There’s nothing quite as exciting as answering a phone call to hear the words, “You’re hired.” After hours of research and preparation, multiple interviews, and a healthy dose of daydreaming about your first day, you’ve made it across the finish line—except for one final hurdle: the negotiation process. Don’t overlook it. The negotiation process is a key determinant of success for a newly hired physician employee, and it doesn’t have to be stressful.
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September 2022Approaching Negotiations
Many people who don’t regularly engage in formal negotiations believe that the process must be adversarial, combative, and stressful. The main purpose of negotiations is not to create a winner and a loser, however, but to create a framework in which everyone involved is headed toward success.
The most important first step is to gather all the information you’ll need. To get you started, here’s a list of information and documents to have on hand in addition to your offer letter when you meet with management or human resources:
1. Public information about your employer (e.g., website, newspaper, word of mouth, court filings). Hopefully, you have gathered much of this during your pre-interview research.
2. All information relevant to this position (e.g., job description, employment contract, benefit information, liability insurance coverage). If the employer has some of this information and you don’t, ask for it. You cannot make a good decision without all the facts.
3. The contact information of the person authorized to conduct the negotiation.
4. A timeline for the negotiation process. Confirm this timeline with the contact you’ve identified.
5. Legal counsel. Issues can be lurking in unlikely places during a negotiation process. Competent legal counsel can help find them and craft creative solutions.
Finally, take a moment to gather your thoughts on what is important to you in terms of work benefits, both personally and professionally. This will help guide you through negotiations and ensure that your goals and values match those of your future employer.
Negotiation Issues
There are many issues and particular contract phrases that may arise during negotiations with a potential employer. Some of the more common issues include the following:
“Other duties as assigned.” This phrase is ubiquitous in job descriptions and employment contracts today. Often, the “other duty” is a simple request that is not quite in line with what you do, but not a burden. In the medical field, however, this phrase can mean quite a bit more. Be sure to match this term up with your listed job duties and coverage requirements in the contract. Are there on-call obligations? Can you be told to move to a different shift or a different clinic location without notice? If you think there may be risks in your employment duties that you aren’t willing to take, you might ask legal counsel to negotiate a provision in which you would be able to renegotiate your compensation if such an event occurs.
Compensation. It’s important to review all forms of compensation when considering a job offer, and physicians and others working in healthcare should closely examine their compensation arrangement for potential legal problems. Two major concerns in a compensation arrangement are violations of the Stark law and any anti-kickback statutes.
Broadly speaking, these laws protect Medicare and Medicaid from being billed as part of an inappropriate compensation arrangement. The Stark law prohibits physicians from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless an exception applies, and prohibits the entity receiving the referral from submitting claims to Medicare for those referred services. An example of a Stark law violation is a hospital paying doctors to refer otolaryngology patients to their hospital. Because the Stark law operates under strict liability, the intent to profit from an arrangement isn’t required for a physician to violate the law.
The main purpose of negotiations is not to create a winner and a loser, but to create a framework in which everyone involved is headed toward success. —Emily A. Johnson, JD
Federal law and 39 states currently have anti-kickback statutes on their books. These statutes essentially make it illegal to offer or receive anything of value in exchange for referrals of patients who are receiving their benefits from Federal healthcare programs. This could include office space, employee time, bonuses, medications, supplies, other services, and more.
Contract arrangements regarding referrals and compensation can be complex and may often seem innocent to the untrained eye. Unfortunately, a compensation structure that violates these laws cannot be negotiated in good faith. If an arrangement is improper, it must be restructured before anything is signed.
Professional liability insurance. Medical professionals should have professional liability insurance to cover malpractice claims. In addition to knowing what plan your new employer is offering you, it is also important to know what sort of coverage you had in your previous position.
Determine if you have occurrence-based or claims-based coverage. Occurrence-based coverage plans are tied to alleged instances of malpractice. Claims-based coverage plans are tied to when the claim of malpractice is made. If you have occurrence-based coverage, you will be covered for any alleged instances of malpractice that occurred while you were under that plan. Unless you stay with the same insurance company when you switch practices, your claims-based coverage will not cover any claims that originated during your time at the previous practice. You may also need a tail coverage plan to cover you if a former patient asserts that malpractice took place during your previous plan’s coverage period but did not start a claim until after you had left.
Before accepting a new position, make sure you know what coverage you will need to prevent later headaches. A point of negotiation may be whether you or your employer will pay for the tail coverage—after all, surely your new employer would rather have you working than distracted by a costly malpractice claim.
Outside work. It’s important to know how much control your employer has over your work for organizations other than the employer. Contracts may have a provision in them that prevents you from providing medical services for anyone else but your employer, and this could prevent moonlighting, speaking, or even volunteering. Employers may have a legitimate reason to prevent you from doing these things, but if it’s important that you be able to engage in your specialty outside of the employment contract, you’ll need to head to the negotiation table.
If you have a specific request, your employer may grant it, or the employer may allow you to participate in certain activities under the condition that you remit all earnings from those activities to the employer. This may seem unfair but could give you leverage in future discussions about compensation increases.
Restrictive covenants. Restrictive covenants, also known as noncompete clauses, are common in employment contracts. Generally, a restrictive covenant limits what an employee can do after they leave their current job. For example, a physician who leaves a practice may have a restrictive covenant that prevents them from practicing medicine within a 50-mile radius of the current practice for two years after they leave their current job. A restrictive covenant may also prevent a physician from recruiting employees or patients away from the current practice.
Whether, and to what extent, a restrictive covenant will be enforced varies from state to state. Regardless, it’s important to review your contract for what you may or may not be able to do after your employment ends. Try to imagine how difficult it would be to make a living if you left this position. If you think it could affect your life or career path, it may be time to negotiate a reduced restriction, such as a smaller noncompete radius or a shorter lifespan of the covenant. A lawyer can help determine how your state will enforce a noncompete, giving you leverage during negotiations.
Employee vs. independent contractor. Another important consideration when reviewing your employment contract is whether you will be considered an employee or an independent contractor. A section in the contract will explicitly describe your relationship to the employer. From tax obligations, to having control over your work, to the stability of your employment, your employment status determines a lot. Review the description of the arrangement from a practical standpoint to determine if any deal-breakers are present.
Your employment status can also have major implications when determining whether your contract complies with the Stark law and any anti-kickback statutes, as there are different requirements for satisfying these laws depending on employment type.
Sign on the Dotted Line
By approaching employment negotiations as a collaboration, you demonstrate to your employer that you are considerate, focused, and grounded. Reach out to an attorney experienced with reviewing employment agreements well in advance of your anticipated start date to ensure any negotiations are timely and effectively completed.
Reprinted with permission from the American College of Rheumatology.
Emily A. Johnson, JD, is a healthcare attorney with McDonald Hopkins LLC. Contact her at ejohnson@mcdonaldhopkins.com or through mcdonaldhopkins.com.