What You Need to Know When Negotiating Your Physician Contract
By Jared Andreoli, CFP®, CSLP®
The prospect of landing your first physician contract (or making a change of employer) can be thrilling and unnerving. But even seasoned doctors can misjudge the importance of a solid negotiation strategy.
The physician contract stipulates more than just your base salary. It can also address student loan repayment, your benefits package, work-life balance, and even your right to exit the situation if you decide to move on.
Here are some considerations to think about before you sign your physician contract.
Base Salary Is Only One Part of Your Agreement
Physician contracts center around a doctor’s base compensation. But there’s more to the story than regular salary. Sign-on or retention bonuses, productivity-based pay, on-call pay, flexible schedules, incentive plans, investment plans, and other benefits are often provided and can significantly impact your overall earnings.
Take time to understand how compensation is structured in your deal. Are the offered incentives reasonably obtainable? Is there a salary review process? If so, how does it work? Are pay raises predicated on performance or cost-of-living adjustments? How are performance-based bonuses measured? Is there a salary floor?
Take the time to fully digest and comprehend the details of your salary agreement. Your financial advisor can interpret any parts that are unclear.
Get a Full Breakdown of Your Benefits
Your total compensation should include standard industry benefits. These include health insurance, disability insurance, malpractice coverage, tail coverage, retirement contributions, and employer-matching information.
Contractors may have a choice of additional benefits. Some individuals may be eligible for signing bonuses, continuing medical education (CME) allowances, relocation assistance, repayment incentives, or tuition reimbursement. The physician contract might contain a structure for repaying student debt. That can be crucial; the median debt amount for physicians is around $205,000.
Also, explore vacation time and parental leave policies. Request a complete breakdown of the benefits package to evaluate it and align it with your professional goals.
Factor In a Student Loan Repayment Strategy
Your very first physician contract has the potential to shape your long-term student debt repayment plan. Some graduates opt for Public Service Loan Forgiveness (PSLF), which they qualify for by signing with a government entity or an approved non-profit. A few doctors have made the mistake of signing with a private practice, thinking they will qualify for PSLF, which can derail your debt forgiveness to the tune of six figures.
If PSLF is a consideration, be aware that while some organizations might offer to pay a portion of your loans, this may not always be the most beneficial option. Instead of direct loan payments, consider negotiating for a higher sign-on bonus, especially if you are pursuing PSLF.
If PSLF isn’t an option, you can still get help with the right contract. Consider asking for a higher base salary or a loan repayment bonus, which enables you to refinance your loan and pay off outstanding debt more efficiently.
Look Closer at Non-Compete Clauses and Termination Clauses
Many healthcare providers include non-compete clauses in their physician contracts. These stipulations can limit or prevent your right to work in the same geographical region for an extended time. Especially if your first contract is in a new and unfamiliar place, a non-compete could be seriously restrictive.
Get a full walkthrough on how long the non-compete lasts and the geographical radius it covers. If you cover the non-compete clause early in the negotiation process, you may be able to loosen up its terms or even have it removed.
Similarly, carefully consider termination clauses so you can be fully prepared if an employer comes to believe you’re not a good fit for a role long-term. Specifically, look for any clauses about termination “without cause” and notice periods required by either party.
Have a Specialist Review Your Physician Contract
Employment contracts of any kind are designed to benefit both parties in the deal. Consequently, they can be exhaustive and complex. Physician contracts, in particular, may have provisions that are difficult to understand or may be uncomfortably ambiguous regarding obligations and expectations.
It’s a good idea to retain a contract attorney to double-check your agreement before you sign it. They can clarify any vague language and identify potential red flags. Your financial advisor could also shed some light on compensation, its impact on terms, and aligning your priorities.
A legal professional can also provide recommendations on aspects that could be negotiable with a prospective employer, especially surrounding your schedule and compensation. While first-time physicians may not have as much negotiating power as an experienced provider, getting the right advice can help you to prioritize the elements that matter most to you, setting expectations for long-term success on both sides.
Make Sense of Your Physician Contract Terms
Simplicity Financial LLC primarily works with physicians who require wealth management assistance. When it comes to your physician contract, we help you understand its conditions and sync it with your priorities and goals.
Interested in getting started? Schedule a free consultation online or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473. We look forward to speaking with you!
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems, big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER®, CFP® and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.