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Bend, But Do Not Break in Contract Negotiations


When it comes to a new contract, you'll likely be tempted to just sign on the dotted line and be done with it. Slow down! Don't do it! You could easily extract some very valuable concessions.

Co-written with Dennis Hursh

As a physician, we’ll bet you feel pushed and pulled in a thousand different directions. You have a long list of patients to attend to, paperwork to complete, administrators to deal with, and loads of continuing education (not to mention fitting in some time for your family!).

In our previous article, we talked a bit about the 3 major compensation models.

When it comes to a new contract, you’ll likely be tempted to just sign on the dotted line and be done with it. Maybe you are salivating like Pavlov’s dog at the new compensation and are excited to move onto the next step. Slow down! Don’t do it!

You could easily extract some very valuable concessions.

Bend, but don’t break in contract negotiations.

What Is Negotiable and What Isn’t Negotiable

Let's just back up a second. Let’s think back to the moment where practicing doctors, residents, or fellows have gotten their contract in hand and they're looking at it and saying "Gosh, this seems pretty set. It’s like it is written in stone".

From 25 years plus of experience, we can tell you that we have never had a contract where the employer came back and said "We will not make any of your changes, we will not bend on anything!”

Practically everything is negotiable, but for any given employer you don’t know what is negotiable and what isn’t.

What you will want to do is draw up a list of the most important points in the contract that you would like changed or you would like to extract more concessions on.

What is likely to happen is that for some points the employer will say, “That's not negotiable at all.” However, on others they will concede the point, and there will be some that they will meet you halfway on.

Some of it is pain points. For example, suppose they just had a star physician leave, and then compete against them, because of a loophole in their agreement. Suddenly, they're going to have a 15-page covenant not to compete and they won’t change that at all.

They tend to not negotiation on issues they've previously been burned on. As you can imagine, this varies from employer to employer.

What is non-negotiable are certain things that employers have to have the same for everybody. For example, employer sponsored plans, like a 401k or 403b, might have a match. They can’t give you an extra amount of a match. The laws, such as ERISA and other statutes, provide that they HAVE to treat everyone equally. It’s the law. They can’t change it.

Also, group insurance plans like disability or life insurance they offer to employees are likely carved in stone. They can’t treat you differently than the rest of the group.

However, don’t let that deter you from negotiating provisions within the contract. For example, what is the amount of vacation time you get? That isn’t provided by a third party. What about an allowance for relocating? You could ask for a higher moving allowance WITHOUT receipts. It could be almost like an additional sign-on bonus.

Also consider the quality of life you may be entering into.

What about the call schedule? Often the new physician has a more strenuous call requirement. The contract may be vaguely worded and not specific enough. This could allow the hospital or employer to assign you a call schedule that is much more rigorous than other physicians. Remember, have the contract be specific so that it is terrific (and crystal clear)!

Final Thoughts

There really are very few things that can’t be negotiated. You just never know what is negotiable for a given employer.

Make sure you work with an experienced attorney who is familiar with contracts for physicians. If they do this work regularly, they may be familiar with your employer and they’ll know the hot buttons to press and the ins-and-outs of contract negotiation.

Always ask for everything! If you don’t ask, you’ll never know if you could have gotten it!

Your attorney can do this in a 3- or 4-page review letter with bullet points citing every troublesome section from the contract.

The employer probably won’t give you everything that you want. They may end up saying "I'll give you this one, I'll give you that one, I'll give you this one, but I won’t give you this one".

Be ready to meet in the middle and compromise on some of these points. After all, this is a negotiation!

Just remember to bend, but not break.

His newest book is The Freedom Formula for Physicians. You can contact him at (800) 548-1820, at dave@daviddenniston.com, or visit his website at www.DavidDenniston.com/Physicians to get 3 free articles on financial issues specific to physicians.

Dennis Hursh is a physicians’ lawyer focusing on physician employment agreements. He literally wrote the book on this topic - The Final Hurdle — A Physician’s Guide to Negotiating a Fair Employment Agreement. You can contact him at (866) DOC-LAW1, at Dennis@PaHealthLaw.com, or visit his website at www.PaHealthLaw.com.

Dave and Dennis had a whole 30-minute conversation on the topic of contract negotiation. You can check out the podcast here in YouTube or on ITunes.

Dave Denniston, Chartered Financial Analyst (CFA), is an author and authority for physicians providing a voice and an advocate for all of the financial issues that doctors deal with.

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