As the job hunt really revs into gear, I think this is a really important topic and a relatively new trend. It’s become more and more common for hiring practices, hospitals, and corporations to first provide a potential new doctor hire with a physician offer letter.
Instead of the actual contract to review.
So what’s the deal with this? And how can doctors successfully navigate receiving a physician offer letter?
First, what is a physician offer letter?
It can be called different things. Most often it’s an offer letter but it can also be a memorandum of understanding, offer sheet, or any other similar term.
But they are all the same thing.
An offer letter is a notice sent to you by a potential employer that at the very least expresses their desire to hire you. The letter then asked you to sign to signify that you intend to sign a contract with that employer.
Yes, the offer letter will ask you to essentially become exclusive with that potential employer without knowing the details of your actual contract!
Why an offer letter puts a physician at a disadvantage
Quite simply, signing an offer letter takes away your leverage. You are now theoretically bound to negotiate only with the employer whose letter you just signed.
No more leverage in the form of:
- Learning about other job opportunities
- Seeing other contract offers
- Negotiating based on other salary offers
This puts all the power in the employer’s hands.
Even if you have a very good idea of your physician value and know what you want to negotiate, you are still at a big disadvantage.
How can you sign without knowing:
- How much you will make?
- If you have a bonus?
- How you will make your money?
- If you have a non-compete?
- What call is structured like?
- What your benefits are?
Easy answer: You can’t!
So, what should you do if you receive a physician offer letter?
In my mind it is simple…
Ask to see your actual full contract before signing anything including and especially the offer letter.
This is obviously a very respectful conversation. But something along the lines of:
“Thank you very much for sending me the offer letter. I am honored. However, I feel that I need to see the entire contract before I am able to sign anything. Would this be possible?”
If the answer to that very reasonable and respectful question is “no,” that is a big red flag to me. It shows a lack of willingness to work with physicians that likely extends into actual practice as well.
What you shouldn’t do
You should not attempt to negotiate based on the offer letter.
First, you don’t even have all of the information to negotiate with. And any negotiation will inherently involve handshake agreements and verbal promises.
And unfortunately in the world of contracts, these mean absolutely nothing. If it’s not written in dried ink on your contract, it doesn’t count.
So, by doing this, you are at big risk of getting promises that encourage you to sign the offer letter. Only to find that these promises are not borne out in the actual contract.
That’s a bad position to be in.
What did I do when I received a physician offer letter?
I did exactly what I am recommending that you do!
I received an offer letter that contained their intention to work with me. It also includes my initial salary, which was nice. But nothing else.
Ultimately, I knew I liked this job and that it was probably where I was going to work. And the salary was very fair.
But, there was still information that I needed to know before being able to commit. It wouldn’t be fair to me or to my employer to not go in with all information.
Was I worried about offending them?
This is a common question I receive when talking about this.
And truth be told, I was a bit worried to offend them. Like I said, I really liked this job and knew it would likely be my top spot (and it is where I signed!). I didn’t want to seem unappreciative.
I Found My Perfect Physician Job in 6 Steps!
But, I also recognized that my employer would also respect and understand my position. Again, if not, that would be a red flag and very unexpected.
So I asked.
And I’m very happy to say that my employer had absolutely no problem sending me the full contract. They sent it within a week and we began negotiations.
We negotiated in good faith. I had all of the necessary information to make an informed decision. And we came up with a contract that is very fair to both of us.
With that said, let’s hit a refreshed on contract negotiation…
These are the 9 steps to negotiating the best physician contract:
- Make it personal
- Know your value
- Pick how you would like to make your money
- Create the ability to move on
- Learn your benefits
- The deal is in the details
- If it’s not in the contract, it doesn’t count
- Don’t be shy, just ask
- Crowdsource your negotiations
The bottom line
The simple formula to build wealth is to increase and invest the margin.
And the margin = what you make – what you spend.
What we spend is 100% in our control while what we make is decidedly less in our control. However, when we are negotiating our contract, whether the first one or the tenth, that is our time to really set what we make.
And that has a huge impact on our margin and our path to financial freedom.
Net Worth Update: From -$400K to +$400K in 14 Months
So you really want to do it from the best position and with the most information possible.
A physician offer letter does not put us in this position or provide this information. Therefore, it is 100% necessary to first view and negotiate a full contract before you sign anything.
If you are looking for more mentorship in reaching financial freedom, check out my free masterclass webinar on The 12 Steps to Financial Freedom for Physicians!
What do you think? Did you receive a physician offer letter? How did you navigate it? What tips do you have regarding contract negotiation? Let us know in the comments below!