What physicians should know before signing an employment contract

Signing an employment contract is one of the biggest financial decisions a physician will make, yet most doctors enter negotiations with little training in what to ask for or what to watch out for. Sarah Nosal, MD, president of the American Academy of Family Physicians (AAFP), has spent years advising residents and colleagues on how to approach that first contract — and on the mistakes that can follow physicians for years afterward.

Nosal says the biggest misconception physicians bring to the table is that a contract is take-it-or-leave-it. In reality, she says, nearly every term is open for discussion, from core salary and productivity bonuses to non-compete clauses and termination provisions. She also points to a pay gap that shows up even among physicians hired into identical roles at the same organization, which is part of why she believes physicians need to negotiate more assertively.

Medical Economics spoke with Nosal about these issue to learn more.

(Editor’s note: The following transcript has been edited for brevity and clarity.)

Medical Economics: What should a physician have in hand before their first negotiation conversation — in terms of both market data and personal priorities — to make sure they’re negotiating effectively?

Sarah Nosal, MD: That’s definitely a big question. I think that there are a lot of pieces that are available to you to have in place as a family doc, as a physician who’s preparing to sign a contract. You want to have market data — there are both publicly available resources, and family physicians have resources within the AAFP. We actually have information on all of the local information on how much people are making, even broken down by gender, race, location, types of organizations. That stuff is readily available through your specialty organization. So that’s the kind of information to have if you’re going to start a negotiation. And then separately, there’s you as a human. What are your non-negotiables? What are your absolute needs? How do you know you want to be working for the next one, two, three, four, or the rest of your career? What do you want to set yourself up for? What do you want to have in place so that you feel good about your job and you’re successful?

Medical Economics: Is there a question doctors should ask that sends a signal like, “I’ve done my homework, I’m prepared for this negotiation,” without coming across as adversarial?

Nosal: I think that it’s always really helpful, when someone says, “What are you asking? What’s your expectation of salary?” to know that you don’t have to answer that question. I think that we as physicians are often trying to make people happy — we’re used to interacting with patients and answering questions right away. That’s not a question you have to answer directly. You can say, “Well, what are your expectations of this position? What kind of experience, expertise, resources do you want to see brought to the table? How do you value those resources?” Having that conversation that isn’t about a money number, but is about the value of the work that you’re going to be doing, changes how you’re going to have that interaction with whomever you’re negotiating with.

Medical Economics: Beyond base salary, are there components of a compensation package that physicians most often overlook or undervalue when comparing offers or looking at a contract?

Nosal: I would say that one of the biggest things that docs know to look for — but maybe people who are just coming out of residency haven’t experienced before — is that family docs really need to ask about non-competes. No matter what the discussion was with the person who negotiated with you, when you get that contract, you want to be working with an attorney to review it. And if there is a non-compete in there that the organization says cannot be removed, you still can negotiate it. Don’t think that even if they say, “Oh, all of our contracts have a non-compete,” it’s set in stone. I’m here in New York City. A few miles from me is every major hospital system covering an expansive part of the East Coast and beyond. If I have a non-compete that says I can’t work in any affiliated clinic, I could not have a job ever again — or I’d have to move to the other side of the country. I had my own spouse negotiating their contract and was able to narrow it to just Long Island, not to all of New York, not to all of the places that could make it really hard for them later. Don’t think that things are non-negotiable just because they tell you they need to be included.

Medical Economics: Are there things to watch out for when it comes to compensation changes over time — for example, productivity bonuses or RVU thresholds that can change?

Nosal: You definitely want to look at what is your actual core salary that you can rely on. Sometimes jobs will offer a signing bonus. That’s great, particularly if you’re a new resident and you need some dollars to move. But a signing bonus is nothing compared to what’s in your long-term salary — that’s dependable, that’s reliable. Then you want to think about: if there are RVU bonuses, if there are quality bonuses, how hard is that to meet, and how often has that been changed? So a question I encourage family docs to ask is, how long has that compensation policy been in place? Did they make any changes in the last year, the last five years? I would tell you that lots of organizations are frequently trying new ways to increase the number of patients being seen or improve the quality dollars being received. If those thresholds are changing frequently, you don’t want to count on that being part of your salary. Even if you know you’re going to do a great job, they may change the threshold that makes it possible for you to get those bonuses. And bonuses are going to be taxed differently, and they’re going to end up differently in your salary than your base salary. Keeping that in mind, core salary probably is going to make the biggest difference in the long term for how financially stable you and your family feel.

Medical Economics: Signing bonuses also bring up issues like relocation assistance, CME funding, or schedule flexibility. Do those fall into the same mindset, or do they need to be evaluated differently?

Nosal: Each of the features in your contract — whether it’s money for continuing medical education, number of paid days off, even healthcare benefits — is really great to get clarity on early, to know early on what that is and what the quality of it is. I definitely encourage people to look online; often some of the most recent employees will give you feedback on whether that’s really true, particularly for some of those benefits. And more and more employers are not covering all of those expenses. So if, for you, you love doing advocacy work and you want to participate every year in the family physician advocacy conference we just had — I just had a friend negotiate that into their contract. It’s written in their contract that they get to go to that. It’ll be considered part of their work as a family doc, and they get to go as part of their time without taking additional time off. Your best leverage in your career is at that first signing of the contract. No time later, after you’re employed, will you have as much leverage. Family docs are sought after. Put in there what you want, how you want it, and make sure it’s in writing.

Medical Economics: A lot of young professionals assume things because they have a good relationship with the person across the table. How important is it to get things in writing?

Nosal: I would tell you, as a family physician, my scope is really broad — I can see newborn babies, I’m an HIV specialist, I do ultrasounds, procedures. Our docs are delivering babies in the hospital, rounding on the inpatient service. That’s a problem in some places. In some places you go, that’s easy, that’s already set up, that’s what everybody’s doing. And in some places, that hasn’t been well negotiated with the hospital system you’re partnered with, or even the organization you’re a part of. So if that’s not written in your contract at the time of signing, you will not be assured that your scope gets to be maintained. If you’re trained up on colonoscopies and you want to be able to do them, if you’re trained up on lap choles and you’re a family physician and you want to be able to do them, you need them to assure you in writing that they understand they’re hiring you for that work and they’re going to pay you to do it. Otherwise you really do run the risk — like many individuals who’ve had a casual, thoughtful conversation with a wonderful individual who was wooing them to their organization, and found out later, “Well, that’s just too difficult, so we’re not going to do that.” If it wasn’t in the actual contract, they do not have an obligation to follow through. You can think they’re great — and they can be great — and they still need to put it in writing.

Medical Economics: How important is it to review the termination provisions — both how you’d get out of the contract and how the organization could terminate you?

Nosal: Right after the non-compete is how they can terminate you and what that would look like. Family physicians, physicians, medical professionals — we take our job and profession really seriously, and whatever happens to us during the course of work, terminations have to be reported forever. We will be asked why that job ended. Insurance will ask. The state licensing board will ask. So you really need to know: Can they fire you without cause? If it’s with cause, what does that look like? What kind of processes are in place? How much warning do they have to give you, and how much warning do you have to give them? You can really get stuck in a very difficult legal battle — sometimes there are long lead times you have to give, and it can actually harm you once you’ve announced that you’re going to depart. These are real things to consider with an attorney at the time. They will be able to negotiate those details for you and know what’s standard, because every state — and even every medical organization you might work for — is a little different in what they’re able to achieve. You really want to look for someone in your area, perhaps from your state academy of family physicians. I get a special deal in my state academy to have a lawyer review my contracts, and it was really important to make sure the details that I didn’t even know to look for were in place, particularly for things like ending the contract.

Medical Economics: If you’re going to bring in outside help — like a contract attorney or a physician recruiter — at what point should you bring them into the process?

Nosal: As soon as you are considering putting a deal in place — as soon as you’re thinking you may want to actually sign something — sign nothing, commit to nothing before you’ve spoken to an attorney. Sometimes offices will say that they’re just going to provide you a letter; that’s something some organizations do. You still do not commit to anything until an attorney has looked at that. It becomes legally binding when you sign and agree to those terms, and often the terms aren’t specific enough considering the conversation, the agreement, and the expectations you have for what your work is going to look like. So I really encourage you — if you’re a new grad, a family doc who’s going to graduate, if you’re a second-year resident, honestly, because that’s when most people sign their contracts, as they’re starting their second year — reach out to your state academy. Ask them if they have a special deal with an attorney. Find out who that is, so that as you’re getting these job offers that might look great, or that you might be worried about, you have that attorney take a look at it. Usually, they have a great deal for residents and for their state members to make it easier for you to afford that, particularly on a resident salary.

Medical Economics: Are there any examples of a contract red flag that you’ve seen that a physician didn’t catch until it caused problems later?

Nosal: I think one of the most common red flags is non-competes. I can’t tell you how many family docs have come up to me, in my role as president of the AAFP, while we were fighting on the federal level to try to remove non-competes, saying they ended up in situations where they had to move their whole family out of their town because the non-compete was enforced so strictly. So don’t think that organizations aren’t going to stick to it. Whole families — kids in their school districts, partners who were happily employed and supporting the family — had to move, even a state away, in order to comply with that non-compete language. That’s some of the stuff that can be really tough, because you disrupt your whole family, and you don’t mean to.

Medical Economics: How difficult is it for a young physician to get into the right mindset — to understand that this is a negotiation, that they have some power, and that they don’t just have to sign the first thing put in front of them?

Nosal: I get to meet with lots of residents and students along the way, which is great — we have multiple residency programs in my organization. As I meet with individuals who are going to have those negotiations with employers, the first thing is to make sure they understand how valuable and sought after primary care family physicians are. We are in a shortage. We are in a crisis. Every organization has patients waiting to see you. You have the upper hand here. We’re going to take it thoughtfully and meaningfully. And I would tell you, this generation, it’s not all about the dollars. It’s about paid time off. It’s about how much administrative time do I get? Can I work from home when I’m doing that? How flexible are my hours if I want to do pickup every day after school? Those flexibilities are really the kinds of things available to us now, which young people are considering — a little different than when I was considering my contracts back in the day.

Medical Economics: What else do doctors need to know about contract negotiations?

Nosal: In general, we are bad negotiators — particularly if you look at the research. A lot of family physicians are women, and we, in general, tend to accept less good pay. That’s why using both public resources, the AAFP’s resources, and talking to your colleagues matters. When we were all being hired at once, as I was finishing residency, each one of us said what we were getting in our contracts, the kinds of contracts that were being offered to us overall. With that information, we were able to realize that the same organization was offering $50,000 more to a male resident than to a female resident for the same role. That’s still happening — you can see it in the broad data across the country. How we can change these huge disparities in race and gender in pay is by making sure we’re informing ourselves and actually asking for what we’re worth. I’m in New York, and they’re required to post a salary range for all jobs, but the real question is: where are the actual ranges in your state, not just what’s posted online? And as my husband always likes to say: You can ask for the amount where you would not say no. What is that amount, or what are those key features in your contract where you would not say no? Ask for that — because what’s the downside?