Contract Negotiations

Define Your Goal

  • Is your focus increased compensation?
    • Potential for earnings vs. guarantee
    • What is your “No less than,” figure.
    • What would be an “acceptable” offer
  • Is your focus a lifestyle change?
    • Shorter hours, less call, no rounding, move from owning or managing a practice to working as an employee
  • Getting well financially?
    • Retiring student loans
  • Determine what are “deal killers” and what is negotiable
    • The “deal-killer” list should be much shorter than the list of negotiable points.

Do your Homework

  • Objectively research the need for your specialty nationwide, by state and then in the locale where your search is focused
  • Ascertain the physician/patient ratio in your search area
  • Find out how long patients are waiting to see a physician in your specialty
  • Find out how long a potential employer has been attempting to fill the vacancy
  • Develop a fair understanding of your financial worth to an employer. Be prepared to illustrate your value to the organization you wish to join.
  • Realistically assess the leverage you have going into the negotiations. You may not be as sought after as you think, or you may be in a position to “wheel and deal.”

Avoid Pitfalls

  • Leave your ego at home. When emotions get involved, bad business decisions follow. This is business; you are a well educated professional, don’t let your emotions reduce you to a pouting, temperamental teenager.
  • Don’t overreach. (Letting a compensation package worth several hundred thousand dollars in first year earnings fall apart over a demand for $200 in professional journal subscriptions. It’s been done.)
  • Don’t be shy. If you have a reasonable request, ask. This is your opportunity to receive the best deal possible. Once the contract is inked, your leverage is diminished.
  • Never commit to a handshake deal. If it isn’t in writing, it isn’t real.


  • Determine what a fair offer is for the area
  • How you will be paid is critical
    • Salary, income guarantee, hourly rate, RVU formula
    • Generally the more complicated, the less transparent the plan, red flags should pop up.
    • Is a portion of the “salary” or income guarantee actually a loan?
  • Risk should be shared. “A good contract hurts each party equally.”
  • Remember, in the Primary Care specialties, many moves are lateral or worse in terms of compensation. A new employer’s starting salary rarely matches income levels built through years of patient care in one location.


  • Consider the value of the benefits package as part of the entire package.
    • A lucrative pension plan or extremely comprehensive medical insurance offer may more than offset a starting salary less than you had hoped for.
  • Bonuses for sign on, moving, marketing, etc. are one time events and must be considered separately from the salary offer.
    • Ensure you understand how taxes associated with the bonuses will be handled. You could wind up with an unexpected tax bill at years end.

Restrictive clauses

  • Almost all contracts contain restrictive covenants/non-compete clauses.
    • Employer desires to prevent a situation where they have paid to bring someone into the community, helped them weather their first year, only to see them become competition.
    • Avoid a contract with clearly unreasonable time or geographic restrictions. (Most non-competes are for a single year and a distance under thirty miles).
  • Clarify any requirement to share earnings from work done outside the employer’s practice (clinical trials, speaking, consulting, publishing, operating a medical business unrelated to the practice).
    • Some employers will want a share of any dollar you earn.

Legal review

Every contract should undergo review by an attorney with at least a basic understanding of medical employment contracts.

  • Colleagues are typically good sources for referrals to an appropriate attorney
  • Work with someone who can get the job done quickly and who will focus on key issues. Some attorneys will take weeks and spend time changing inconsequential wording (“six to half-dozen,” “happy to “glad” ) as a way of justifying their fee.
  • You want the review done right, done quickly and done by someone who understands the business end of medicine.


  • If you want the position, but there are sticking points; communicate that to the employer. Don’t assume the employer’s first offer is set in stone. Keep talking, stay positive and solution oriented.
  • Don’t let the clock rob you of a position. In recruiting, we have an expression, “Time kills deals.” If you don’t work vigorously to close the negotiations, the process stagnates, the employer begins to suspect you aren’t interested and moves on to other candidates.
  • Remember, if everything works out, you’ll be working for the folks you are negotiating with. Preserve a positive, friendly, professional relationship throughout the process.