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We dive into the essential skills every physician needs to master in contract negotiation. Internal medicine physician Miguel Villagra offers practical advice on navigating the complex clauses and legal language, sharing key strategies for securing a fair, comprehensive agreement that supports career growth and personal well-being. From understanding contract types to leveraging market data and avoiding common pitfalls, Miguel’s insights empower physicians to negotiate with confidence and clarity.
Miguel Villagra is a hospitalist.
He discusses the KevinMD article, “10 essential tips for doctors: Mastering contract negotiations.”
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Transcript
Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast. Today, we welcome back Miguel Villagra. He’s a hospitalist. Today’s KevinMD article is “10 Essential Tips for Doctors Mastering Contract Negotiations.” Miguel, welcome back to the show.
Miguel Villagra: Thank you, Kevin. I’m glad to be back at your show.
Kevin Pho: So tell us about what led you first to write this particular article in the first place.
Miguel Villagra: Absolutely. So, through my career, I have gone through different pivoting moments, and I have gone from being a full-time employee to a partnership agreement to doing independent contractual work. Now I even do business-to-business work with my company in telemedicine as well. One of the things that I realized is that physicians go through changes during their careers, and that has been well documented. Oftentimes, we ignore the importance of being ready. There is a lot of research and science behind contract negotiation, and this is not something we’re trained for. That led me to write the article, combining my experience sitting at the negotiation table and some evidence-based research on the topic.
Kevin Pho: All right. So when you say that physicians need to prepare themselves and be ready before entering contract negotiations, what are some ways they can do that? What kind of research do they need to do?
Miguel Villagra: Well, first, I’m going to share a few stats for your audience to understand how important this is. Back in April of this year, Doximity did a compensation survey with a thousand physicians, and nearly 40 percent of them were dissatisfied or very dissatisfied with their current contract, salary, and compensation. On the other side of the coin, in the same report, nearly 62 percent of those physicians felt they were not compensated according to the level of work they were performing or their area of expertise. In other words, they were not practicing at their full license or potential.
That’s something to reflect upon because you might change jobs for better work-life balance or move to a different state, but the statistics among physicians in the United States indicate that at some point, you will likely face these challenges. Understanding this is crucial. Before diving into contract negotiation, it’s essential to do thorough due diligence about your true worth or value. There are resources for this—some are free, some require payment—but knowing the type of contract you might be presented with and the value of the tasks you will perform is very important.
Of course, there are geographical differences, depending on whether the position is a locum tenens agreement, independent contractor role, full-time employment, or even a partnership. All of these need consideration. Additionally, I would say it’s important to ask yourself what you truly want before sitting at the table. Interestingly, when I meet with or coach physicians, they often don’t even know what they want, making it difficult to achieve that.
Kevin Pho: So when physicians try to figure out what they want, what types of questions should they be asking themselves to clarify that?
Miguel Villagra: Absolutely. First and foremost, it’s essential to understand your mission. What are you most passionate about or what do you want to do most of the time? Aligning that with your career portfolio is crucial because you need to understand the skill set you bring to the table. Surprisingly, the question of what you truly want can be quite complicated for some. I’ve had the privilege of helping other physicians navigate career transitions, either as a mentor or coach. Recently, I was speaking with a practitioner who had been working in a particular field for a few years, only to realize she didn’t like what she was doing. She had just gone with the flow, following a specific track because it was convenient, only to discover she wanted something different.
Those types of hard questions require time and reflection—what you want, what you’re passionate about, and what you’re capable of doing. These are important questions to ask yourself before conducting due diligence on how much you can get paid, etc.
Kevin Pho: You mentioned surveys earlier. Do physicians have ready access to these surveys, like MGMA and other types of compensation surveys?
Miguel Villagra: Yes, MGMA is mostly a paid service, although some information can be accessed freely. I also recommend the Doximity compensation map, which is free to use. You can search by zip code and specialty to see average compensation packages. Additionally, understanding the impact of negotiation can be eye-opening. Research shows that the gap between the top and bottom percentiles of physician salaries can be nearly $150,000 per year. Not doing your due diligence could mean leaving significant money on the table. It’s essential to be realistic about what you ask for but also to start negotiations at a level higher than your minimum acceptable offer.
Miguel Villagra: And yes, I have heard of many cases where employers have budged from their initial offer and physicians were able to successfully negotiate higher salaries. In my own experience, I have been very strategic and tactical when negotiating my contracts and can cite various examples where compensation was improved. But this isn’t just about salary; this goes beyond that. One common mistake is focusing solely on salary and not considering other benefits that could be just as valuable. Physicians often overlook aspects like flexibility in their work schedule, which could greatly impact their work-life balance. For instance, negotiating fewer working days or specific days off can be just as important as negotiating a higher salary. The structure of payment—whether it’s a productivity model versus a base salary—also matters.
Analyzing all aspects of an offer before accepting is crucial. Physicians need to understand their worth and start negotiations with that in mind. I recommend having an anchor—essentially, your target figure—and aiming to land in the zone of potential agreement, with a clear understanding of your BATNA, which stands for Best Alternative to a Negotiated Agreement. This is essentially your exit plan. Having a backup plan gives you leverage and confidence to walk away if the offer does not meet your needs.
Kevin Pho: That’s a great point. Tell us more about the mistakes physicians should avoid when negotiating contracts.
Miguel Villagra: The first and most common mistake is accepting the first offer without negotiating. This is particularly prevalent among early-career physicians who might not have the confidence or knowledge to negotiate. Accepting the first offer can mean leaving money or benefits on the table, which could compound over the years, especially if you remain with that employer long-term.
Another mistake is focusing solely on salary, as we touched on earlier. While you should anchor your negotiations with a reasonable figure based on research, don’t forget to consider other aspects of the offer. For example, does the position offer opportunities for growth or leadership roles? Does it meet your geographical preferences, and what trade-offs come with that? Larger cities may offer higher salaries, but they often come with more competition, which can reduce your leverage.
It’s important to remember that even if it seems like you have no leverage, the employer might be facing challenges you’re unaware of, which could work to your advantage. That’s why I recommend speaking to current team members, not just recruiters or leadership. By reaching out to people who work there, you can get an honest sense of the workplace culture and potential challenges. This insight can help you determine how well you might fit in and strengthen your position at the negotiation table.
Kevin Pho: That’s really insightful. We’ve had attorneys and companies come on the podcast to talk about handling contract negotiations for physicians. Do you recommend that physicians outsource these negotiations to an attorney or a contract review service, or should they handle it themselves, possibly with some legal guidance?
Miguel Villagra: I have a few thoughts on that. I have used services that review contracts for potential red flags, and I recommend this approach to others as well. However, even if you plan to outsource part of the negotiation process, it’s important to be informed and involved. You need to understand what you want and need so that you can ensure the person advocating for you is doing so effectively.
If this is your main job or a significant career move, I would definitely recommend seeking legal help, whether from a lawyer or a low-cost contract review service. They can help identify potential issues in the contract that you might overlook. However, if it’s a side gig or a consulting role that doesn’t impact your primary job, it may not be worth the expense of legal services. It all depends on the situation and what’s at stake.
Kevin Pho: Can you share a success story from your coaching where a physician successfully negotiated a much better contract than initially offered?
Miguel Villagra: Sure, I can share a couple of examples. One involved a physician on the East Coast transitioning from academia to private practice for better work-life balance and compensation. The first question I asked was whether she was willing to move to a less populated area. She was, and that decision alone increased her compensation by nearly $50,000 without even starting contract negotiations, simply because she found a position in a higher-paying location.
In addition, she wanted a better work-life balance. She negotiated to work fewer days per week—down to three and a half days. This was a significant change from her previous role, where she had no such flexibility. These adjustments made her very satisfied with her new position.
On the flip side, I had a case with a gastroenterologist who wanted to move to a larger city. He did all the research and found that the median salary for his specialty in that city was $450,000. However, the initial offer he received was only $380,000. Although he didn’t get the salary he hoped for, he was able to negotiate more flexible on-call scheduling, which improved his overall work-life balance.
The key takeaway is that even if you don’t get everything you want in terms of salary, you can negotiate other aspects of your contract that are valuable. It’s about thinking creatively and understanding what trade-offs you’re willing to accept.
Kevin Pho: We’re talking to Miguel Villagra, a hospitalist. Today’s KevinMD article is “10 Essential Tips for Doctors Mastering Contract Negotiations.” Miguel, let’s wrap up with some take-home messages for our audience.
Miguel Villagra: Absolutely. First, remember that even if you don’t know how to negotiate a contract now, you can learn. There are resources and research available to help you master these skills. If you’re interested, read the article and feel free to reach out to me by email for more guidance.
Second, even if you don’t need these skills now, you might in the future. Surveys show that many physicians plan to make career changes in the coming years. For example, a recent survey found that while 75 percent of physicians were planning to stay in their current position through 2025, only 40 percent expected to stay through 2026. This indicates that many physicians anticipate change, so having these negotiation skills is essential.
Kevin Pho: Miguel, thank you so much for sharing your perspective and insights. Thanks for coming back on the show.
Miguel Villagra: Thank you for having me.