Negotiating tips

How to negotiate a contract like a pro

You’ve made it through the hard parts. You have the knowledge, skills, and now the official opportunity to treat patients. But there’s one little thing standing in your way: The contract.

Actually, it’s not so little.

A contract does more than determine your pay and benefits. It can also determine your long-term job satisfaction. If you don’t have a good contract, you may eventually wind up unhappy, or have to renegotiate. A contract that both you and your employer are happy to sign will mean more satisfaction and fewer headaches down the road for everyone.

Whether you’re a new dermatologist preparing to accept your first job offer or a current dermatologist accepting an offer with a new practice, knowing how to negotiate a contract can be a bit overwhelming.

Here are nine things to keep in mind to negotiate like a pro

1. Fight for what’s reasonable

You may feel pressured to take a contract exactly as it is, without making any changes. Or you may want to negotiate every single point in the contract. Neither of these approaches will get you where you need to go. The key is a happy medium.

If there is something you feel strongly about, don’t be afraid to recommend a reasonable alternative. Although it can be intimidating, remember that neither you nor the practice will benefit if you end up unhappy with your contract. 

On the other hand, think twice before trying to negotiate everything. Due to a practice’s policies, and their need to be fair to current employees, some areas just aren’t going to be negotiable. For example, while they may be able to bump up your starting salary, they probably will not be able to change their whole compensation model.

If the practice comes back and says that they don’t take negotiations, you don’t have to give up. Just keep on being reasonable. Negotiating is always possible. However, larger groups may have less flexibility at the negotiation table — they typically offer contracts similar to their current employees. You should articulate your value, focus on your top negotiation points, and be prepared to compromise.

2. Always remain professional

There’s a difference between being firm and being pushy. Your attitude during negotiation says a great deal about your personality and can affect others’ first impressions of you as an employee. 

When you’re starting negotiations, make a list of your minimum requirements. Don’t hesitate to fight for what you need, but do so without being abrasive or rude. The right mix of friendliness and professionalism can go a long way. 

Let’s say you’re trying to get a higher salary. Saying, “You need to give me this amount — I have other hospitals who are trying to recruit me,” could be misinterpreted as an inflated ego. You may also want to avoid the “I’m drowning in student debt” and “plus, I’m a very hard worker,” lines. Most medical professionals either have or have had debt, and they are also extremely hard workers, so the sympathy card probably won’t get you very far.

Keep the conversation positive and friendly. Throughout the negotiating process, the employer should feel confident that you’re advocating for yourself because you truly want to work at the company, not because your ego is about to burst.

3. Put it all on paper

This is one of the most important parts of a contract: Make sure you get everything in writing.

Your future employer may make verbal promises and genuinely plan on following through with them. However, as time goes on, details can get fuzzy and promises can be forgotten. Having it all in writing allows you to hold your employer accountable for their promises.

Even if you’re sure that the contract will be signed, don’t do anything until the deed has been done. Brett Coldiron, MD, dermatologist at The Skin Cancer Center, says, “I knew someone who did not have a contract. He was told he would be able to deal with it when he got to town. So he bought a house, moved, and then the contract was terrible and he was miserable. He worked there for the term of the contract, but left as soon as he could.”

4. Don’t hesitate to get a third party involved

While some contracts are straightforward, others have complicated terms and formulas. And although some employers may be ready to negotiate, others might be a bit more stubborn.

If you are having trouble understanding or negotiating your contract, it’s not a bad idea to ask for help.

Dr. Coldiron recalls, “When I first went into practice, I was working for a university program. I could not get them to budge. So I hired a contract attorney who went in and told them I was asking for the industry standard. I got a much better contract because of him.”

An attorney can be costly, but Dr. Coldiron highly recommends shelling out the money if you need the help. “It may be difficult and expensive, but hiring an attorney is a good investment. You will ultimately end up saving money. I’d definitely recommend hiring someone if you can. Also, make sure that they are a contract attorney, who is an expert in contracts and negotiation, rather than a general lawyer.”

5. Check for growth and professional development opportunities

A high salary might sound tempting right now, but will it get you where you want to go in 5 or 10 years?

“Some employers dangle great contracts at first, but there isn’t much room for growth,” says Dr. Coldiron.

Before signing on, know what the future could hold in store. Will you have an opportunity to become a partner, and own part of the practice? Do they offer CME courses — or pay for you to attend CME courses — so that you can keep growing and developing as a physician? Is the practice size or patient population increasing in size?

Create a list of your long-term goals, and make sure that your contract allows for you to reach those goals.

6. Know the ins and outs of your benefits package

Even if the starting salary is a bit lower, an employer can win you over with the right benefits package. Review the benefits thoroughly, and don’t hesitate to ask for more details.

Typically, employers offer: 

• Health insurance

• License fees

• Medical staff dues

• Malpractice insurance

• CME stipend

• Three to four weeks of paid time-off (including sick days, vacation days, and CME time)

You will also want to ask about onboarding costs when you begin practicing. Many practices will cover your onboarding costs associated with medical licenses, background checks, and insurance credentialing. Fees associated with hospital privileges may or may not be covered by the practice. Alternatively, the practice may offer a stipend to cover some of these onboarding costs.​​

When it comes to malpractice insurance, there are two types, claims-based insurance and occurrence-based insurance. If the practice offers only claims-based insurance, your contract should outline if you will be responsible for part or all of the coverage needed for claims filed outside of the coverage year.

Pay close attention to malpractice insurance. Costs vary greatly from state to state and between employers. There are two models.

Claims-made insurance only covers cases when the policy is in effect during the incident and when the lawsuit is filed. You will need coverage for claims filed later, and your contract should outline if you are responsible for part or all of this coverage.

Occurrence-based insurance covers incidents that happen during coverage, even if the lawsuit is filed after the policy has lapsed.

7. Do your research

Negotiating your salary and benefits is a lot easier if you know your goals are realistic. 

If you feel you’ve gotten a low-ball offer, compare it to salaries for similar positions in the area. 

Dr. Coldiron also recommends, “Look at your geographic location and demographics. Physician income can vary greatly from location to location, depending on if the area is saturated with dermatologists, or on the size of the population.”

Since office culture can play a major role in your job satisfaction, it’s important to do that research, too. “Spend some time in their office and see how you fit in,” says Dr. Coldiron.

Make sure that you also research the type of contract that the company uses. Many companies offer young dermatologists work relative value unit (RVU) contracts, and these contracts are often better in theory than in reality. Dr. Coldiron explains that with a work RVU contract, you will end up paying more of the company’s overhead, and receiving less for yourself. He recommends asking for a contract based on a percentage of total collections or total RVUs.

8. Discuss market stability

If the market changes, you’re going to need to have a plan in place. Dermatology is undergoing a lot of changes with various practice models, including more consolidation, adoption of new technologies such as teledermatology, and a shift to value-based payment. With all of these forces at play, you should think about how your current employer may change in the future and what type of practice model you ultimately prefer. 

The dermatology market is rapidly changing secondary to private equity investments. To date, there are more than 30 known private equity-backed dermatology groups. Private equity firms in dermatology have consolidated by acquiring practices with an ultimate goal of selling to another entity in three to seven years. The next owner after the flip may be another private equity firm, a larger health care conglomerate, the public via an initial public offering, or an insurance company. 

Some independent dermatologists are deciding to sell to private equity given currently high practice valuations. If you decide to join a currently independent group and do not want to be employed by a private-equity group in the future, consider asking for a private equity buyout clause or “non-assignable clause,” which limits your employer’s ability to sell your contract to another entity.

9. Have an exit strategy

Sometimes, things just don’t work out. That’s OK, so long as you know how to make a clean break.

Look carefully at any restrictive covenants (also called “non-compete clauses” or “non-competition agreements”). These clauses aim to protect an employer by ensuring that when a physician leaves, they do not take many patients with them. 

If you are leaving a practice, a restrictive covenant can bar you from practicing in a certain geographical area, for a certain amount of time. The radius depends on the location for the practice. For example, you may have a 25-mile restriction in a rural setting, but only a 1-mile restriction if you practice in an urban setting. Generally, a covenant lasts for about one to two years after you leave.

You probably won’t be able to make a case for removing a restrictive covenant entirely, but you may be able to negotiate the terms. Look out for unreasonable covenants. A clause that says you can’t work anywhere in the entire state for five years should never fly. 

It’s also important to have a non-work related exit strategy. If you’re moving to a brand-new location, and you’re not quite sure about the area, Dr. Coldiron recommends renting a home instead of buying one. 

Related AAD resources

• Employment guide: See all our resources on contracts, questions for employers, and more.

• Employment contracts: See additional guidance on contracts, including red flags you should negotiate.

• Questions to ask a potential dermatology employer: See our detailed lists of issues to raise with potential employers.

This content was created with the particular needs of early-career dermatologists in mind. See the rest of our Career Launch resources for young physicians.

This information is provided as general guidance and is not intended as legal advice. Employment contracts can vary widely, and state and federal laws may affect how certain terms are applied. Physicians are strongly encouraged to consult an attorney for a thorough contract review to ensure compliance.