Navigating physician contract renegotiation is a critical aspect of ensuring that physicians are fairly compensated and have their needs adequately addressed. As the landscape of healthcare continues to evolve, physicians must take proactive steps to protect their interests and secure favorable terms in their contracts. This comprehensive guide aims to equip physicians with the essential knowledge and strategies necessary for effective renegotiation. By understanding the key elements of physician contract renegotiation, physicians can foster better working relationships with employers while advocating for their rights and professional goals.
The right time for physician contract renegotiation
An obvious time for physician contract renegotiation is when the physician’s employment agreement’s initial or renewal term is approaching.
But physicians should not feel constrained by the term of the agreement – especially since many physician employment agreements automatically renew indefinitely.
You should consider renegotiating if you have had changes in your responsibilities or duties since you signed the agreement. Has your patient load increased? Are you getting more referrals?
If physicians have recently departed, or have announced their departure, your patient load is likely to increase drastically. Similarly, if you have recently been asked to assume increased administrative responsibilities, it is probably a good time to consider renegotiation.
Personal milestones may also trigger the need for renegotiation. If you have (finally!) attained financial freedom, you might want to cut back. Similarly, if you have a child on the way, you may want to have more time with your family. And you may want to “ease into” retirement by slowly cutting back.
Signs it is time for physician contract renegotiation
If you are feeling undervalued for your contributions to the organization, you should consider renegotiating your contract. If you are continually being told “it’s part of the job,” or “the patients come first” then you are probably being taken advantage of.
Administration may try to to guilt you into extraordinary efforts “for the patients.” Remember, if they really cared about the patients, they could hire locum tenens to reduce physician burden.
Perhaps the best reason to renegotiate is concern that you are becoming so over-worked that patient care may suffer. Look at patient care as if another physician were doing it. If a physician with the same training and background as you worked the way you do, would you want them to treat your Mom?
You know very well that a burned out physician doesn’t treat patients as well as a rested one. You are not immune, even if you aren’t aware of the slippage. Continuous 60+ hour weeks will burn out anyone – yourself included.
Of course, if your compensation is below market, it’s obviously time to renegotiate. You can get MGMA data on physician compensation. But you probably already have a sense of what physicians in your specialty are being paid through the flood of recruitment offers in your inbox.
It’s also possible that your current contract doesn’t reflect your current career or personal goals. Don’t assume that less work or less call should mean less pay.
If any of these signs are present, start preparing now. Do not let your discontent fester, or permit a bad situation to get worse.
Preparing for physician contract renegotiation
To properly prepare for a physician contract renegotiation, you should consider the following steps (discussed further below):
- Evaluate your current agreement
- Gather supporting data; and
- Define your goals in the renegotiation
Evaluate your current agreement
When renegotiating a physician employment agreement, assume everything is on the table. Don’t simply try to get a little more pay, or a little less call, or a little more vacation. The whole contract should be reviewed for places it can be improved.
You should evaluate your current compensation, productivity and benefits, as well as the time you have spent with this employer. Is it time for a retention bonus? I believe a retention bonus is appropriate if it has been two or three years since your contract was last negotiated or renegotiated.
Does your current agreement have a productivity bonus? If not, why not?
Many physicians find themselves drawn into administrative duties such as medical directorship, department or division administrative responsibilities, etc. You should be compensated separately for these duties.
Separate compensation for administrative duties is especially important if any part of your compensation is based on productivity. You don’t generate any wRVUs in a departmental meeting! Have you “backed into” a medical director position?
Some hospitals are now paying physicians for resident supervision. Is yours?
Are you being paid for excessive call? If not, why not? Are the call coverage requirements reasonable? Is the call schedule safe for your patients?
You also need to consider your work-life balance. Yes, there is such a thing for physicians. Vacation is a wonderful thing. Are you able to take time truly away? If you are checking the patient portal while on the beach, something needs to give. It shouldn’t be your health.
A key area to renegotiate might be the patient contact hour requirements in your agreement. In the rest of the world, 40-hour weeks are considered full time. If you are seeing patients 32 hours a week, you know that you will still be working much more than 40 hours, even ignoring call coverage.
Gather supporting data
There are many benchmarks out there to evaluate your compensation. I personally prefer Medical Group Management Association (“MGMA”) data, because they provide a separate database for academic compensation. Academics generally accept less compensation, so I don’t like lumping them into the database, as most benchmarking firms do.
But as mentioned earlier, you may not need benchmarks if the job offers that are flooding your inbox look better than what your are making, or have better hours, less call, etc.
You should be getting information on your productivity. How does that compare to benchmarks? If higher, does your compensation reflect that?
MGMA has data on medical director compensation as well as call coverage frequency and compensation. How does your current deal stack up?
Although you have to tread carefully because of confidentiality requirements in most physician employment agreements, you may also want to find out what your colleagues are making.
Patient satisfaction scores can bolster your argument for more compensation, as can your general reputation in the community. Are you the go-to source for information for the local or national media?
Referrals you receive from the community are also a good indication of your unique value. (As discussed below, though, you should not discuss, formally or informally, the volume or value of referrals you make to the institution).
Define your goals
You may want to focus on compensation adjustments. It should go without saying that your compensation (including productivity compensation) should match or exceed benchmarks/market rates.
Your call coverage schedule and compensation should also be in line with benchmarks and market rates. If you are performing medical director or other administrative duties, you should be paid appropriately for those additional services.
You may also want to focus on improving your schedule. This can be done by negotiating a limit on patient contact hours, and putting limits on the total amount of call.
If you are serving as a medical director, it would probably be appropriate to get more CME time and funding to help you improve on the administrative aspects of that position.
Another area of focus might be your general working conditions. A scribe might massively reduce the amount of time you spend charting. Mid-level support may also be helpful.
Bear in mind, though, that if you get mid-level support, you should also be compensated for your supervisory duties (especially if you are being compensated in whole or in part based on your productivity).
Effective physician contract renegotiation strategies
To succeed at physician contract renegotiation, you need to plan your approach, craft an effective communication strategy, and prepare for employer push-back.
Plan your approach
First, prioritize your goals. What is really important to make this position enjoyable (or at least tolerable)?
You want to be clear about your value to the organization. When considering your value, however, never discuss the value or volume of the referrals you make to the organization. That could be interpreted by an over-zealous regulator as a Stark Law violation. Trust me, the institution is well aware of the value of your referrals – you never need to mention them. Benchmarks and job offers are persuasive.
Instead, focus how you can help achieve better patient care and patient satisfaction. Should a physician with your schedule be making life and death decisions? A burned out physician will eventually provide poorer care, and will have less patient satisfaction.
You might also consider timing, although that is rarely the decisive factor in deciding when to renegotiate. A recent award or honor may be a reason to think about renegotiating, and during budget preparation time is always a good time to start discussions. Once the budget is in place, don’t make the CEO have to decide between increasing your compensation and reducing his or her bonus!
Crafting an effective communication approach
When talking to administrators, never forget who is the smartest person in the room. It’s appropriate to insist that you be addressed as “Doctor” rather than by your first name. Don’t fall for hospitalsplaining.
Remember that data is your friend. Use data appropriately, though. Folks in Northern Michigan make more than folks in Manhattan. Supply and demand applies to physicians, too.
Don’t try and compare yourself to other physicians. You are a unique physician and bring special talents – you are not a generic provider.
At the risk of sounding like a broken record, remember that you, too, are human. A content and rested physician will provide better care, increase patient satisfaction, ensure more efficient care, reduce turnover, and make physician recruitment easier.
Physician recruitment is expensive and time-consuming. Keeping the physicians happy will obviously reduce turnover, but it will make recruitment easier as well. Would you have joined an institution if the physicians all looked like death warmed over?
Addressing employer pushback
Remember that this isn’t about you, it’s just a negotiation about fair compensation and working conditions. The hospital doesn’t hate you, they just want to make a lot of money from your efforts.
It is often difficult for physicians, who are used to giving orders, to practice active listening, but it’s important to do so in physician contract renegotiations. You can more effectively address employer concerns if you are focused on what they say.
For example, if they are concerned about you maintaining productivity, you could suggest that paying you above median in recognition of your higher productivity can have guardrails to protect the employer.
You could receive a salary in line with your percentile of productivity, but only get a bonus if you exceed this year’s productivity by 5%. You could agree to a salary reduction or claw back if your compensation falls below 95% of this year’s productivity.
If they insist that the current physicians must share all the call “for the patients”, you can inform them of this new invention called “locum tenens.” Again, nobody wants burned out physicians. It’s in both parties’ interest to make sure patient care is not being jeopardized.
If they tell you that the other physicians have all agreed to this salary, call, etc. you can congratulate them on striking such a great deal. Just because the other physicians are expected to work like dogs does not mean you should, however.
Avoiding common pitfalls in physician contract renegotiation
Don’t go into negotiations blind – be aware of benchmarks and/or comparable job offers. Know what your colleagues are making.
Make sure you are aware of what your contract provides. Too many physicians don’t read their contracts, and therefore don’t get what they are contractually entitled to. Maybe renegotiation isn’t required – the employer just needs to honor their contract.
Don’t have unrealistic demands. If you want compensation in excess of median, be prepared to demonstrate that your productivity, excess call coverage, administrative duties, etc. justify this compensation.
Perhaps most importantly, prioritize what you want. Don’t expect to get increased salary, increased call compensation, less call, more CME, mid-level support, a scribe, decreased patient contact hours and medical director compensation all at once.
The bottom line on physician contract renegotiation
Renegotiation is a powerful tool to align your career with your goals. Never forget how valuable you are, and how much your colleagues and patients depend on you.
If you have a physician employment agreement you would like us to renegotiate, you can start your review here. We can also provide a free consultation to talk about how we can help. You may also find my book on physician employment agreements helpful.
