Here’s How To Avoid Disaster With Your Contract

By:  David Kashmer, MD MBA (@DavidKashmer, LinkedIn profile here.)

 

You’ve narrowed down the choices, you’ve gone on the interviews, and now you’re looking very seriously at offers from your top choices. It’s time to do something for which you have absolutely no training: negotiate your employment contract. If you’re like a lot of young doctors, you’ll just sign whatever contract the hospital administration puts in front of you. Maybe that will work out okay—and maybe it will turn into a disaster. With the information in this section, you can tilt the odds strongly against that horrible disaster.

NEGOTIATING YOUR SALARY

 

When you see the salary on your employment contract, you might be tempted to just say yes and take the money. That’s the approach a lot of young doctors take, to their cost. That salary number should be just one part of the starting point for your negotiation.

Before you meet with the hospital administration to discuss your contract, think about your negotiating position. A good starting point is the BATNA. This is an acronym for Best Alternative to a Negotiated Agreement. The principles were developed by the Harvard Negotiation Project back in the 1970s. In 1981, they became the basis for a wildly popular book by Roger Fisher, William Ury, and Bruce Patton called Getting to Yes: Negotiating Agreement Without Giving In. I recommend reading it when you’re done with the content here.

BATNA nicely summarizes your ability to influence the outcome of a negotiation. You develop the alternatives to the deal in front of you based on what’s most important to you. Your strength in negotiation is directly related to your BATNA. The better the quality of your executable options, and the more you have, the better you can influence the negotiation.

Having a good BATNA makes you more apt to talk about alternatives with the other party to the negotiation.  And if you’re more willing talk about alternatives with the people in front of you, you’re more willing to push the structure of the deal and how it needs to look. As physicians, because we don’t know about business stuff, we tend to see negotiations with the hospital as an adversarial “us versus them” situation. I take, they give—that’s called positional negotiating.

You can dig your heels in and say “I need this,” but in reality, a better negotiating path is to understand what the interests are of the other side. That’s very different than the positional negotiating described above.

Their real interests may be different from what they’re articulating in the first contract they park in front of you. If what they really want is someone to come in and take on a large administrative component, yet they’re reimbursing based on clinical work and straight RVUs, you probably want to influence that so that they get what they really want rather than their standard contract. That can be challenging, but can be more worthwhile in that both you and the other side may be much more poised for success with an agreement that represents what you each actually want.

You need to educate them a bit even as you’re learning from them what their interests are. You’re trying to satisfy the interests behind what they initially ask for. It’s a different way of looking at it than “I win, you lose,” which I’ve found is more typical doctor’s way of looking at it.

Remember, on the other side of the negotiation, when it’s all done, you’re going to be working there. You need to make sure the relationship is reasonable and that relationship starts as you negotiate with the hospital or whatever team you’re joining. This is one good reason for going on a lot of interviews. The more alternatives you have, the better your position to compare the current offer. Too many interviews give you diminishing returns, but you want at least three or four high-quality alternatives to get a sense of where you want to be. It’s not always “more is better.” It’s important to develop meaningful alternatives—ones that you can actually execute if you need to.

The interview process itself is time-consuming because you’ve got to prepare for it and then go do it. The hospital pays for your transportation and hotel and sets it all up for you. You don’t usually have any significant out-of-pocket expenses, but your time has value. And sometimes you’re up against a deadline—you need to get some cash flow going. Sometimes the closer deadline is on the other end. The position needs to be filled before their current surgeon goes on maternity leave, for instance, or before the end of the budget year.

In negotiating, you need to have as much information as you can. You want to know more about them than they know about you. At the interview, you’ll probably be asked about your timeline. It seems like an innocuous question and usually comes with “When are you looking to make a move?” But in reality, giving up your timeline allows the other team in the negotiation to have a little more control. If you know the hospital wants to fill the job in two weeks, you have information about their timeline. You can leverage that because they have a deadline. They may be willing to come around a little bit faster than they otherwise would, so they may be willing to negotiate some other points to get you to sign on the dotted line and get the job filled. In general, my advice is to make it seem like you have all the time in the world and to use that to get a sense of what their timeline is.

In reality, young physicians are usually finishing their residencies or fellowships in July. Everybody knows that, so every interviewer knows your timeline. You could say to them, “Well, I have plenty of time. If I don’t find something, I’m going to take some time or work across the country as a locum surgeon, so I don’t need a position until August or September,” but in reality, most young people need a job by July and the hospitals know it. That’s why we have this cynical saying which I mentioned earlier: “In your first job, you’ll probably get your brain stolen.” You’ll be under-reimbursed because you need a job now. You’re more likely to take any serious offer without really negotiating.

 

OBJECTIVE BENCHMARKS

As part of preparing for the contract negotiation, it’s helpful to prepare a list of five or six points that are really important to you. One of those points, however, should probably be a pawn—something you’re willing to sacrifice as part of making the deal. You’d like to have it, but you’d be willing to give it up.

As you give it up, you can use it to negotiate the points that are more important to you. For example, you might say, “Well, if I can’t have 20 weeks of vacation, then I need to have a different call schedule.” Twenty weeks of vacation is obviously a lot and you didn’t really expect them to agree to it, anyway, so it’s an easy sacrifice. This technique is called “log rolling” because you take one point and roll it into the other.  It also takes advantage of the reciprocity effect…

 

The above excerpt is from The Hidden Curriculum:  What They Don’t Teach You In Medical School.  For more information about contract negotiating techniques for physicians (page 53) look here.