Better ways to evaluate, negotiate employment contracts

Before signing an employment contract, reflect on the life you want and what is most important to you.

Kyle Claussen, JD, has seen some surprising things as CEO of Resolve, a legal services firm specializing in physician employment contracts. One of the most shocking was when an employer accidentally sent a job candidate a template that had “Female Physician” in the header.

“There are a ton of studies out there about pay discrepancies between male and female physicians, but it was pretty outrageous to see a specific contract for females,” said Mr. Claussen, whose firm offers discounted services to ACP members.

Most pitfalls in employment contracts aren't quite so obvious, he said, so early career physicians need to be prepared with a basic understanding of how such contracts work—and the earlier the better.

“Negotiations can start as early as your interview. If you walk in and say, ‘My spouse is here and we've enrolled our kids in school here,’ you've already made it more difficult to get changes in your contract,” Mr. Claussen said. “We have case studies showing that people who have more leverage get better offers.”

Candace Sprott, MD, MBA, FACP, a member of ACP's Council of Early Career Physicians, agreed and said starting early means taking a step back and thinking about your job in a broader context. Many people don't have the chance to do this during their medical training because they are so busy, she said.

“Reflect on the life you want to build, and the role work will play in it,” said Dr. Sprott, an internal medicine physician with Kaiser Permanente in Oceanside, Calif. “Ask yourself, ‘What is most important to me? Is it location? Salary? Work-life balance?’ Take your time and talk with the people who are important in your life and who may be affected by your decision.”

It all starts with salary

Salary is typically the starting point and the top concern for early career physicians, and initial offers can seem eye-popping for those coming out of a relatively low-paying residency, Dr. Sprott said. She tells physicians to do some research so they aren't starstruck and have a grasp on how similar jobs are compensated.

“First, narrow it down by the type of practice you're considering: private practice, hospital setting, academic medical center,” Dr. Sprott said. “Then do some benchmarking of salaries for those jobs in the geographic areas where you're looking. Ask friends or acquaintances, join Facebook groups for physicians … I've even found Reddit threads useful for this. Professional societies can be helpful here too.”

ACP's partnership with Resolve includes free access to a salary tool that filters by location and job title, as well as a “contract scorecard” that tells you how your offer stacks up to industry averages. These are, Dr. Sprott added, a “wonderful resource.” (See sidebar.)

Compensation for early career physicians usually includes a guaranteed base salary plus an opportunity for a bonus or incentive. Both the base and bonus often reflect a measure of productivity such as work relative value units (RVUs), which are meant to embody the level of time, skill, and training needed to provide a specific element of care.

“It's entirely reasonable to ask what the base and guaranteed salary are and how they came up with it,” said Luci K. Leykum, MD, MBA, MSc, FACP.

Knowing the financial model of your potential employer is important to understanding your salary, added Dr. Leykum, center lead for the Elizabeth Dole Center of Excellence for Veteran and Caregiver Research, chief clinical officer at Harbor Health, and an affiliate professor at Dell Medical School at the University of Texas at Austin.

“A fee-for-service model is quite different from a Medicare Advantage plan, where financial success is based in part on keeping people well and meeting quality measures. Inpatient physicians, meanwhile, may be paid based on number of encounters, as well as type of schedule, with night and weekend shifts paying more,” Dr. Leykum said.

If an employer provides a salary range for a position, it's smart to ask what makes a candidate fall into the higher end of the range, said Dr. Sprott.

“When they tell you what makes an applicant more likely to be paid at the upper end, you potentially can speak to having the knowledge or experience they want in those same terms,” Dr. Sprott said.

Generally, the employers who are most transparent about how compensation is determined are the least likely to have wiggle room in negotiation, said Dr. Leykum. “They are trying to set something up that works for everyone,” she said.

Getting familiar with the employer and the local market is key, which means reaching out to colleagues, professional societies, or even friends of friends who may have personal insight on the practice, group, or hospital, Dr. Leykum added. “Don't forget to ask about turnover,” she said.

Noncompete clauses

After compensation, noncompete clauses are the second hottest topic for physicians around employment contracts, said Mr. Claussen. These clauses prohibit physicians from leaving their employer and taking another job practicing medicine in a community or region for a certain period. If you leave early, you may be on the hook for paying the employer an amount that represents their investment in you.

Though several states prohibit them, noncompetes are quite common. Even in states where they are banned, some employers try to put them into contracts hoping that physicians will comply anyway, Mr. Claussen said. In general, the clauses are enforced to a “reasonable standard” that is determined by a judge.

“I've seen a handful of ridiculous noncompetes, like preventing someone from working in telemedicine across the entire U.S.,” Mr. Claussen said. “A judge probably wouldn't enforce that, but you still may have to go through a tedious litigation process, so it's best to negotiate noncompetes up front.”

The Federal Trade Commission (FTC) is considering banning noncompete clauses for all professions nationwide and issued a proposed rule to that effect this year. For now, noncompete clauses are one reason it's a good idea to have a lawyer review your employment contract, especially for your first job out of residency, Dr. Leykum said. Fees are usually several hundred dollars an hour, depending on where you live. There are also lower-cost options available through ACP. (See sidebar.)

It's (almost) all negotiable

Most employers expect a certain amount of negotiation, and most things in an employment contract are negotiable, Mr. Claussen said. This includes relocation allowances, vacation time, and call schedules. Group benefits such as health insurance usually can't be changed because they are tied to a plan that applies across all employees.

Contracts for early career physicians are more likely to come with incentives such as student loan forgiveness and signing bonuses, he added. Be aware that the bigger the bonus, the longer an employer usually will require physicians to work for them before they are considered “free” of obligation. Also be sure to know what happens if an employer is subject to a buyout or merger.

“Understanding how the contract terminates and whether you have malpractice insurance and tail coverage is critical,” Mr. Claussen said.

Another element to pay close attention to is the “duties and responsibilities” section of the contract. Many physicians run into problems when things like call schedules and days off change from what they expected, he added.

“They find themselves working full days on Fridays when they expected to work half-days or are asked to go work at two to three satellite locations when they thought they would be at the main site,” Mr. Claussen said.

If joining a private practice, be sure to know the partnership terms, as well as what happens if the practice is bought out before you become a partner. For those in academic medical settings, learn about the time preserved for research and teaching, he advised.

Negotiation tactics

It can be helpful to have a plan B when you negotiate with an employer, a backup job you feel comfortable with that will allow you to walk away from a lackluster offer. Many physicians are conditioned to lead with altruism and may recoil at haggling over money, Dr. Sprott said.

“We need to reframe that mindset to, ‘I deserve to be compensated fairly for the work I do,’” she said.

Friendly negotiations can be a good opportunity to establish a positive relationship with future colleagues and to distinguish oneself in the absence of a long work history filled with personal data on patient volumes and average work RVUs.

“You can frame things in a way that is collaborative. Make it clear you're excited about the position and want to know how to be a good team player,” said Dr. Leykum. “If you are open and genuine, employers will be glad to know that they have someone who cares about their professional development.”

Looking to the future

Once you have gotten the job and are on your way, remember that your career requires active management. Consider evaluating your goals and day-to-day experience every year or so, perhaps around the time of your annual evaluation, Dr. Sprott said. You can even type up a short summary to send to your supervisor in advance, for reference.

“Reflect on your workload, and whether you have adequate time for the types of tasks you are asked to do: clinical care, administrative work, medical education,” Dr. Sprott said. “Supervisors often aren't aware of everything their employees do, and this is a time to establish that and, if justified, ask for more time or compensation.”