here are three strategies to help doctors pay down their six-figure student loan debt balance.

• Government pays: Enroll in the Public Service Loan Forgiveness (PSLF) program to have your student loan balance erased after 10 years of payments (120 on-time payments). This applies to doctors who work for organizations classified as 501(c)(3) non-profit organizations. This doesn't mean you must vow poverty to enroll in PSLF. Many faith-based, academic, and community hospitals are non-profits, making them eligible for PSLF enrollment.
• Employer pays: For physicians to pay down their medical education loan debt, employers can provide financial support, up to $100,000 to $300,000. This contribution from your employer could cut years off your pay-down timeline.
• Doctor pays: If all else fails, negotiate for an increase in your base salary guarantee and direct that income toward paying down your debt. Physicians must proactively negotiate their first employment contract, especially the base salary. Don't be afraid to speak up and advocate for value you bring. Remember, you are a physician and a valuable resource, so don't let an employer take advantage of you.

My take home message is don't neglect to ask for education loan debt repayment, as it's not usually offered unless you ask for it.

Finally, the safest approach for contract negotiations is to have a professional negotiator such as an attorney with healthcare experience to negotiate on your behalf.

Bottom Line: Negotiating your contract is stressful but taking the time to prepare for the process will be worth it. Negotiating your contract requires leaving your comfort zone or the cocoon of your training. Remember to consider the incredible value you will be providing to hospitals and practices. You are worth millions to any organization or practice that hires you. I know our training doesn’t prepare us for the business of a medical practice. But don’t forget that medicine is a calling as well as a business. It's your responsibility to proactively negotiate your employment contracts to ensure that you receive the pay you deserve. As a result of signing a favorable contract, you can provide the best care of your patients and don’t have to have second thoughts that you are underpaid compared to your partners and peers.

Neil Baum, MD, a Professor of Clinical Urology at Tulane University in New Orleans, LA. Dr. Baum is the author of several books, including the best-selling book, Marketing Your Medical Practice-Ethically, Effectively, and Economically, which has sold over 225,000 copies and has been translated into Spanish.