Professional contract review is one of the final steps that a new doctor must take before securing their first official job. And yet, many residents and fellows are largely in the dark about the details of the professional contract review process when they receive their first employment offer. Our team of physician contract attorneys and financial advisors often work with new doctors who have been seriously misinformed about the nature, cost, and importance of the contract review process.
Here are five of the most common misconceptions we encounter in the contract review process for new doctors:
Misconception 1: “I’m not planning to negotiate, because I don’t want to seem difficult.”
We hear this all the time from doctors who are worried that an employer will get angry or revoke an offer if they try to negotiate. But there’s good news: employers virtually never rescind an offer because a doctor wants to negotiate their contract. Negotiation is a perfectly normal part of the hiring process. And it can be highly beneficial for employers and employees to communicate their respective priorities via negotiation. They designed the contract review process to help prepare doctors for negotiation. By ensuring they understand the details of their pay structure, termination provisions, benefits and more.
Of course, if a physician walks into a negotiation with an unreasonable list of demands and an adversarial attitude, it may turn off a potential employer. That’s why physician-specific attorneys and financial advisors can offer “Negotiation 101” advice during your contract review. They can identify fair and reasonable points for negotiation. And help you prioritize your requests for contract modification. By and large, the vast majority of employers are open to hearing out a prospective employee’s negotiation requests. Armed with the insight of a professional contract review, doctors are more likely to walk into a negotiation with confidence. And walk out with a better offer.
Misconception 2: “I can just have my friend who’s an attorney look over the contract.”
It takes more than just an understanding of legalese to provide adequate contract review. Physician-specific lawyers devote their entire careers to healthcare employment contracts. Because these documents are complex, nuanced, and worth millions of dollars. Attorneys who practice different types of law cannot offer the in-depth understanding and industry-specific insight necessary to evaluate and negotiate a doctor’s employment contract. Simply put, physician contract lawyers do it better. They have years of experience reviewing letters of intent and employment offers for doctors. So they can quickly identify red flags or missing provisions. Specialized attorneys can also offer advice on what negotiation strategies have proven effective for their clients in the past. Or even negotiate on your behalf if you wish.
It’s also strongly recommended that your contract review process includes a physician-specific financial advisor to evaluate the pay structure. And determine if a contract meets your personal financial needs. Because these financial professionals look at physician contracts everyday, they can offer insight into the standard salary for your experience and specialization. To help ensure you’re receiving a competitive offer. When there are millions of dollars riding on your employment contract, its best to go with the experts.
Misconception 3: “I only need to be concerned about the tail coverage and non-compete”
Somewhere along the line, someone (a recruiter, an administrator at medical school, a family member) has told the physician that the non-compete and tail-coverage provisions are the most important contractual issues. That is not necessarily true – in fact it’s rarely true that a contract review will boil down to those two issues alone. Each different employment opportunity and each physician’s personal background and preferences dictate what is most important. Clients are best served when a professional reviews the contract, listens to the physician’s personal story and preferences, and then gives advice balancing those things together.
Non-compete clauses and tail coverage are important, but so are other contractual terms. Is the compensation too low? Should there be a signing bonus, moving-expense bonus and/or productivity bonus and are these subject to repayment in certain situations? Does the contract limit call frequency and/or the multiple locations where the physician might work? Can the physician terminate “without cause” from day one is there a required notice period?
If a private practice, is there partnership potential and if so, is there a buy-in and how much? These and other contractual terms potentially can affect the physician in much farther-reaching ways. While tail coverage is an important and costly piece of an employment contract, these other topics can translate into much more value, depending upon how they are negotiated. Our professionals will help you focus on what is truly important for your contract, and give you the confidence to negotiate with the employer on those items.
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Misconception 4: “I can’t afford contract review.”
For many debt-strapped new doctors who have been living on a modest residency income, the idea of paying for a professional contract review before getting their first real salary seems counter-intuitive. In reality, contract review is one of the most important investments a young physician can make to ensure their financial security. A large dollar amount may tempt a doctor applying for their first job in a contract. However, physician pay structures are complex and variable.
Behind that potential salary figure, there may be unfair metric-based calculations or bonus terms that are unreasonable which result on your overall pay to fall below the median compared to other physicians in your specialty in the area. A professional review by a financial advisor can help you understand the structure of your pay, determine the feasibility of bonus terms, and negotiate for terms that are in your favor while remaining reasonable and not appearing greedy.
Too many doctors accept the boilerplate terms of an initial contract, only to realize months later that they are making $20,000-$50,000 less than their counterparts. Or worse, that they fall short of the production levels necessary to bonus resulting in less income and funds to pay off loans. By having an attorney and financial advisor review your employment contract, you can earn millions more in income over the course of your employment. Whether you need a single consultation by phone or in-person negotiation assistance, there a variety of contract review services available at affordable rates for residents, fellows, and new doctors.
Misconception 5: “I need an in-state lawyer to review the contract.”
While there are state-specific regulations to take into consideration for a contract review, professional physician contract attorneys are familiar with these nuances and can provide review services for any geographic location. In general, the variations between states are extremely minimal, and attorneys specializing in physician contracts are well-versed on the regulatory subtleties of different locales.
Don’t let word of mouth and unqualified advice cost you thousands of dollars on your first employment contract.
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