Physician Contract Negotiation: Value of Multiple Offers

Using Multiple Offers for Contract Negotiation

Having multiple employment offers provides additional leverage during contract negotiations

When physicians are considering more than one employment offer, they often have additional leverage during negotiations. The reason for this is that the physician can utilize the strengths of each offer as a way to request changes in the competing offer(s).

For a very simplified example, all else being equal, Employer A offers a compensation package of $200,000 with a signing bonus of $20,000 while Employer B offers $215,000 and no signing bonus.

The physician can share with Employer B that he/she has another offer where there is a signing bonus of $20,000 and ask Employer B if they would be willing to provide something similar.

Our experience has shown that many employers match the $20,000 and if not, provide $10-15,000 or some other variation. It could be that the bonus is provided at the end of the first 12 months.

How do some employers handle signing bonuses?

It is very common for employers to not include the signing bonus in the initial offer or negotiations to see if they can get by without providing one. Once there is added pressure from the competitive offer, many employers end up providing a signing bonus of some kind.

This can be a delicate area of the negotiation and should be approached with fairness, humility and respect. Otherwise the employer may react negatively. When managed properly, it can end up being the $10,000+ opportunity that if not addressed, could be missed.

Additional leverage can be obtained when using multiple offers during the negotiation when they are similar in the following areas:

  • Geographic location: city, state, or region
  • Practice type: solo practice, single or multi-specialty or hospital department
  • Practice ownership: physician or hospital
  • Demographic classification
  • Business relationship: employee, independent contractor or partner

Related: the physician’s guide to being an independent contractor

The objective here is to get a good idea of what is a fair offer and then work within a reasonable range. Physicians who are very interested in an offer, but don’t know what is reasonable to ask for, can end up losing an offer if they are too aggressive.

In the absence of multiple similar offers or in situations where the offers are an apples-oranges comparison, where can physicians go to get an idea of what is a fair compensation package?

A common source is from a third party data collecting organization or association. What should be kept in mind when using such a source is that most of the data that is collected and reported by the large physician survey providers is dated as soon as the reports are available which can make having access to current data difficult to obtain. Another source is conversation with colleagues to build a small sample-size of what is being offered. This can also be a limited source if there is a lack of willingness to share the information because of their desire to keep it private.

Our advisory group recognizes these challenges and it is for these reasons that in addition to pursuing the above mentioned options, we collect, track and report our own compensation and employment data on a confidential basis so that our clients have access to current information.

For more on this topic, access to practice management resources or services that help with evaluating employment offers, please don’t hesitate to contact our office.

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