Graduating Residents and Contract Negotiations…Hold On to Your Dreams

So this is one of those “Sena Alerts” in which I pass on what I learned from looking at a website Sena, my wife, suggests I take a look at. I’ve written a few posts based on Vanguard Bogleheads discussion boards and this one is on Bogleheads on physician compensation and negotiating contracts. The question for the discussion group was:

“Hello all,

I am a graduating resident currently looking at a few prospective career opportunities. I have seen at least a few physicians posting and wanted to gather more advice/information. Soon to be out of residency, I am curious what compensation is reasonable in comparison to published data from MGMA (Medical Group Management Association). I will be doing internal medicine and pediatric outpatient care. I believe the most telling number is the compensation to work RVU ratio. Should I expect 25th percentile? 50th? etc. Also, what all is included in the MGMA reported compensation data? Recruiters understandably try to make the offered numbers look as good as possible and have inconsistently indicated that signing bonus, 401k (or similar) match, CME stipend, relocation stipend, reimbursed professional organization fees, etc. are all reported and included in the data. If any administrators or recruiters are lurking, I would love to hear from you all too.”

What makes this special for me and other faculty is that around this time of year, the graduating senior residents are negotiating employment contracts. One of them just told me that, although she didn’t feel confident about negotiation contracts, she felt like she got what she wanted. She’s a very talented combined internal medicine-psychiatry program resident and she’s excited about being able to teach and do psychiatric consulting.

I don’t remember negotiating anything when I graduated or when I was trying out private practice. This probably means I never did it at all or my efforts failed miserably and if it’s the latter, I’ve blocked it from consciousness. This is the defense mechanism called “denial.”

Obviously this makes me a poor advisor to graduates for contract negotiation, so I thought I’d pass along a little advice from those who at least sound like they know what they’re talking about. The one I thought combined hardheaded advice and guidance on assuring quality of life came from a Boglehead contributor called “staythecourse” and is below:

Physician negotiations are dependent on 1. Supply and demand and 2. Precedent. It is that simple. If you want a job in a competitive area then they are not going to budge much if at all. Why would they? Unless you have found the cure to cancer AND figured out how to make more of a profit then the next doc they don’t care what you have done up to that point in your young career. Now if you are looking at a less desirable place to live and know they have been searching for YEARS to fill the spot then start asking for the moon and work your way down from there.

The precedent issue is big. If a group as always offered x amount for y work then that is what they are going to offer. No reasoning beyond that is what they have been comfortable doing in the past and their practice has not fallen apart doing it that way. You will find most docs are just pathetic with business knowledge. They often just do the same thing just “because”.

What I would be looking for if I was a new grad with my level of knowledge? As long as the money is similar (within 20%) I would look at: How long is the gaurantee [sic]?, What does partnership mean?, If there is partnership how is buy in calculated?, How attainable is reaching bonuses?, How much time must they give you if they want to fire you?, What are the restrictive covenant laws in the state you are proposing to move to?, Who picks up tail and in what situation?, If one sues the other who covers legal fees?, How open is the practice in looking at your billing/ receipts?, What is the turnover like at the midlevel level and physician level?, If you are a woman or minority or alternative sexual orientation do they have a track record of hiring such folks?, Do you like the community you are going to live in? Does your significant other want to move there? What is the call like? Is everyone treated equal in relation to call and vacation or do the senior partners, i.e. ivory tower, get better treatment off the sweat of the younger guys, etc…

Entering into a contract is NOT about what you get salary wise, but the level of protection when the stuff hits the fan. If everyone is happy you nor they will ever look back at the contract. If you or they are unhappy at any point you can bet BOTH will be scrambling to see what does the contract say in “x” situation.

The greatest use of a lawyer is: 1. If they are local to that area and do this for a living they will have a good idea on “what is the norm” and 2. They can tell you places in the contract that may shift the risk to you if something breaks down between you and your employer. I am dubious having a lawyer looking over it makes much of a difference in getting what you want vs. you asking. The difference is you are coming to the table with a bit more knowledge. If they don’t want to do something it doesn’t matter if you or a lawyer asks they will still say no.

Good luck.

I doubt that other contributors will make comments that are much more useful than those already up as of today.

The whole relative value unit (RVU) thing is controversial in academia. While it’s being emphasized more these days, it seems to me to conflict with the collaborative care arrangement, which is population-based and for which a different payor model (capitation?) needs to be developed because it’s not based on RVUs. Hmmmm…managed care has come to Iowa Medicaid.

Anyway, I thought the Academy of Psychosomatic Medicine (APM) Annual Meeting 2015 Plenary Session was very thought-provoking, “President’s Symposium Part 2: An Educational and Research Approach to Patient-Centered Communication” featuring speaker Grayson Norquist, MD, MSPH and Dennis Novack, MD.

Dr. Norquist’s lecture, “Improving Clinical Communications through a Patient-Centered Approach” included his remarks which echoed almost exactly my own regarding the imposition of Relative Value Units (RVUs) as a measure of clinical productivity–it basically sucks.

OK, he didn’t use the word “sucks.” But he could have. In fact, he observed the oft-noted decline in fee-for-service “widget” work (in fact he did use the word “widget”) in favor of population-based integrated care models, highlighting the ironic move some academic medical centers (including psychiatry departments) are making to establish RVU components in their compensation plans. Some are going so far as to email the quarterly RVU count to psychiatrists–along with an apology that the number doesn’t come close to evaluating productivity for consulting psychiatrists because of the complexity of our work–which is vital whether or not we make money.

And money does make a difference, especially with some graduating residents looking at hundreds of thousands of dollars in college debt to pay off.

It was nice to see some of the Bogleheads pointing out that RVUs aren’t everything and that the intangibles in life are important, too. Academia is different from private practice, but the RVU system is being measured in academic medical centers, even in my neck of the woods. However, the advice from contributor “cutterinnj” may oversimplify a little and pretty much says “Take it or leave it” is the position of most recruiting organizations:

There are different types of jobs.

If you are looking for an academic job, you may have a little wiggle room if you are highly sought after.

If you are joining a hospital system, you may (depending on the specialty) have room to negotiate. In fact, the time of contract signing may be the BEST chance that you have to get what you want.

If you are joining a private practice, however, you need to be flexible; you are essentially “trying out” to become colleagues with the doctors you are negotiating with. It’s a MUCH better idea to take a slightly less optimal deal than to start things off on the wrong foot.

In my practice, for instance, we have a VERY solid, standard contract. If we make you an offer, you will get this contract. If you try to “negotiate” (unless it’s something VERY reasonable), we will pull the contract.
Reasons being
1) any change in the contract means we have to pay our lawyer, meaning I bring home less money
2) If you don’t take what we offer, it means you have a high likelihood of either not trusting us and/or being high maintenance; either of which doesn’t work in private practice.

That almost implies you shouldn’t try to negotiate at all, which I don’t think is wise either.

Anyway, I’m very pleased about the resident’s success in her negotiation and I just want to say…Good Luck!