Do Contract Reviews Work?
Contract reviews can be expensive. Do contract reviews work?
Anticipation is defined as a feeling of excitement about something that is going to happen or the act of preparing for something. On average, physicians spend at least 10 years in training and preparing to step into their career. When that day finally comes you’re presented with a 10 – 30 page document outlining and describing in great detail the minutia of the offer. In most cases, comparing the awareness level of what’s actually included in the contract or isn’t included, is a bit lopsided. On one side of the table is the health care organization or practice with their team of attorneys and on the other side of the table is, you. Being presented with the offer usually leads to many different emotions, all in the midst of trying to evaluate the compensation, benefits, implications, ramifications and details of a legal document.
The majority of physicians who are presented with a job offer and contract usually feel that they either can’t negotiate, shouldn’t negotiate, or that there really aren’t areas for negotiation, that the offer is what it is. In the presentations I give at different universities and organizations across the country, the feeling and response is pretty uniform and supports this. When I ask the doctors to give some reasons why they think most don’t have their contracts reviewed and negotiated, the answers are also pretty consistent. You don’t want to come across as being difficult, you look forward to knowing that your income will be going from where it was while in training to the level of what the offer would provide or worst case, you don’t want to give any reason for the offer to be rescinded. All of these feelings are real feelings but that doesn’t necessarily mean that these reasons are accurate. In fact, it’s quite the opposite.
In looking at an average contract across all specialties and geographic locations, the average duration might be 2 – 4 years. In looking at the financial value to both the physician and the employer, this naturally translates into a multimillion-dollar deal. This might make some more reluctant to negotiate the contract but let me give you a couple of scenarios. Let’s say that you’re the employer and you’re looking to hire a physician and I’m the doctor you’re having conversations with. You go through the normal hiring process, vetting me upfront, we have a meeting and the conversation goes great. You’re asking questions, I’m asking questions and learning more about the opportunity and we’re both feeling like it would be a good fit. At the end of the meeting, you present me with an offer. Now here’s the 2 different scenarios. In the first scenario, I thank you for all the time you’ve put into getting to know me, I state that I too feel this would be a great fit, that I really enjoyed getting to know the others in the office and I accept the offer. In the second scenario, I say all the same things mentioned in the first scenario but instead of accepting the offer, I simply say that I would like to have my attorney go through the contract with me and that I’ll get back to you in a reasonable time of when you’re wanting a response. After hearing both of those scenarios, which one sounds more professional? Each time I give that example, everyone says that the latter sounds more professional, because it is. In our experience, that’s exactly how it’s perceived by the employer also.
Once the question of should I have my contract reviewed and negotiated is answered, then it always leads to the questions of what can be negotiated. There are over 100 areas in contracts that can be reviewed. I mentioned earlier that it’s not just what’s in the contract but also what is left out of the contract. Remember, these are written by attorneys and if something is left out of the contract, it’s not going to be by accident. This isn’t only beneficial for physicians who are thinking about signing but also for doctors who’ve already signed a contract. In both cases, having your contract reviewed brings clarity and an awareness of what’s included in the details of the contract so there aren’t any “waiting to happen” surprises.
Some of the common areas that can be negotiated are compensation, singing bonus, relocation reimbursement, vacation time off, CME time off, who pays for your tail coverage and many other areas. A lot of times, it’s not just negotiating some of the areas that should be negotiated but also having an awareness of what your signing. A few examples might be, what if there are restrictive covenants and they’re written in a way that would jeopardize your ability to continue practicing in that area and force you to move after your employment ends. This may be okay if you’re not very attached to the area but what if you don’t want to move after you get settled. Another example would be how RVU’s and compensation is calculated or are their income guarantees as part of the offer. What if the organization you’re signing with ends up getting acquired by or merges with a larger organization and the provisions of the employment agreement and the provisions of the hospital agreement differ and the hospital agreement controls?
There are many more things to consider when it comes to the details of an offer, most of the time you just want to know if the offer is fair and reasonable and if you’re getting what you’re worth. If you know what you’re worth, you should go out and get what you’re worth. Having your contract reviewed and negotiated, helps get you what you’re worth in many different aspects. If you would like to learn more about the process or if you have any questions, visit our website and we look forward to helping you simplify your life.