I just recently completed contract negotiations and renewed my contract with my employer. Overall, I am very happy with how it went. And I’ll certainly go into details about it in another post.
However, what I want to really talk about in this post is how I defined and established my value as a physician prior to the contract negotiations. Because this is what set the stage for a successful negotiation on my part.
I think the biggest mistake that doctors make going into contract negotiations is they have no idea what value they bring in a tangible sense. I think we all, as doctors, have an intangible sense of our value. But our employers or practice owners don’t care about intangibles. Right or wrong, that’s just how it is. So we need hard data to show them.
Unfortunately, just like personal finance, we have little to know formal education or training in contract negotiating. So we are at a disadvantage.
And that is where I hope this post based on my experience can come in handy.
3 ways I defined my value ahead of contract negotiations
I’m not putting these in any order of importance because I think they all play an important role…
1. Normative physician salary data
To me, this is the biggest shift in recent years to favor doctors in their quest for fair compensation.
When I negotiated my first contract 3 years ago, accurate normative physician salary data based on large populations of doctors was hidden behind massive pay walls that were prohibitively expensive for individual physicians. Thus, it was only institutions or large practices that could buy the data and use it. This left physicians blind.
However, since then, this data has become democratized. And that is all of the better for physicians. This means that multiple companies exist that have access to the overall data and will share the relevant portions of data with you for a nominal fee.
So, I used these services prior to my contract negotiations
I’ll focus on Compensation Rx since this is the more fleshed out service at this time. I also recently used Compensation Rx as I approach time for a contract re-negotiation. Basically, for a flat fee of $297 – a price I would have even found reasonable as a graduating trainee – I received a full report of compensation data for early career plastic surgeons in my geographical region of Western New York.
The data did not only include things like average salary, which is useful but limited. It included a breakdown of how compensation was determined – RVUs vs. collections, etc – as well as breakdowns by practice setting. The dataset also includes additional RVU data like compensation/RVU.
Also included in the flat fee however is a strategy meeting with a contract advisor to really break down the data and answer any questions.
Needless to say, normative physician compensation data like this is invaluable. This really legitimized the salary that I was asking for in my negotiations.
2. RVU tracking
Many of you will remember that my contract is salary-based. I make 96% of my income via salary and the extra 4% is via a bonus for things like dictating my operative reports in time.
I think most doctors in this situation just ignore RVUs. Because their income is not based on RVU production (here is a full breakdown of the RVU system). Unfortunately this is really short-sighted. Because in reality, their compensation is based on their production and the most common and universal measurement of production in medicine in the RVU.
Take my case again. My initial contract was for 3 years. I knew from day 1 that I would be re-negotiating my contract in 3 years. And I knew that, at that time, I would need to show that, at the very least, I earned my contract. And, at the very most, the I outperformed my contract and deserved a raise.
So, I tracked my RVUs from day 1
For a surgeon, RVUs come largely from our operative cases. So, I tracked every case that I did as well as the coding.
Then, when it came time for contract negotiations, I simply tabulated all of the different CPT codes from my cases, used available software like EncoderPro to gather the RVUs associated with each CPT code, and then multiplied the total RVUs that I generated by the $/RVU value available via the normative data I obtained.
Now, I could tell my employer exactly how much value I brought is a very concrete and tangible way. And, in my case, I showed how actually I was still giving them a deal even at my new asking price based on the value I brought to them.
And you can do the same
Regardless of your compensation structure (and if you are RVU-based, this is a must), you can do this. Figure out where your RVUs come from. And track them obsessively. Do it at the end of every day.
No one will care about your value as much as you will. And if your employer tracks your RVUs, you can guarantee there will be inaccuracies.
So, do it yourself.
3. Compare to your colleagues
Comparison is the thief of joy.
This is a central tenet in the study of happiness, in personal finance, and even in the concept of intentional spending. However, in the case of preparing and establishing your value, comparison can help.
In fact, just yesterday, I received an email from a doctor who was asked to help spread the word that her employer (a big hospital system) was looking to hire more doctors in her specialty. They sent her a listing for the job and the compensation listed was higher than the employee’s who had been there for 10 years! Needless to say, she is using this in her upcoming contract negotiations.
While this is an extreme example, the concept of formally and informally comparing your compensation is an important one.
Get as granular as you can
Normative salary data is very helpful because it is granular. It can tell you what an average doctor in your specialty in your region in your age ranges makes annually. But comparing compensation with colleagues is even more granular. They are real doctors. In your area or even in your hospital system many times. It’s was granular as you can get.
Now, I am sure many of you are wondering how to actually do this? Or if it can be done at all? Because it sounds awkward and goes against the grain of how doctors usually handle their compensation.
We are usually very tight lipped. But why? A rising tide lifts all ships. And sharing salary data amongst our tribe will only help us in the future when we negotiate. It happens in pro sports all the time. But not in medicine. And it costs us our leverage.
So, meet with your partners are make an agreement to share data in an effort to help you all. Talk to other mentors or friends nearby – in a similar practice type as your or not.
Or, if you are in a state position like I am, you can just look online to find out this data. Lastly, you can look at job postings for similar positions to see what is advertised – especially as laws are being passed making compensation data mandatory to include in these postings.
And then after this, focus on the intangibles…
Don’t ignore them completely.
Remember, the problem is that most doctors focus only on intangibles. And that is not the language that administrators or practice owners speak. They speak numbers. So lead with the numbers as we’ve reviewed above. Then top it off with the intangibles to really drive your point home.
My advice is to list out all of the intangible things you do to contribute and bring value. Things that you do that others can’t. Because remember, the way compensation works in our society is that the less people there are that can do a thing, the more they get paid to do that thing.
As examples, here are a few of the intangible value-adds that I brought into my contract negotiations:
- Starting and running a new residency program
- Speaking nationally, bringing attention to the hospital
- Bringing new service lines into the hospital
- My local connections that draw patients into the system and keep them in the system downstream
The big take-aways
As a physician, you bring significant value. For better or worse though, it is up to you to demonstrate and then define that value.
And now you can!
Here are some other great posts to help you design the best practice for yourself!
- Exploring an Exciting New Employment Option for Doctors
- 7 Do’s and Don’ts of Building a Successful Medical Practice
- 9 Things I Wish Someone Had Told Me About Starting a Private Practice
- How to Negotiate Your Physician Contract
What do you think? How do to define and demonstrate your value? What have your contract negotiations been like? Let me know in the comments below!