Physician Contract Negotiation Guide

Your employment contract will govern your life for the next several years—and most physicians sign it without negotiating. The difference between accepting the first offer and properly negotiating can easily be $50,000-100,000+ in additional lifetime compensation, better benefits, and more favorable terms.

This guide teaches you how to evaluate physician employment contracts, identify red flags, and negotiate effectively for better compensation, benefits, and protective clauses.

Before You Negotiate: Know Your Leverage

Your negotiating power depends on several factors:

You Have MORE Leverage If:

• You're in a high-demand specialty (anesthesia, emergency medicine, hospitalist)
• You're willing to work in underserved areas
• You have multiple offers to compare
• The practice is struggling to recruit
• You have unique skills or subspecialty training

You Have LESS Leverage If:

• You're in an oversaturated market (NYC, LA, San Francisco)
• Your specialty has surplus candidates
• You have geographic constraints
• This is your only offer
• You're desperate to escape current position

Compensation Structure: Understanding the Basics

Base Salary Models:

Straight Salary:

• Fixed annual compensation regardless of productivity
• Pro: Predictable income, no RVU pressure
• Con: Limited upside for high producers
• Common in: Academic medicine, some hospitalist groups

Base + Production Bonus:

• Guaranteed base + bonus for exceeding RVU/productivity targets
• Pro: Income security with upside potential
• Con: Targets may be unrealistic
• Common in: Private practice, specialty groups

100% Production-Based:

• Compensation tied entirely to RVUs, collections, or net revenue
• Pro: Unlimited income potential
• Con: High risk, variable income
• Common in: Established private practices, partnerships

Key Questions About Compensation:

1. What's the base salary vs. potential total compensation?
2. How are RVU targets calculated? Are they achievable?
3. What's the conversion rate (dollars per wRVU above target)?
4. How often are bonuses paid? (Monthly, quarterly, annually?)
5. Can you see historical productivity data for this position?
6. Are there productivity cliffs or penalties for underperformance?

Benefits Package: What Actually Matters

Health Insurance:

• What percentage of premiums does employer cover?
• PPO, HMO, or high-deductible options?
• Out-of-pocket maximums?
• Coverage for spouse and dependents?

Retirement Benefits:

• 401(k)/403(b) match: How much and what vesting schedule?
• Profit sharing: Discretionary or guaranteed?
• Pension: Rare, but some academic centers offer
• 457(b): Available at non-profits (huge benefit)

What's a good match? 6% employer match is excellent, 3-4% is standard, 0% is negotiable.

CME and Professional Development:

• CME allowance: $3,000-5,000/year is standard
• CME time: 5-7 days/year is typical
• License/DEA fees: Should be covered by employer
• Board certification fees: Should be covered

PTO and Schedule:

• Vacation time: 3-4 weeks is standard for new attendings
• Sick leave: Separate from vacation?
• Parental leave: Paid? How many weeks?
• Holiday coverage: How many holidays are you expected to work?

Malpractice Insurance: Critical Details

Types of Coverage:

Occurrence Policy:

• Covers any incident that occurred during the policy period, regardless of when the claim is filed
• No tail coverage needed when you leave
• More expensive but better protection

Claims-Made Policy:

• Only covers claims made while policy is active
• Requires "tail coverage" when you leave
• Cheaper annual premiums but expensive tail

Critical Questions:

1. Is it occurrence or claims-made?
2. Who pays for tail coverage if you leave? (This can be $50,000-$200,000+)
3. What are the coverage limits? ($1M/$3M is standard)
4. Does it cover moonlighting?
5. What happens if you're terminated for cause?

Call Requirements and Compensation

What to Clarify:

• How many call nights per month/year?
• Weekend call frequency?
• Holiday call rotation?
• Is call compensated separately?
• Backup call expectations?
• Can you trade call with partners?

Typical Call Compensation:

• No additional pay: Built into base salary
• Per diem: $500-1,500 per 24-hour call
• Hourly: $150-300/hour
• Annual call stipend: $20,000-50,000/year

Restrictive Covenants: The Fine Print That Matters

Non-Compete Clause:

Standard terms: Prohibited from practicing within X miles for Y years after leaving

What's reasonable:

• Geographic radius: 5-15 miles in urban areas, 25-50 miles in rural
• Duration: 1-2 years maximum
• Scope: Limited to your specialty, not "all medical practice"

Red flags:

• 50+ mile radius in metro area
• 3+ year duration
• Covers all of medicine
• No buyout option

Negotiation strategies:

• Request buyout clause ($10,000-50,000 to void non-compete)
• Shorten duration from 2 years to 1 year
• Reduce radius
• Exclude academic/research positions
• Add "reasonable distance from primary residence" exception

Non-Solicit Clause:

Prevents you from soliciting patients or employees after leaving. Usually reasonable, but ensure it doesn't prevent patients from choosing to follow you independently.

Termination Clauses

Key Terms to Understand:

Notice Period:

• How much notice required to resign? (60-120 days typical)
• How much notice if employer terminates you? (Should be reciprocal)

Termination Without Cause:

• Can employer fire you for any reason (or no reason)?
• What happens to bonuses, benefits, tail coverage?
• Do you get severance? (Negotiate for 3-6 months salary)

Termination For Cause:

• What constitutes "cause"? (Should be specific: malpractice, license loss, criminal activity)
• Vague language like "behavior inconsistent with practice standards" is dangerous

Partnership Track (If Applicable)

Critical Questions:

1. Is partnership truly available or just dangled?
2. What's the timeline? (2-3 years typical)
3. What are the requirements? (RVU targets, patient satisfaction, peer votes?)
4. What's the buy-in cost? ($50,000-$500,000+ depending on practice)
5. Can you finance the buy-in?
6. What happens if partnership is denied?
7. Can you see the partnership agreement?

Red Flags That Should Make You Walk Away

Contract Red Flags:

• Employer refuses to negotiate ANY terms
• Pressure to sign immediately without attorney review
• Unrealistic RVU targets (ask current physicians if targets are achievable)
• Vague compensation structure or "trust us" explanations
• Employer requires you to pay tail coverage regardless of circumstances
• Non-compete that effectively bans you from practicing in your city
• At-will employment with no severance or notice requirement

Practice Red Flags:

• High physician turnover (ask why people are leaving)
• Current physicians are unhappy or evasive
• Financial instability or pending litigation
• Disorganized or unprofessional during interview
• Won't provide contact info for current physicians

Negotiation Strategy and Tactics

Step 1: Research Market Rates

• MGMA data for your specialty and region
• State medical society compensation surveys
• Talk to colleagues in similar positions
• Recruitment agency data

Step 2: Prioritize Your Requests

• Must-haves: Deal-breakers if you don't get them
• Important: Will negotiate hard for these
• Nice-to-haves: Would accept but won't push too hard

Step 3: Present Requests Professionally

Good approach: "Based on MGMA data for [specialty] in [region], the median compensation is $X. Given my [subspecialty training / experience / unique skills], I believe $Y is more appropriate."

Bad approach: "I need more money" or "My friend makes more than this"

Step 4: Negotiate Multiple Items Together

Don't negotiate one item at a time. Present 3-5 requests together, then be willing to compromise on some to get others.

Example: "I'd like to discuss base salary, call compensation, and the non-compete radius. If we can agree on these three items, I'm ready to sign."

Step 5: Get Everything in Writing

Verbal promises mean nothing. Every agreement must be in the written contract. "We'll probably give you a raise next year" = worthless unless in contract.

Common Negotiable Items

Usually Negotiable:

• Base salary ($10,000-$30,000 increase often achievable)
• Sign-on bonus ($10,000-$50,000)
• Relocation expenses ($5,000-$15,000)
• CME allowance and time
• Non-compete radius and duration
• Tail coverage responsibility
• Partnership timeline
• PTO days

Sometimes Negotiable:

• RVU targets (if unrealistic)
• Call requirements
• Retirement match percentage
• Moonlighting permissions

Rarely Negotiable:

• Health insurance options (usually employer-wide)
• Malpractice coverage limits (usually group policy)
• Partnership buy-in amount

Attorney Review: Worth Every Dollar

Cost: $500-$1,500 for contract review

What they catch:

• Unfavorable legal language
• Missing protective clauses
• Unreasonable restrictive covenants
• Ambiguous terms that could hurt you
• Industry-standard provisions your contract lacks

ROI: If attorney negotiates just $10,000 increase in base salary, that's $10,000/year × however many years you're there. Easily worth 10-50x the review cost.

When to use attorney: ALWAYS. Even if the contract seems standard. Especially for your first attending contract.

Final Thoughts

Your employment contract is one of the most important financial documents you'll sign. The terms you accept will govern your income, schedule, benefits, and freedom for years to come.

Key takeaways:

• Never sign on the spot—always take time to review
• ALWAYS have an attorney review before signing
• Everything must be in writing
• Negotiate professionally with data to support requests
• Know your leverage and use it appropriately
• Walk away from contracts with major red flags

Most physicians leave $50,000-$100,000+ on the table by not negotiating. Don't be one of them. This is business—negotiate professionally and get the compensation and terms you deserve.