Whether you’re a new physician or have been working for decades, signing a new employment contract can be stressful. Fortunately, it’s also the best time to advocate for yourself and ask for what you want. CompHealth has assembled a panel of contract specialists to share their insights on how you can effectively negotiate your physician contract.
In this webinar, you’ll learn what to look for when you receive a new contract, what items are typically negotiable, and how to best ask for what you want.
Our expert panel includes:
- Jon Appino, Principal and Founder, Contract Diagnostics
- Kathryn Sarnoski, MD, Director of Physician Education, Contract Diagnostics
- Kim C. Stanger, Partner, Holland & Hart LLP
You can watch the webinar here:
TRANSCRIPT:
Michael Atkinson:
Hello, and welcome to this contract negotiation webinar. I'm Michael Atkinson, Vice President of CompHealth's Permanent Placement Division. Thank you for taking the time to join us today. Whether you’re a new physician or have been working for decades, finding a new employment contract can be stressful. Fortunately, it's also the best time to advocate for yourself and ask for what you want. Today we want to really dive into the ways physicians can negotiate a new employment contract to ensure that you get what you need. We have a wonderful panel of experts that have great experience with physician contracts that I’m happy to introduce.
We have Jon Appino, founder and CEO of Contract Diagnostics. He has worked in healthcare for over 2 decades, including the past 11 years with Contract Diagnostics. His proactive dynamic style has proven successful in helping physicians achieve their best career outcomes with both prospective and existing employers. In some instances, Jon has navigated more favorable decisions even when physicians were told there was no negotiation or the answer was final. Jon's expertise, experience, and commitment are unmatched in the area of physician contract negotiation.
And we have Dr. Kathryn Sarnoski, MD and Director of Physician Education at Contract Diagnostics. Dr. Sarnoski is a board-certified practicing OB/GYN. From her personal experiences as a physician, she recognizes there is no single best contract for every physician. Her expertise is in helping fellow physicians identify their personal goals and values, understand exactly what they're signing, negotiate the terms that support their goals, and ultimately be educated and empowered in the process. Dr. Sarnoski is a Yale University graduate who completed her MD at the University of Wisconsin and her residency of obstetrics and gynecology at the Medical College of Wisconsin.
Finally, we have Kim Stanger, partner at Holland and Hart. Kim assists facilities and professionals with the many regulatory, transactional, and practical challenges facing the health care industry. He has particular expertise on unique laws facing health care providers. With 20 years of experience, he understands the needs of his health care clients and how to address those needs in a cost-effective matter. Kim's commitment to his clients and the industry is demonstrated by the hundreds of hours he spends each year providing free education to his clients and serving in industry organizations.
Welcome panelists. I'm looking forward to the insights you’ll share with us today. Just a couple of housekeeping items. If you have any questions as we go, please use the Q&A tab at the bottom of your screen and we'll try and get to as many questions as we can at the end of the presentation. We will also be recording the webinar and will email it to everyone that registered. Our first question is for Jon. By the time a physician receives a contract they've already been through an interview process and are familiar with the organization. What should a physician try and learn about the opportunity before they even see a contract?
Jon Appino:
Great question. And I’m excited to be here, thank you for having me. These are great fun and we love to educate on everything that we've learned over the past 12 years here at Contract Diagnostics. I’m looking forward to the next few questions. But as far as an opportunity, we were just talking earlier before we started the conference about the market for physicians right now, and everyone's talked about the supply and demand curve with physicians and how it’s shifted over the past 5 years, and expected changes over the next 5 to 10, and it's really a great time for a physician to be coming into the market, or for a physician to be transitioning from one opportunity to the next. It's a great time to find out what an opportunity could provide for you or your career, your family, your income, and everything else. I think it's a great question on what are the things that we should look for as far as a position maybe before we get a contract. I do think that figuring out why the position is open is a great first step. Is it open because a physician transitioned out? If so, I’d love if you can have a conversation with that physician to figure out if it was just a relocation for a family member, or if there was something at a practice level that they didn't appreciate, or they couldn't reach a bonus threshold, or to get the support that they needed, or whatever the question would be. So, I do think why the position is open is important.
I think that the physician should also evaluate his or her goals from a personal and a career level and see, is this the opportunity that can get me where I’d like to be? So, if that's a question around income, maybe someone's coming out of training, they have a high student loan debt and they'd like to get them paid off, whether it's through a federal program at the facility, or whether it's just through having a high income and having the ability to do more work and pay those student loans off early. I think it's important for the physician to evaluate what their goals are with the position. Again, if it’s financial, if it's flex time, if it's taking a certain amount of call, if it's having a certain opportunity in a community for your family or your faith or your children, I think it’s important to evaluate the opportunity for all of those things because it’s not just about the dollar amount in the contract, it's about the job itself and your satisfaction with it. So, I think it's a great opportunity for a physician to evaluate all of those things before they actually receive a contract. If there are things that are maybe what we would call “deal breakers” with a physician in a contract, like signing a noncompete or having a certain floor of income, I think those are important valuations to make also while you're on the site visit or while you're digging into it. But I also think it's a good idea for a physician to look at many jobs and so it's not just about this one opportunity that I’m looking at, it's about evaluating a couple. I think physicians interviewing and selling yourself is a very definite skill set that physicians don't – they don't have job interviews every 3 months, it's not something that people tend to practice, so I do think they should look into how to conduct one of them. I think practice is important and I think that all those things come together before they even get the contract, and then, of course, we could talk for days and days about what to do then. But those are some of the things that I think are important as every physician evaluates their opportunity.
Michael Atkinson:
Those are some good key points for physicians as they look at the opportunity before they even get a contract. Thank you. Our next question is for Kim. You work with healthcare facilities in order to help them create a contract. What's the first thing that you would say to a physician that they need to know about contract negotiation?
Kim Stanger:
Well, when I'm representing the physician, I tell him to hope for the best but plan for the worst. It's kind of like marriage, right? Nobody expects this thing to end in divorce so you need to go into it with high hopes but at the same time realize that there could be misunderstandings that come along the way, there could be problems that result in the termination, and so you need to make sure that the contract is written in a way to avoid misunderstandings and to protect you in the case that there's a situation where there has to be a termination. Don't rely on any unwritten promises or assurances. Almost all of your contracts are going to have a provision that says that once you sign that contract that it supersedes or replaces any prior understanding or agreement, and so don't rely on outside terms or agreements. Make sure that if it's important to you that it is included in the written agreement. As you go through that negotiation process you may want to keep copies of relevant communications back and forth, whether there are emails or other things like that to show the promises that were made or the interpretation of the contract terms. I think it's important to do your due diligence before you go in. Make sure that you understand kind of the quality of this particular employer to the extent that you're able to and talk to other physicians or providers who are employed to find out what their concerns are, how they've been treated. If a healthcare provider has a really good reputation of being fair and upright, I have less concern about the nuances, and maybe some of the ambiguity in the agreement. On the other hand, if the employer has not a very good track record with its employees, then I think that you want to be a lot more careful and make sure a lot of those terms are spelled out to avoid misunderstanding. Remember that when you're going into it, bargaining power is all-important, right? If you're in demand, if they need you, then you're going to have a lot more bargaining power and you're going to be able to extract more benefits to you than if you are a run of the mill, they’ve got 1,000 of these particular providers, and you're just one more. So, make sure you do your due diligence, kind of know where you stand on that. The more attractive, the more specialized you are, then probably the more bargaining power you're going to have. Remember that health care systems, if you're going to go to work for a health care system they’ve got 100 to 200 other employees, other physicians that they need to be aware of, and it's difficult for them to make a lot of changes to an individual unless you're specialized and they can justify that. It's not just an operational thing but it's also they don't want to create problems where physician A suddenly realizes that physician B doesn't have a non-compete or that they're getting this additional stuff. So, it's not just that the health system is being uncooperative it's that you have to look at it from their perspective and understand that there are reasons why they may be limited in their ability or their willingness to kind of go outside their standard contract terms.
Finally, when you go into those negotiations, make sure that you identify the issues, as Jon said, that are most important to you, and you make sure that those are addressed. But not only the things that you would normally think about like compensation, work/life balance, those types of things, but think about other situations that have arisen in your career, or that you've seen arise in others, that you may not think about it when you go into it but they can become really important in the contract, things like termination provisions. How long is this contract really going to last? Most of them will have a 90-day out provision so it doesn't matter if it's a 10 year contract, 5 year contract, if it's got a 90-day out you've got a 90-day contract, and what happens if they terminate that? What kind of protections are you going to have, or what kind of penalties are going to rain down upon your head if you terminate? Are you going to have repayment obligations? Are you going to be subject to a non-compete? Are you going to lose privileges? Is that going to be reportable? Non-competes, again, is an important one. Outside activities, are you going to be barred from engaging in some of the research or moonlighting or some of the other charitable things you like to do? Insurance and tail coverage is a huge issue. Make sure that you address that whether or not you're going to have to pick up your tail, or under what circumstances you're going to have to pick up your tail insurance. Practice support, intellectual property, there's a whole checklist of items that you may want to consider that they may not seem that important to you now, but down the road if there's an issue that comes up those will be important, and you'll be glad that you had the foresight to negotiate those terms in advance.
Michael Atkinson:
A lot of good things. It's important to put that leg work in in the beginning and understand exactly those things and going with that list prepared for it, so a great point is there. This question is for Dr. Sarnoski. What are some of the most common mistakes that you see physicians make and what things do physicians often miss that should be on the table to be negotiated?
Kathryn Sarnoski:
That's a great question. I’m going to actually jump back to the one that Jon talked about just to start off my answer on common mistakes. One is just not spending enough time exploring the opportunity upfront. I have worked in a number of different jobs and now I do almost exclusively locum assignments and so I’m frequently interviewing and getting all that practice in that Jon talked about to explore the jobs, and so I do spend a lot of time asking questions. And I break it down pretty much into four areas that I explore in each of these jobs. One, is the general position, so that’s some of those questions like Jon talked about. Why does the facility need a provider? Something as basic as, what electronic medical record are you using? One of the newer questions I have started to ask is, how did the employer manage Covid? Were there furloughs, were their layoffs, were there changes in pay? Second area I’ll think about and talk about is the clinic specific questions. So, how many providers are there? How long have they been there? Their personalities, the culture of the group, how the MAs and the RNs and the front desk staff all work together, office flow, any supervision that you may have of residents, PAs, or nurse practitioners, so gathering some of that. Thirdly, the hospital and resource specific questions. So, what kind of specialists are available for internal referrals? I do a lot of rural medicine now and that answer is wildly different from one facility to the next, so being aware of that ahead of time when you're not in a stressful time crunch of a patient clinical scenario. Do they have a blood bank? That's always another one, basic like that. And then the employee benefits, taking time with the human resources contact that you have and asking information about the vacation time, the CME time and funding, licensing fees, board prep courses, parental leave, if that's something you're looking for. So those are some of the questions that I ask up front, and I would really encourage physicians not to miss that stage. And just as an FYI since I know we go through so much so quickly in this talk today, Jon and I and our team, we put together a lot of resources and I have a whole PDF that we can send out, if anybody's looking for it, that list a lot of those questions that I ask, and we have it on one of our forms. It's free, so feel free if anybody wants to reach out to us about that.
Otherwise, jumping into making sure you take the time to have your contract reviewed, like we've been encouraging everyone, make sure you understand what's in there. And then Kim was talking a lot about making sure you understand the legalese and having everything written down, and how that can impact. And then I just really encourage physicians not to forget about the lifestyle impacts of that legally, so really putting all of that together. I did just mention a little bit, spend time reviewing the benefits package, that has a huge financial component that you may not see upfront, but really does in the short and long term. As a 1099 worker I don't get all of those benefits and I really do see the cost of them so make sure you know what your employer is offering. There's a lot of student loan repayment options now. Some places might have some sort of cost of living offset. Just explore what is there. The parental leave packages will be really different from one place to another. Don't forget there is supply and demand, so some of us are really specialized and that will make us in higher demand, but just in general there is a shortage of physicians across the country, and as a locum doc I'm really seeing the volume of positions available, and so don't forget that you can explore what is out there. It might not be what you initially had homed in on as your dream job, but it might turn out to be, so you do have some leverage.
When you go into the negotiation, really try hard, I know this is easier said than done sometimes, but don't put yourself in a position of desperation. It makes it really hard to negotiate when you feel desperate and you feel like you just want to sign anything so you have the job ready. You might compromise on one of your own personal core values or goals that was really a non-negotiable for you and puts you in a position that you don’t any longer feel comfortable in, and then figuring out what you want to do next can be really challenging. And then Kim mentioned this too, don't assume something will never happen. So, most physicians, at some point in time, will leave a practice, and so spending time negotiating and understanding the termination clauses is really, really key. Some of the costs associated with that like paying back student loan repayments or sign on bonuses or relocation bonuses, or the cost of tail insurance. Make sure you're really familiar with all of that or if you think the noncompete – I often think the noncompete doesn't matter to me, I’ll just move 3 states away, no big deal, and that might be your initial thought and then something changes and you don't want to anymore. So, just put yourself in a position that you feel really comfortable with even if it never happens, great, but if it does then you're all set.
In terms of what I see a lot of physicians missing is, I would say, number one is a lot of us will home in on the compensation and forget that the other terms can be negotiated. And sometimes you'll have more leverage negotiating some of those other terms if they can't budge on their compensation package, so don't forget about that. We talked briefly about malpractice insurance and just understanding the difference between the policies, occurrence-made, claims-made, and then whether or not it has tail insurance is going to be really key. And I have another PDF on that if anybody wants to go into more detail, that could take a little time so I won't jump in on that. The termination clauses, like we talked about, some of those costs with termination, like paying back a signing bonus or relocation bonus, you can get those prorated so instead of if you don't stay the full 2 years instead of paying the whole thing back, maybe you pay it back 50% if you stay a year. So, thinking of some of those simple changes, those can oftentimes be more palatable to an employer. Looking at your schedule, that's a really big one. A lot of people now, they're joining a practice because they really want to limit their time in clinic or their time on call. And we've seen in Covid a lot of shifts in the volume of providers and patients and expectations. And so, if you join a group that has 10 people in it, and you are going in thinking you'll have 1 in 10 call and then 4 people leave, and suddenly you’re 1 in 6, or say you start with a smaller group, it could be even more jarring. Having some limits set on call with additional mutually agreed upon, compensated additionally, trying to set some of those boundaries upfront. If you want a 4-day clinic week, make sure it states it's a 4-day clinic week if that's what you've agreed to, so that when somebody leaves you're not forced to add that fifth day. A couple of other little things like noncompetes, oftentimes you'll see any location that you've worked at or provided clinical care at, you can get it down to one specific location. Now your radius that you are limited by is much smaller, so paying attention to that. Vague language, like Kim was talking about, try to make it as specific as possible so it's not left open to interpretation on the back end. And then one of the new areas that I've started to see in more physician contracts, and maybe Kim could even speak to this and what he's seeing on the employer side, is some of the language that I assume came out of Covid, but the ability of the employer to change their language or the terms of the contract. The term I mostly see is force majeure, like something out of their control like a pandemic, and they can just up and next day say your salary is going to be this, your schedule is going to be this, or this is going to be your expectations for clinical work. You're an OB/GYN but you're going to go run a ventilator tomorrow, something like that. So that is one to pay attention to as well.
Michael Atkinson:
Lot of great advice there. Thank you, Dr. Kathryn. How can a physician know if the offer that they're receiving is a competitive offer for the market and for their specialty?
Jon Appino:
I think that's another great question. I think the common theme here as we're talking about, what do you look at before you go into a contract negotiation, or one of the items that you look for when you're in that contract negotiation, and how do you look at it from the employer's perspective? I think the overarching goal or theme, if you will, is risk and reward, so how do you manage the risk side of things with, like Kim said, determination provision, like Dr. Kathryn said, tail insurance or noncompetes or not having your schedule documented and doing more work than you expected. Those are a lot of the risks to then, Dr. Kathryn mentioned, Kim mentioned as well, some of the benefits of a job being the actual HR benefits if you're a W2 employee who have access to those. And obviously a lot of physicians look at the risk and reward, if you will, and the risk is all the bad things, the reward is what you get out of it, so the compensation. We spend a lot of our time at Contract Diagnostics talking about that reward, the benefit, right? What do they receive in terms of compensation and it's not an easy task to say, here's what your job entails in terms of fair market. We've heard the term fair market value and it's defined in various different ways, but I’m a big believer in that the story matters. The story matters about the position. How long has this position been open? Has it been open for 2 years and they can't get anybody? Has it reopened? It's open for 2 years, it fills, and it's reopened again after 6 months, right? If that's true, that matters. If the position has been open for 6 weeks and they have 50 applicants, that matters. If it's a small group of one physician with the first time he or she is hiring somebody and they're going to offer them a 50% partnership in a year versus 10% versus a question mark or self-private equity, that all matters. If it's a large employer and you're the 27th hospitalist that's joining and the sixth one this year in an expansion, that matters. So, it's not something that’s super easy just to say a hospitalist in Illinois, or a hospitalist in Chicago, the fair market is X, because I think that the story matters and I think it's important that that the physician understand that they can go and they can grab MGMA data or they can go to Doximity, they can get Medscape data, they can call their peers, they can post on social and they can get the median salary for the Midwest region for a hospitalist is X dollars. It partly is applicable but there's so much that goes into the story. Like Dr. Kathryn said, total compensation does matter so if the salary is, say 250, and you have a 6-week paid parental leave policy, that's fantastic, that makes a big difference, right? Again, that's part of the story and that story matters too. I could go on and on for days about how to evaluate a particular opportunity but I would say make sure that you have the story right, make sure that you understand the risk versus the reward to figure out, again, to go back to Dr. Kathryn’s point, if I'm a surgeon and I’m told calls 1 in 4, but my contract says it's equal, and I have a partner that goes out on maternity leave, and another partner retire early and I’m doing call 1 in 2 with the expectation of 1 in 4, and I’m not getting paid any more, or maybe I am but I just don't want the extra work, that level of risk should be baked into the contract in a higher reward if they're not willing to document call. So, I think once a physician can establish all of those risks, if you will, they can come up with a reward. I do think having somebody who can guide the physician through that process with data and can help them evaluate and provide creative solutions to the salary is X, the RV bonus is Y, there might be other things that the physician could propose to evaluate it. I say all that by saying it's not as easy as just grabbing a data set or looking at the recent survey from whichever organization and say, the median is this, the 75% percent is this, I want to receive that. I think it's a much more intricate process. And of course, it changes over time so if you sign a 3-year contract, to Kim's point, it might be a 90-day contract, even if it says 3 years but how do you look into the next 3 years and make sure that your contract keeps up with the price of fuel, or the price of milk, or the price of tuition, or whatever it is. There's no easy way to answer the question, I guess, as to say, how do you set what is reasonable and fair for a physician? I think it's all about the opportunity, it's all about the story. It's very important to have access to data. And again, we talked earlier about having multiple opportunities and multiple offers and I think this is one of those areas where if you're interviewing for hospitalist positions in Illinois or in Chicago, specifically as an example, and you're seeing there's a fairly tight interval in terms of where the pay is and you've got an outlier either way, it would pose a question mark to us.
And then the last thing I’ll say is, look at total compensation. So maybe the salary is one thing but maybe there is not a student loan reimbursement, maybe they do have a higher amount for CME, or their holidays are baked into their 25 days of PTO versus in addition to 25 days of PTO and an extra week to see any. Maybe they have things that you care about like flex time, maybe you can do for 10 days versus 5 days [inaudible]. There might be a call burden, that's important, there might be a quality bonus that has certain metrics that may or may not get paid out based on how long you're at the position and what their fiscal year looks like. I think it's important to look at total compensation from retirement accounts to what you have for your health insurance. I remember 2 years ago we were helping a physician through evaluating a position and she got almost all the way to the end and we said, make sure you understand the benefits and figure out what it's going to cost. Well, she looked into just the monthly cost of the health care benefits, and I want to say it was $1,400 or $1,600 as a W2 employee just for the benefit. And so, you start adding that up to a practice that says your benefits are taken care of by us and your family can be an add on, and that's a $15,000 delta right there. All those questions matter, and I think as a physician is evaluating the opportunity for what's considered fair, everything from the signing bonus, the relocation amount, the vacation time, all of that stuff should go into the equation as they calculate what they feel their time is worth and how they balance that risk and reward equation.
Michael Atkinson:
The total package and understanding the story behind everything really that it comes down to, not just the black and white compensation plan.
Kim Stanger:
Could I jump in there just with a couple of thoughts, too? I appreciate everything that Jon said but remember that this is not necessarily static. It's true, you go in there with your compensation plans, a couple of things that you might be able to do is to negotiate some kind of a base with a productivity compensation component on the other side. Now it's going to create some risk for you, but on the other hand if you're concerned about not being compensated fairly, if you can negotiate a work RVU bonus or a collections bonus or whatever it might be that allows you to get that upside then that might help alleviate some of that risk. The other thing, too, is, if you go in there and you do an outstanding job you ought to be compensated for it, right? And there's nothing that prevents you from going back, given the new Stark regulations that generally limits you from going back and negotiating additional compensation or negotiation additional terms afterwards. As I mentioned, almost all the contracts will have a 90-day out provision so if you don't feel like you're treated fairly you can always exercise the 90-day out provision or tell them that for these reasons we feel like the compensation is no longer fair, we think that we got to make these decisions. I guess my point is just because you signed on doesn't mean you're necessarily stuck there. If the circumstances have changed, or you've established yourself as extremely valuable to the organization such that you have leverage to go in there and try to renegotiate the terms of your agreement.
Jon Appino:
I think it's a great point, Kim, and the one thing that we encourage physicians all the time to keep up on what fair market value is for their particular specialty, and know what those expectations are, and don't just settle in. We see a lot of contracts; they might be 3 years with the 90-day provision and then that are just evergreen, they automatically renew every single year, year after year after year. And we talk to physicians who will call and they'll say, I've been at this position for 7 years, and I love my position, and I love the patients, and I feel like I am needed, but I haven't had any updates to my compensation in 7 years; should there be? And so, I think it's a great point when the answer is yes. Let's make sure that we're raising our hand every so often and say, hey, I’d like to come in and talk about my performance and how I’m doing and maybe have an update or two to the structure.
Michael Atkinson:
Great points on that. Before we go to our next question, we're getting a lot of questions coming in from our audience and we will get to those at the end. Also, all the questions that come in through the webinar, we will answer and send out as well and respond to all of those, so we will get back to you on all of that and take some questions at the end. Kim, I'd like to come back to you for a second about contracts, not everything is negotiable in a physician contract. What are the things that employers are often unable or unwilling to negotiate? What are those things and why?
Kim Stanger:
Sure. So, the things that they can't negotiate are pretty much the stuff that's required by the applicable laws and regulations, particularly Stark and the anti-kickback statute. Stark is, for those of you who don't know, it's the Federal law that says, if a physician has a financial relationship with another entity, like your employer, then you cannot make referrals to that employer, and that employer can't bill for the services unless you've structured the arrangement to fit within certain regulatory requirements. When it comes to the regulatory requirements for employment contracts or independent contractor arrangements under Stark, there are certain criteria that the employer has to satisfy. For example, the most important, generally, the compensation has to be fair market value. It can't be based on the volume or value of referrals, so you can get paid based on services you personally perform but you can't get paid based on services that you refer or generate for the hospital that you're not personally performing, or the other health system, or whatever it might be. The compensation generally has to be set in advance, so not prospective, and the overall compensation package has to be commercially reasonable. Now, that's if you're relying on either the employment or the independent contract or safe harbor. If you're just going into a group practice, the group practice actually has a little bit more flexibility. They can pay based on productivity. They can also pay based on a share of profits, so they could do some kind of profit sharing. But even then they're limited in the structure. If they're going to pay purely eat what you kill, then generally that pool for determining eat what you kill is, they've got to have at least 5 physicians in that pool so it's not a one to one relationship. So, the bottom line is your employer or the person within your contract, they're going to be limited, if they know the law, they should be complying with the law, they're going to be limited in how they can structure that compensation arrangement. You may not like it and you may not feel it's fair market value, but they're limited in what they can do on that under the Federal anti-kickback statute, similar requirements. Generally, it has to be, again, fair market value, it has to be commercially reasonable, can’t be based on the volume or value of referrals, at least when it comes to independent contractor relationships. So those are most of the things that they don't really have flexibility, they've got to stay within those regulatory limits. Almost everything else, they probably could negotiate if they want to negotiate but they may not want to negotiate, or they may not feel like that they can for the reasons that I mentioned earlier. I mean, you're not the only physician there. If they've got a whole bunch of other physicians and they give you a really sweetheart deal, that's going to create a lot of problems with the other providers. I mean all the contracts, they all have confidentiality provisions, right? But word always gets out and so people know what other people are getting, and so they may be unwilling to make significant changes to terms that could affect other physicians, including things like scheduling or stuff like that if your favorable contract imposes a burden on another physician, that could create issues. So those are the things that they may be less willing to negotiate, but again, it comes down to market power, right? Bargaining power. If they need you then they're going to be more willing to make concessions to you if they can distinguish your services from those provided by other physicians then that allows them to justify what they're doing for you versus others. So, it really is a matter of just making yourself really important and justifying why they should treat you differently in these types of situations.
Michael Atkinson:
Higher value, higher return, right? Let's see here. Dr. Kathryn, what are your best practices for completing a successful negotiation and where do you see negotiations fail most often?
Kathryn Sarnoski:
I would say, to have a successful negotiation give yourself time and stay calm. So that's where I would suggest starting. You don't want to go in with anger, desperation, confusion, just trying to make sure you're taking that time to do your due diligence, ask your questions, even maybe before you start asking for what you need. Just understand the whole picture so starting there. I think it's also really important for physicians to take the time to know their own goals and their own non-negotiables essentially for the contract, because as Kim said, the hospital is probably going to have their own and it's totally reasonable for you to have yours too. You're looking at this job for a reason whether it's growing a research career or it's based on location or it's based on compensation, whatever it might be, it's important to remember why you're looking at that job and what you need out of it. And as you're going into the negotiations, staying true to yourself in that sense. Go into all of the talks really listening to your employer, too. I mean we don't want to just sit there and spit out, as I said it, like your goals and values and list all of that and just tell them, yes, I need this, this, this and this, and then they say something back and you didn't listen. You're like, no, no, no, I need this, this, this and this. That's not really going to get you anywhere. So, taking the time to hear what they have to say in response and maybe their explanation for why they can or can't offer what you're asking for. They might give you a hint of like, Kim said, they're not going to budge on that compensation because of those Stark laws, because of that fair market value, they're not touching it. They know it's compliant and they don't want to risk it being noncompliant. Well, they might offer you a little heads up on, we're starting a student loan repayment option, or other areas that might be helpful, or hey we could throw in a couple of extra days of vacation, or maybe you have to ask for that, but just taking the time to hear what they're saying so that you're not just hitting your head against a wall asking for the same thing once you've already realized that's not going anywhere. So that's really important so don't miss other opportunities. You might not get exactly what you thought you wanted, but there might be an equally positive outcome available.
Going into the talks with data on your side whether this is a new job or you're renegotiating. When it's a new job, just knowing what all other offers are out there, what maybe that MGMA data is, or the AAMC data if you're looking at an academic position. What other providers are getting paid in that region for similar work, that can be really helpful. And when you're renegotiating bring to the table everything that you've already brought to the table for them. What makes you so valuable? Your patient reviews, your RVUs, your surgical outcomes, whatever that might be, that can be really helpful information to bring as well giving them a reason for why you're asking for what you're asking for.
I also think it's really important to be successful is to practice negotiating. I mean, we all became physicians because through lots and lots and lots of practice we had to do a ton of reading, we had to do a ton of time on these awkward fake patient encounters, and we can do the same thing negotiating. There's some great books out there. There's some great courses. My favorite book to start with, if anybody has ever had any interest in looking into negotiating is, Never Split the Difference by Chris Voss. I think that's a really, really good book for reading or audio book. He has a master class too. His resources are exceptional, and that can give you some ideas. You can start practicing on your next car purchase, on your next apartment lease renewal, it doesn't have to be the job. It doesn't have to be something quite that big. If you're traveling, some areas are really open to negotiating on what you're purchasing, so really practice that skill as well.
In terms of where negotiations fail, I think that's a tough word to use because I don't know that I've ever seen one ever be a “fail.” I don't really think of it as a win-lose. Everybody is trying to come to the table with a shared goal. I've never seen, and not to say it never has happened, but I've never personally seen an employer walk away from a potential applicant. Generally, where I see the negotiations come to a halt and maybe somebody does walk away from the position is when the physician came in knowing what they needed, knowing what they wanted, knowing what terms were really important to them, trying really hard to negotiate those, and recognizing that this employer was actually just not going to share some of those, or maybe just one of those values, and they can recognize, I don't think in the long run this is going to be a good fit for me, and they’ll turn and look for another opportunity. I don't think it ever burns bridges or breeds bad blood or anything like that. I think it's just really important to be able to have those honest conversations.
Kim Stanger:
Along those lines, I think those comments were really good. Where I see a lot of these things break down is when the communication breaks down, when egos get in the way, and it's like, well, you wouldn't give me this, then, I’m leaving. Right? But usually there's ways to skin a cat another way, right? As the others have mentioned, look for other opportunities that can help you get where you need to go and be willing to be open, be objective, don't let the egos get in the way. Maybe you can't come to terms. That's fine. If you can't, that's fine, that's what it's supposed to be. But usually, reasonable people can come up with a way that they can address those concerns and hopefully make the deal happen. A lot of times the physicians, they don't like to do negotiating, that's not really their forte, and that's where an attorney or somebody else maybe can help them kind of play bad cop a little bit. The other comment is you don't have to make the decision right there, right? If something's proposed to you, you can always say, okay, let me go back and let me think about that, and then you can go back and you can look through it, weigh it out in your mind. Don't feel like you have to make a decision right there at that particular moment in time. Give yourself time to think about it and then go back and respond. I've seen that be helpful in trying to come to a resolution or a solution in some of these situations.
Jon Appino:
I think those are great points, Kim. The other thing that I’ll throw out there, we always get questions from physicians on, okay, here's the points, and then now what? Can I send an email to somebody? Because having the conversation can be awkward, like Dr. Kathryn said. And so, knowing who should you call? How should the conversation go? I think Kim mentioned earlier, how do you send some documentation and follow up by email later on? Not just fire an email that says, they're offering 200 and I want 250, and I want tail covered, and I want an extra week of vacation, thank you. It's much more of a conversation. And I think Kim mentioned, and Dr. Kathryn as well, when communication breaks down is when sometimes the deal can go south, and having the dialogue instead of something like an email that just goes forward, I think is very important as well. Figuring out, are these things that I’m asking the recruiter, are these things I'm talking to the service line manager, are these questions for the CFO, or the attorney at the facility, or a little bit of everybody? I think it's important to delegate which questions are for whom and who the right contact person is for that conversation.
Michael Atkinson:
That’s a great point. I think often in the world today we’re so quick to send a text or an email or not actually have that conversation and build that relationship right? It's another opportunity to build that relationship and understand where both of you are trying to get to. A great point, great points. When could a physician seek legal counsel versus maybe just having a contract reviewed?
Jon Appino:
I mean, every contract that comes to our firm is looked at by an attorney, but as far as like having something specifically that you would need like a state-based attorney for, obviously state regulations and laws change quite often so having a state-based attorney can be a very positive thing in many cases. If you need language written, redlining a contract, or creating language from scratch, is something that obviously you need an attorney involved for to write legal language. I would be curious as to Kim's perspective on this one as far as employers. It's been our experience that a lot of employers don't want the physician or don't want the lawyer to draft language, they'll prefer to draft it on their own and put them in the contract. I'd be curious as to Kim's perspective on that with his experience. But I think if you’re looking to have legal language written, that would be something that you would need a state-based attorney for. I also think if there's of course any disputes, handling disputes in a court would of course be something that you would look to as state-based attorney for. Analyzing compensation, balancing risk, reward, all of those things can be done in a variety of different ways, but those are some of the examples where I think, hey, having a state-based attorney is a fantastic idea.
Kim Stanger:
I’m obviously biased, being an attorney, but I do think that the physicians need to, before they jump into any contract, they need to understand what the contract really requires, and understand the important points that should be important to physicians that they may not see. Now, an attorney can help him with that. There's a ton of tools that are just available on the internet if they just simply search for guidance. I noticed that CHG has some of those materials available that have deal points that you should consider when you're negotiating your contract. So, at the very least, physicians should do some research to identify those things, because it will point out red flags or negotiation issues that the physician themselves might not have ever recognized but could be very important in the process. I get a lot of calls when I'm representing physicians where they will ask me just to review their contract. Usually what I’ll tell them is, look, it's a large system, they're likely not going to do a lot of negotiating with you on this, but what I can do is spend a half hour, read through the contract – because most of these are pretty standard – read through the contract and point out red flags and then you can decide where you go from there. If you feel like that that's an important issue to you, then fine, you can go negotiate or we can help you with it. If it's things that don't really matter and you're willing to sign on the line and the risk is acceptable to you, then that's fine, too. But if you are going to hire an attorney I would make sure that you get a health care attorney who is familiar with these types of contracts because in the long run they will see issues that others might not see, and they'll be able to handle it more efficiently than others might. So, do you need an attorney? Not always. But if you're going into this thing, especially if it's really complex and you're not as astute or sophisticated, I think it's probably worth talking to somebody even if it's for a half hour or an hour, it’s probably money well spent.
Michael Atkinson:
No, absolutely, Kim. I think the key there is a health care attorney that looks at these types of contracts all the time. I can’t tell you how often we see people saying, “oh, I've got a family friend who's an attorney.” It's very different, right?
Kim Stanger:
Yeah, they have no idea what Stark or the anti-kickback is or any of those things.
Michael Atkinson:
Right. Exactly. And you want to make sure that you’re in the best hands and you’re going to get the best contract in hand. So, if they do need to seek an attorney – I think you mentioned some of the state-based attorneys, what is the best way for them to choose an attorney?
Jon Appino:
Is this for Kim or for myself? I'm sorry.
Michael Atkinson:
It was for you, but I mean if Kim, if you want to add to it, absolutely.
Jon Appino:
I would say, find somebody who, again, has lots of experience with no conflicts with the employer. So, somebody who hasn't reviewed, who doesn't review – you don't want a family lawyer, maybe, to review your physician contract. You want someone who understands physician lingo, physician language, RVUs, compensation, risk management. But then, of course, one thing that can be sometimes challenging is finding one that doesn't have a conflict of interest with the potential employer that you're seeking. That would be the way that I would advise a physician to look into it. Kim?
Kim Stanger:
What I would do is just call your local state medical association or your county medical association because they will know the attorneys out there who represent physicians. And they usually have a laundry list of people that they will recommend to help physicians in a particular state or particular county, help them negotiate. So just reach out to your local association.
Michael Atkinson:
Local association, perfect. Thank you. And then last question, I want to open this up for the group, any other advice that you would have for physicians when they're getting ready to negotiate a new contract or agreement that we haven't spoken about?
Kim Stanger:
I think we covered a lot of the many issues. You probably won't remember these. But again, I would go on and just look for some resources either on CHG’s website or online about tips for negotiating your contract. And it'll have a lot of the things that we've talked about already, things that you may not have remembered. I’d probably start with that and then build from that.
Michael Atkinson:
And obviously we're going to be sending this out after the webinar to all those people who registered. We have a few minutes left to take some audience questions so just to switch over here. We have a question from one of the registered participants. What advice do you have in terms of contract negotiations for physicians taking a J-1 waiver visa job and then getting the hospital to file for a green card after completing the three years waiver?
Jon Appino:
Would this be an immigration attorney question?
Kim Stanger:
I mean, Jon, the doctor may have their own thoughts on that. But for those situations, I mean, that's certainly something that you could negotiate with the hospital and talk to them. You'd probably want to talk to your own immigration lawyer to make sure that you understood what the rules are, but that's pretty specialized. When those immigration issues come up I call my partner because the immigration stuff, it's fairly specialized.
Jon Appino:
I would say, I mean, in terms of like timing, we'll see language quite often as far as who's paying for it and the timing of all of it. I think, to Kim's point, there's multiple attorneys involved at that point as far as filing on the employer side, sometimes the physician has their own as well. But I think making sure that it's very clear in terms of – there are certain requirements that we see in J-1 contracts like a 36-month term. Some allow no cause terminations, some don't, depending on which state you're in, there's certain provisions that a J-1 contract requires as far as timing and working full-time with dedicated location. But when it comes to the timing after three years, we'll often see language that does say, this is the process for filing, this is the payment, and how it's going to be funded at that time. So I think that a physician should definitely look into the future, make sure that all those things are lined up, both for the first three years and then what happens afterward.
Michael Atkinson:
Definitely additional attorneys with the specialized knowledge of immigration needed in this situation. Another question, what are the three questions you should ask an attorney prior to hiring them to review your contract?
Kim Stanger:
Well, from an attorney's perspective, I can tell you. One, do you do this on a regular basis? Two, what are the charges? What's your hourly rate and how much time and what’s it going to cost me? And three, what product am I going to get? You don't need to, nor do you probably want to spend $2,000 to have them redline the whole contract at that point. I would have them read the contract first then come back and talk to you. A lot of times, physicians are scared to negotiate or ask questions about their attorney concerning the cost, but she should ask that upfront. So, I would just make sure that, one, they're qualified and two, you know how much it's going to cost you and what kind of product you're going to get as a result of it.
Michael Atkinson:
Experience, quality, and cost, right?
Kim Stanger:
Right. And no more than you need.
Jon Appino:
I would also throw in there to make sure that the work – to Kim's point – as far as how many they do, but also that they're doing the work in-house, that is not being outsourced anywhere, that the firm that you're actually hiring is the firm that's actually going to do the work. And so that's another question that I feel would be relevant.
Michael Atkinson:
Great advice, Jon, as well. Thank you, Kim. They ask, can we discuss the things to consider when moving from an employed physician to a partnership in a small practice. Is it typical to accept partnership without seeing any financial records of the practice?
Kim Stanger:
I would not want to do it.
Jon Appino:
Yeah. We’ll see partnership contracts all the time, as far as, like an associate contract, and you might be an associate for one year, two years, three years. Again, lots of questions should be asked upfront if that's a path that you're looking at going down. But if you are able to make whatever metric they're looking at to offer partnership, that would be a point where – we've seen partnerships work where not a whole lot changes, the contract simply goes to a production model, and then it will go to buy-in and you maybe get to vote at the annual meeting. And then we've seen contracts, of course, where there are hundreds and hundreds of pages, and there's millions and millions of dollars’ worth of equity on the table, and those are totally different dynamics with lots of people needing to be involved. But I would definitely, if I was going to invest in a business, which I would assume the partnership would be, that’s something that I would definitely want to look at. Look under the hood and figure out how much debt load is there, if there's any lawsuits, if there's any HR pending issues, and how much everyone's getting paid if you are now going to be fronting some of those dollars. If an employer is unwilling to share some of those documents or details, that, to me, would be a red flag, and I would probably look elsewhere for the next step in a career.
Kim Stanger:
If they're not going to share that they really don't want to be your partner. If you're going to step into that, remember you're going to be incurring liability or potential liability especially if the thing wasn't structured properly. So, I do think that you need to do your due diligence. Looking at the financials is one thing. I think it's also looking at their other potential risks, compliance issues, and those other things, too. You may want to look at all of those things so you don't step in it.
Jon Appino:
And I think when it comes to partnership, even on the front end, Michael, is if you're looking at joining a physician or two physicians and they've never brought on a partner before, I think that's a really good time to ask a lot of these questions. Would I be an equal partner? What are the different types of voting shares? Would I be a 10% partner? We often talk to a physician who is joining one other physician and they are expecting to be a partner inside of two years. They assume it'll be a 50/50 partner and once they start asking questions they realize that the actual owner of the organization is only willing to give up 10% control, and they don't even know how they're going to value the organization. So, those are things that can be asked on the front end, even though we wouldn't expect a partnership documentation or valuation on the front end, those are a lot of questions that can be asked before you jump into the associate position that could potentially lead to the partnership job.
Kim Stanger:
If you think it's important to look at a contract before you get into an employment situation, it's many times more important to look at it before you get into a partnership. Just the risks and the consequences are so much greater once you step into that partnership role. You can't just up and leave, right? You may have those continuing law obligations. I think before I ever got into that kind of a partnership I would get a qualified attorney to help me to look under the hood and find out, okay, what are your obligations, what's your risk, what's your exit strategy? Look at all of those types of issues.
Michael Atkinson:
That's a great question because I think, Jon, you may have said it earlier, it's clearly understanding your contract, right? And a lot of those details, we see partnership in the contract but what does that mean? Don’t assume, right? That's, I think, the takeaway. Don't assume. Let's ask those questions and understand what that looks like years from now.
Michael Atkinson:
Let’s see here. The last question we have for this evening from our audience. How much time, as in days or weeks, do you spend negotiating a contract? What is the standard amount of time for a physician to expect to spend on negotiating your contract and how long should employers give physicians to review and respond to contract concerns? That's quite a lengthy question so let's break it into two parts. What is the standard amount of time a physician should expect to spend negotiating a contract?
Jon Appino:
Kim, I'd love to hear your perspective on what an employer typically expects out of the physician client as far as turnaround on time or deadlines, if you will.
Kim Stanger:
I think, if you can, you probably want 30 to 60 days realistically because you kind of have the initial dance to talk about terms. You provide a written contract, that goes to the employee, the employee then shares it with the attorney, the attorney makes comments, and there's time for a little bit of give and take. I think 30 to 60 days is probably fair. More time is maybe even better if you're already an existing employee and you're trying to renegotiate, then you may want to do it for the 90 day period so that you can always terminate if it doesn't work out. I would give yourself as much advanced time as you can. I don't think it's fair for the employee to expect to get a turnaround in two or three days and probably it’s not fair for the employer to expect that either.
Jon Appino:
It's amazing how many times at Contract Diagnostics we’ll have a physician message us on a Thursday or a Friday and say, I just got an offer. They said it's due Monday. And I say, hold on, this is a flag in itself. What employer gives you a weekend to do all the due diligence, have the contract professionally reviewed, and come back with questions and sign it. It doesn't make sense. I don't think a physician wants things to drag on and on and on. The last thing you want is to spend 60 days working or 90 days working on something and the negotiations fall apart, which is one of the questions earlier tonight. And then all of a sudden, you're thinking, okay, I'm finishing my training in 4 months and I don't have a job. We typically see somebody who gets a contract, sometimes the physician, they're busy, and it can be a daunting process on having it reviewed and understanding it so they might take a week or two where it sits on their desk, and then they'll call somebody – us or somebody – and they'll say, I need this reviewed, I've had it for two weeks, I need it reviewed in the next week or so. And so, I would say from the time that you receive a contract you should expect to have that conversation with the employer maybe inside of two or three weeks. Maybe do some back and forth in a four, five, six week period would be a reasonable expectation to have everything kind of shored up. And then one other thing, before we catch Dr. Kathryn’s perspective, as far as like when people start looking for jobs, we used to see people start looking for jobs in January and February as far as new trainees for their June finished day. Then we started seeing people look in December, and then it was November, and then we saw October, and now we're seeing people start to look in September. We are actively doing 2024 contracts. We've even done a 2025 and two 2026 agreements. So, physicians are starting to look a lot more into the future in terms of, I want to know where I'm going, I want to have my position lined up, and we're starting to see that a lot. So as far as like when, and obviously they may not be in as big of a rush, but I’ll leave it at that and I’ll go to Dr. Kathryn with maybe from a physician's perspective with everything else going on in your guys’ lives, what do you think was reasonable as far as I get a contract, and I have it reviewed, I have a conversation with the employer and my goal is to have it signed, or to walk away. What would be reasonable from your perspective?
Kim Stanger:
If I could jump in there just for a quick second to make a comment on what you just said, Jon. You're right. Given the demand for physicians you do see these contracts – I mean, I do a lot of recruitment agreements that are a year or two out, and as a physician you might be able to negotiate additional benefits including some kind of a stipend to help you during the residency program and those types of things, too, and negotiate in advance of your actual starting of the employment. Now, if you don't go with them there's usually some kind of a repayment obligation, which is only fair, but I just wanted to point out that if you're going to negotiate something a year or two out, you may be able to get some additional compensation or a stipend to help you in the meantime. Sorry about that.
Jon Appino:
No, it brings it back to that story. If you’re taking yourself off the market, you’re risking potential better offers and so, for that risk on your end there should be a higher reward and stipend agreements through recruitment agreements or other various vehicles, I think, are a fantastic idea.
Kathryn Sarnoski:
And then just from the physician perspective, when you think about how long it takes to actually find a job, this is where some of these termination numbers probably came into existence. 90 days, if you give your notice or they give you notice, it's probably going to take you at least those 90 days to find another job, to get credentialed, to get licensed in a new state if you're moving, so we can't expect to go from contract to signed overnight if we're actually taking our time. So, from looking at the job, you've got your site visit, you're starting some of your negotiations there, 20% of the time you're going to get a letter of intent and you're going to want to spend some time on that letter of intent. That's going to have a lot of the contractual information listed out in it, and you want to make sure whatever gets transcribed over to the contract is what you feel comfortable with and what you were envisioning as well. So, you're probably going to be spending a decent amount of time, a couple of weeks, maybe, on that letter of intent which will save you some time on the contract end because you've actually probably negotiated a lot of those terms ahead of time. The contract itself, I've certainly seen people turn them around in a couple of weeks because maybe they did all of their due diligence upfront. They had all of their questions answered upfront and the employer did a really great job getting all of those expectations into the contract, but generally you're going to need to spend some time back and forth. You probably have vacation, you're on call, you're in clinic, you're not going to be responding to questions immediately, just like the admin team or the HR person, or the legal representative from the employer side won't be responding to your emails overnight. So, I would say, just when I've negotiated my own contracts and then the physicians that I've worked with on theirs, easily that 30 to 60 days. I've seen some go up to 3 months, and at that point, like Jon said, you certainly don't want it to fall through unless you have that budgeted time but give yourself that expectation of a month or two to feel like you have really explored this and feel really comfortable that everybody is really in agreement on their contract and this position moving forward.
Michael Atkinson:
Great feedback. Thank you, Dr. Kathryn. We've explored a lot of different topics today and I’d like to thank you for sharing and having this interesting discussion today. Thank you for our participants with us as well. Thank you all and have a wonderful evening.
RELATED: 11 things every doctor should know about physician employment contracts