Understanding The Nuances Of Negotiating Physician Contracts

Jon A. Hultman, DPM, MBA, CVA

Whether you are starting out in a podiatry practice, haggling over a managed care contract or selling a practice you’ve had for years, there are many factors that go into being a savvy negotiator. Accordingly, this author focuses on strategies that address both the economic and emotional issues that play a part in negotiating physician contracts.

From the moment we complete the training and education necessary to “hang up our shingles” and seek an employment contract, our ability to negotiate becomes a skill that plays a significant role in our job satisfaction and success throughout long careers. Virtually every transaction we make involves some form of negotiation. In fact, successful negotiation is as important in our personal lives as in our business lives.

   Negotiating is not just something we do when making major financial transactions such as seeking employment, adding an associate, hiring staff, buying equipment, haggling over the terms of a managed care contract or selling a practice. It also comes into play daily in our offices when discussing procedures or fees with patients, and in our homes where we routinely negotiate with children and spouses. Since our overall effectiveness in both personal and professional pursuits depends on our ability to negotiate skillfully, working to improve our skills of negotiation should be a lifetime endeavor.

   Perhaps the greatest challenge for a negotiator is the fact that he or she must address emotional as well as economic issues. This complex combination of rational and possibly irrational factors can lead to outcomes that result in damaged relationships or less than optimal results. For transactions in which we are selling — say a home or a car — the subsequent relationship is irrelevant. For other transactions — such as when pursuing employment by a medical group, HMO or hospital; seeking surgical privileges; or working out the details of a managed care contract — maintaining good relationships amongst negotiating parties is crucial to future success.

   In the 1950s and 1960s, negotiating often involved a “hard-nosed” bargaining style that typically resulted in one party winning and the other losing. Such win-lose outcomes resulted in strained relationships and lost future opportunities. This style later gave way to “win-win” negotiating, which Roger Fisher and William Ury articulated well in the book Getting to Yes.1 Let us focus on some basic ideas that I have found helpful in developing negotiating skills that lead to win-win situations.

   While much of the discussion regarding negotiations would seem relevant specifically to younger practitioners who are just entering the workforce and are involved in working out their futures with potential employers, the reality is that many DPMs in their mid- and late careers are finding themselves in situations similar to those of younger practitioners who are just starting out. For example, many who are five to ten years from retirement are selling their practices and seeking employment by the new owners, or they are seeking employment by medical groups or orthopedic groups, clinics or hospitals. Mid-career DPMs are merging practices to form larger groups, groups that will function like business corporations. Even if they are partners in those businesses, they will need to negotiate such things as work hours, vacation time, call schedules, division of overhead, compensation formulas and benefits.

Exploring The Link Between Money And Satisfaction

We often perceive money as being the most significant issue in negotiations and while it is important, money actually may not be the most important factor in determining a practitioner’s job satisfaction. The 2014 Medscape Physician Compensation Report contains two interesting charts that are quite revealing when we compare them side by side.2

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