Contract Negotiation Tips for Resident Physicians | Physician Contracts
Today I will talk about contract negotiation tips for resident physicians. An actual employment contract, not a resident agreement, is something that no resident has much knowledge of in my experience. I mean, a large percentage of my contract reviews are with residents or fellows just coming out of training. They have this 20-page contract. They have no idea what should or shouldn’t be in it. Or what the terms are. That’s a large majority of people that contact me. We just kind of work through, okay, what is in here? Something that also comes up is, well, what is the strategy behind negotiating a resident’s first employment agreement?
What to Expect for Residency Salary
I wish I could give a one-size-fits-all analysis, but I can’t, so we’re going to work our way through it. First, any negotiation is simply based upon leverage. Does a physician have leverage or not? And this goes for any negotiation. The individual or entity with the most leverage can get better contract terms. In some specialties, a physician coming out of training doesn’t have leverage. Those specialties would be any specialty where one has to build up a patient base. Primary care, peds cardiology, dermatology, anything where you’re not just doing shift work in the hospital, or maybe some surgery. That type of thing.
If you’re not from the area, you have no ties to the area. You have no existing patient base. There’s not much value you provide to the practice as if you were. Let’s say you were an established physician in the area. Then you have an established patient base and a referral network moving to a new practice. You have much more leverage because you’re bringing in a large patient base. If you’re in a specialty where you must build it up to practice, usually, that takes 12 to 18 months. That means you won’t be that profitable in year one. You don’t have as much leverage to get the type of contract that you may necessarily want.
Now, that doesn’t mean you don’t have any leverage. Some practices have an absolute need for a new physician. And the reason why that would be is one. There are just volumes that are so high, they need help. Or two, they could be in a location that’s hard to staff.
Consider the Location of the Employer
Rural communities are always tough to staff to. I guess the weather also affects that. If you’re moving into a community that’s hard to recruit to, you have more leverage immediately. One misconception is that the salary doesn’t normally reflect the salary for physicians moving into high-cost living areas. I’ll use my hometown, Scottsdale Arizona, as an example. Scottsdale is a very desirable place to live. It’s a great suburb of Phoenix. The weather is great, and many people want to live here. Because of that, the salaries are depressed a little bit, simply because more people want to live here. The same goes for California, San Diego, and LA. Like the warmer climate locations, Miami and Florida. They have more competition amongst physicians for those jobs, giving you a bit less leverage.
Tips on Negotiating Physician Contracts
Some tips on how to get beyond that. One, you need to talk to your classmates, those in your residency, maybe those in fellowship. What do your job offers look like, and what are they offering you? What’s your base salary, the signing bonus? Lastly, what’s the productivity compensation down the line? Get in there and compare offers from the other people in your residency program. You’ll get a better idea of the average of what the employers are offering.
Two, if it is a difficult place to recruit, you need to let them know that you understand. And say, I’m not trying to be a jerk, but I don’t necessarily have to live here. I have no family here, no community ties. It’s remote. Because of those things, I would expect to make a little bit more.
You can attempt to Google some of the industry-standard compensation surveys. The MGMA and some of that data are not available to the public. But you’ll usually find a couple of years old, which will give you a better indication that this is normal. Now, the comp in there, the comp averages, and those surveys are averages. So, it’s not just residents. People coming on training too. It can be people that have been out for 20 years. You need to take that into account as well.
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When Should a Physician Resident Start Looking for a Job?
When should a resident physician start looking for a job? This is a complicated question. First, I do contract reviews daily for physicians. Many are individuals getting their first jobs who’ve never had an employment contract before. They’re either in their last year of residency or fellowship and have an offer they want me to review. There are occasions where there’s a multiple-year fellowship, maybe a PGY-2 or something like that. Wherein residents already have an offer that won’t begin for two years and want me to look at, as well.
Search for a Residency Job
Let me give some words of wisdom, just from doing this for a couple of decades now. One, if you are a resident or a fellow. You know where you need to be geographically. Maybe you have to move home, or you have a significant other completing trading themselves elsewhere. Want to move close to your family, whatever it is. If you have a pinpoint location in mind, getting started sooner than later is probably a good idea. Start looking for a job when you still have two years left in training. Think of it from an employer’s perspective. Some employers don’t have immediate needs for a physician, right? So, if they are well run, they’ll have financial forecasts.
Forecasts as far as the patient load will be, perhaps the practice is expanding and opening a new office. But they’re not going to open it for a year. I guess I’m saying that employers know that they’d have a need for a physician. But sometimes, it’s not for a couple of years. That’s why an employer will start looking immediately for a position that’s not immediately available. Once they get out there and see some candidates, even if that candidate has two years left in training. It’s not uncommon for them to offer them a position and make them sign an employment contract. One benefit of looking early is simply getting in before someone else takes the part. So the earlier you look at the job, the more likely you’d have a chance to get it. If that makes sense.
If You Take a Practice Early
Next, the downsides of going early. What’s the negative part of finding a position far out from when residents have completed training? Suppose you sign an employment agreement that doesn’t commence for two years. And then you have some change in the family. Maybe the significant other that was supposed to move to one city is now moving to another. Or there’s a sickness in the family. There are a million reasons why a location is perfect at one point, and two years later, it’s not. The downside of signing early is that things may change in your life, but you have signed the employment agreement. Then it gets into: how can I terminate this agreement even before I’ve started? Are there any penalties associated with it? Some contracts have built in that if the physician doesn’t start, they will owe some penalty.
Have Someone Review Your Contract
I would suggest. Before signing an agreement with that kind of language, probably get it reviewed by someone to go over the ramifications. What happens if I sign the agreement, I either can’t start or don’t want to start. And then need to get out of the contract? Another possibility is you sign early, and then you get a better offer. So maybe it’s just a better opportunity for you. The compensation is more. The benefits are better. The concern is that if you sign a contractor early, you’re foregoing any potential opportunities down the road. Now, some employers are okay with letting someone out with enough notice.
The contract will have a notice requirement, but if you haven’t even started, most employers are understanding. If there is some actual change in family circumstances. They’re not as forgiving if it’s just simply, this person is paying me more than you. I don’t want to complete the terms of this agreement. Once the contract is signed, the employer relies upon you to start, so they will stop recruiting anyone else. They’re going to make plans to either bring in more patient volume. Or maybe the office they’re opening up is contingent upon you being there.
Residents Would Want to Look at Multiple Offers
So, I guess there are problems for both sides if the physician doesn’t want to start. The employer could have some damages associated with the physician not completing the terms of the agreement. Overall, I’d say the sooner, the better to start looking. However, taking the first offer and signing an employment agreement without comparing different bids is a bad idea. There are almost always multiple opportunities for somebody. Just to accept the first one just because they are the first doesn’t make a lot of sense to me. So I’d suggest you look at multiple offers, gauge the compensation structure amongst them, and then go from there.
How Should a Resident Physician Look for a Job?
How should resident physicians look for a job? Literally what steps should they take to find a position they’ll be satisfied with? The timing certainly is important. Most physicians generally start looking for positions early in their PGY-3 year. Some specialties will even sign contracts in their PGY-2 year if they’re not going into fellowship. If a physician is moving from residency into fellowship, they usually won’t start looking until the end of their last year of residency, or maybe it’s a multiple-year fellowship. Maybe at the beginning of the last year of their fellowship as well. There are several tips for physicians finding jobs.
How Physicians In Residency Can Look For A Job
The easiest way I’ve found is through colleagues. If you’ve trained with somebody, usually, they’ll know of a place that’s recruiting. Or maybe they joined a practice. And they say, it’s a great environment that we’re looking to add another physician in a specialty. Maybe you should look at it. Now, that can vary wildly in location, and location is very important to some, while not important to others. So, it can go all over the place if you’re getting some leads from fellow residents or fellows. One way is to talk to colleagues, mentors, or other people you’ve met in training. And that’s also a great way of determining the market value at the time. The MGMA data is like an annual physician compensation survey across the nations broken up into geography, specialty, and physician-owned versus hospital-based physicians. In some specialties, the sample size is so tiny.
I don’t think it’s a great tool. Other specialties can usually be a pretty good gauge if there are hundreds and hundreds of responses. I don’t think any physician should base a job search solely on compensation. I think that’s shortsighted. Anyone coming out of training needs to be in an environment where they can learn. Or they’re going to have mentors where they’ll feel safe, where they’ll have an opportunity to grow.
I often see it, especially in rural environments, where they need a specialty. They’re willing to throw a bunch of cash at somebody. But they’ll be the only ones in their specialty out there. Like there’ll be no others, no one to learn from, to train with, to pick someone’s brain, at least locally. Those scenarios are tough. Some physicians can thrive in that environment, but it’s more complicated for others. So, I think they need to consider that.
Without-Cause Termination in Contracts
Any physician contract is going to have without-cause termination. If a physician is unhappy in their practice, they just provide usually, 60- or 90-days’ notice. And they can move on. Even if you’re in a job at the beginning, you’re not stuck there forever. You can find something better. I mean, I find a lot of physicians coming out of residency or fellowship will take the first job. And then they’d say, alright, now I know what I don’t want. So, they can look for work more appropriate to the practice they’re looking for.
Physician Employment Recruiters
Another way is through physician recruiters. There are two types of them. You have in-house recruiters. Many big hospital networks employ physician recruiters who go out to different residency programs. Maybe there’s a job fair, something like that. Or they’ll specifically reach out to people in training, saying, hey, I have this opportunity in this place. Would you be interested? They’re free to physicians. You do not have to pay the recruiter or anything. The employer is the one that pays the recruitment fees.
So, physician recruiters. Both in-house and those that are just a private group where they just go out and broker these deals. Typically, they would get a percentage of the first-year salary of the physician, or maybe a flat fee. Something like that. But there’s absolutely no harm in discussing positions with recruiters. It’s a usual way of doing business nowadays. They usually have their ear to the ground and know many different opportunities that could be exciting for physicians.
Physician Job Search
Another way if you have a specific region in mind. Is just doing job searches for practices in your specialty in one specific area. Most places will have job posts on regular job sites if they’re looking. Then you can search for those in the city you want, find that, and contact them from their work listing.
That’s another way. So, those are the three biggest tips. Word of mouth through colleagues, doing it through a physician recruiter or searching in specific cities through job search websites. Now, for those who are maybe J-1 or something like that, that’s like an entirely different kind of job search. And I can do a separate video about that. But this is more geared towards those looking for the normal position just coming out of training.
How Much are Resident Physician Salaries?
One question med students have is the average salary for resident physicians. After physicians graduate from medical school, they move on to an internship or residency within their specialty. Then get paid. But for most of them, it’s simply not even remotely enough for the work that they’re doing. So, it’s not uncommon for medical residents to work 70- or 80-hour weeks. The average salary for medical residents in the United States is around $63,000. Maybe you’re a resident right now, thinking, I don’t even make close to that, or maybe I make more. This is average across all specialties. Some specialties will make a little bit more than others.
Some could be as high as the 60s. Whereas maybe in family medicine, you could be about 50s. Can a resident negotiate their salary during training? No, they have no leverage. Anytime you’re negotiating a contract, you base it upon leverage. Even those medical residents coming out of training and moving on to their first employed work don’t have much leverage. They only have leverage in those situations if they’re in a needed specialty. Or two, if they’re willing to go to an under-served geographic area and need physicians.
So, around 63,000 is the medical resident salary. If you think of it this way, if they work 70 to 80 hours a week, they’re making about $15 hourly. And providing care as a doctor for $15 an hour. Now, once they move out of training, the salary increases substantially. And for some specialties could be an eight-fold increase, at least just coming out. But that’s what it is. One consideration we make when reviewing and negotiating the resident or fellow’s first contract. Most of them don’t have much money coming out of training.
Importance of Relocation Assistance Signing Bonus
So, suppose the new employer is offering a signing bonus or relocation assistance. In that case, we want to ensure they’re getting a chunk of that before moving and starting the new job. Wherever, if they are moving from where they’re currently training. Simply most medical residents, especially if they have family, may be the only breadwinner. At that point, they don’t have $10,000 to $15,000 if they’re making a cross-country move. So, we need to ensure that either the employers pay their moving costs directly to the moving company. Or they’re going to front the money before physicians need to spend it on the move.
In that way, they don’t have to outlay a ton of cash. Because it certainly is expensive moving from one place to an entirely different one. Medical residents certainly are underpaid. Unfortunately, it’s part of the process they must go through to be fairly compensated for the services they provide. But it’s just tough when you’re making that little. And I think the average physician has about. I think 47% of physicians have student loans over $200,000. It could be a big burden.
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