Physician contract negotiation: Best asks, strategies for doctors
Take advantage of the opportunity to advocate for yourself before you sign on the dotted line.
Many physicians avoid contract negotiation, especially early on in their careers, when advocating for yourself can have the most long-term impact. However, if you know what to ask for and how to confidently ask for it, there’s often room to improve an employer’s offer. Even in situations where an employment contract is said to be non-negotiable, payment of membership fees or additional CME funding are examples of smaller changes employers are often willing to make.
Understanding physician contracts
Contract language is daunting, but even if you hire an attorney, reading through at least key provisions and writing down questions you have is important. The AAFP has contract review advice, including member-exclusive tools that help you focus on highest priority items.
What is a physician contract?
Physician contracts spell out the terms of your hiring, employment and exit from an organization. It outlines critical points of agreement between you and employer and can even affect where you practice after you quit or are terminated by your employer. You’ll sign a contract each time you start a new employed professional opportunity, and typically at regular renewal points if you remain at the same employer.
Key terms in physician contracts
Some of the terms you’ll be especially interested in when negotiating a doctor’s contract are:
Term and termination: How your employment begins and ends
Job duties: Your essential duties, practice location, and schedule
Malpractice: Type of policy provided, payment responsibility and tail coverage
Benefits: CME stipend, health insurance, retirement plans and more
Compensation: Salary and bonus calculations and how the plan may change
Noncompete: Limitations to future practice opportunities after termination of agreement
Future equity: Terms for becoming an owner at an independent practice
Dive into these terms and why they matter with an exclusive contract guide for AAFP members.
How to negotiate a physician contract
Understanding how to negotiate your employment contract is essential to achieving professional satisfaction and personal fulfillment.
Preparing for physician contract negotiation
Preparation is the best strategy for successful physician contract negotiating. Review your contract carefully, which you can do with the help of this member-exclusive simple checklist that will help you identify possible concerns.
Make a summary of items most important to you.
Prioritize your list of important items.
Identify the major goals you’re seeking in your employment.
Write down any concerns you have about the contract.
Understanding your goals and what is important to you can help refine your negotiation strategy. For example, if burnout is a concern, consider prioritizing scheduling issues or avoiding burdensome administrative or call requirements.
Steps to negotiate physician contracts effectively
Once you know your goals, take these steps to get to terms that are agreeable to you and align with your priorities.
Step #1. Explore the best items to negotiate.
Talking with other physicians in the organization about how they have been treated can help you learn more about what you can negotiate for in a contract. Ask for the same or different items or treatment based on the information collected.
The willingness of any employer to modify an employment agreement depends primarily on the employer itself. Every party to a contract negotiation comes with its own set of experiences and goals, and it helps to understand what they may be.
Eight items to always consider asking for in contract negotiations
Increased salary
More administrative time
CME funding
Work location and schedule clarification or changes
Increased time off
Limiting enforcement of non-compete agreements to only certain reasons for termination, excluding reasons outside of your control, like force majeure
Clearer for-cause termination provisions
Payment of your AAFP membership
Step #2. Hire the right advisers to coach you.
Choosing and hiring a lawyer and working with a financial advisor are the best ways to equip yourself for success.
A financial advisor can help you understand the tax implications of your salary offer and can research compensation averages in your area to help you negotiate salary.
An attorney can discuss the contract language with you, including focusing your attention on issues you may not have noticed or understood.
Step #3. Conduct negotiations yourself.
A negotiation is the beginning of your relationship with the employer and sets the stage for what working together will be like. You’ll gain insights about your future employer through direct interaction and can better convey your needs and concerns than a legal representative could. Plus, many of the items you’ll likely identify for negotiation, such as salary and daily activities at the organization, don’t involve legal issues.
A self-led negotiation can demonstrate your thoughtfulness to the employer and give you insight into the employer-employee relationship you are considering entering into. For example, if the employer seems indifferent or dismissive of your concerns or responds in a condescending or rigid manner, that’s a potential red flag. On the other hand, you can find great reassurance in an employer’s responsiveness and detailed explanations on various issues. None of this can be fully captured by having legal counsel engage in the discussion on your behalf.
Additionally, you’re best positioned to directly address items you have questions about from your interview conversations and previous discussions.
Bringing legal counsel into the negotiation is best when there are legal issues that remain after you’ve worked through the initial items on your list with the employer. Narrowing down the items to be negotiated before counsel gets involved can also help reduce legal expenses.
Step #4. Get every change in writing.
Many times, physicians are forced to rely on verbal assurances and promises when they negotiate an employment agreement. Many employers, especially larger ones, simply will not make any changes in the written contract, meaning you must trust that the employer is acting in good faith if you choose to sign an agreement with them.
As you assess elements of your contract you are not able to get changed in writing, decide what you are willing to live with and if the issue is worth walking away from the job opportunity.
Step #5. Know your exit strategy.
If you sign onto a contract that does not perfectly reflect the terms you had hoped for, it is especially important when this happens that you're aware of and satisfied with the contract exit strategy. Ask yourself: If I am not happy in my job, do I understand the termination provisions? Do I know how to get out of my contract and what the consequences will be?
Be aware of exactly how you can terminate the agreement and what that would look like before you sign. Termination can have numerous effects on items like insurance, bonuses, non-compete agreements, and loan forgiveness. A lawyer can help you develop a plan.
Step #6. Abandon negotiations if your priority items can't be met.
Compromise too much, and you can find yourself in an unhappy employment situation. Although negotiating often means letting go of some items, stick to your original priorities (e.g., if providing obstetric care is important to you, make sure your contract includes that scope of care).
A contract should present more pros than cons. Only in a situation where you have no other likely opportunities, for example, due to issues such as immigration or loan forgiveness requirements, should you sign a contract with more cons than pros.
Salary and compensation in physician contracts
You’ve worked hard to become a physician, and you should be paid fairly for the work you continue to do. Unfortunately, many employment contracts don't offer a fair compensation package out of the box and require deeper understanding of data and payment structures to negotiate appropriately.
Salary structures in physician contract negotiation
Doctors often have to decode complicated salary structures to understand their total compensation. In some cases, a straightforward salary is offered, but you’re more likely to be offered a blend of a minimum or base salary plus incentives and bonuses. Each model has different pros and cons and larger effects on the practice environment.
Under current fee-for-service models, incentives are largely productivity based. Productivity-based compensation follows the Resource-Based Relative Value Scale set by the Centers for Medicare & Medicaid Services. This methodology determines physician reimbursement based on relative value units, geographic costs and an RVU’s conversion factor.
Performance-based incentives are also becoming more common in compensation formulas as value-based payment models that prioritize health outcomes over procedure-based activity grow.
A financial advisor with experience in physician compensation can help you assess a salary structure offer to determine how much income you can expect once you sign a contract.
Physician salary and compensation data sources
Before you consider negotiating for a higher salary, you must know whether negotiation is even necessary. When approaching any contract negotiations, it’s important to remember that you are only looking for fair terms. No one wants to be undercompensated, but you also do not want to ask for a salary that is way above average for a family physician in your location.
Start by consulting data on average physician salaries so you know what a typical level of pay should be for your job.
- AAFP members can access a free family medicine career benchmark dashboard to compare real-world compensation, benefits, job satisfaction data and more.
- Most employers reference the Medical Group Management Association’s (MGMA’s) annual compensation report, which physicians can also access for a fee through AAFP member advantage partner Resolve. Keep in mind, however, that even when employers use MGMA data to decide what compensation to offer you, that doesn’t mean they will always offer a salary that is at or above the average, so it's important to check the data yourself.
When to consult a physician contract lawyer
Hiring an attorney can help you ensure you aren’t missing anything important when you are signing or renewing a contract at any point in your career. If you feel comfortable reviewing your contract independently, you still might want to seek counsel if:
- You are unsure how to interpret compensation data and apply it to your situation
- You are nervous about asking for a pay increase, or just want someone to negotiate on your behalf.
- You know of an attorney who has negotiated with your employer in the past and can provide invaluable insights into how your negotiations should play out
Intimidated by negotiation? Don’t be, especially as a resident. Member Jennifer Bacani McKenney, MD, shares her tips.
Avoiding common pitfalls in physician contract negotiations
- Although some people like to have “throw away” items to use in negotiations, this can sometimes backfire if the employer is presented with a laundry list of issues, some of which may be of questionable value or consequence.
- Don’t make demands. Approach your request by talking about your concerns and asking the employer questions.
- Don’t sign a contract with a belief a term will be changed or not enforced. If the employer agreed to make a change verbally, ask for it to be put into writing.
Learn about red flags and pitfalls in a contract.