The short answer is yes. While there are presumably some physicians who have the time, patience, perspective and knowledge to effectively negotiate their own employment contracts with a hospital, there are a number of reasons why most physicians cannot or should not attempt their own negotiations.
1. Promoting the Talent. Most people are constrained by natural modesty from beating their own chests with respect to their professional abilities and value. It is far easier for an independent professional to sing the praises of a physician and turn the perspective on the physician to its best vantage point.
2. Apples and Oranges. Hospitals frequently use physician compensation surveys to their advantage in employment contract negotiations as a frame of reference. There are surveys and there are surveys. There are over 16 major physician compensation surveys, which frequently arrive at different conclusions depending on the specialty surveyed. Knowledge and access to the surveys by agents can enhance a physician’s negotiating position and can provide a point of departure for a demonstration as to why a particular physician is worth more than median value survey results. If the negotiations involve the sale of a professional practice, money may be left on the table without a clear understanding of components of a practice appraisal and how small changes in assumptions can have a dramatic effect on the bottom line.
3. Relative Value. Practice overhead calculations in a hospital based practice negotiation can vary widely depending upon the sophistication of the hospital in physician billing (not usually good) depending upon whether the hospital is located in one of the 22 or so mandatory Medicare states. Further, physicians managing their individual practices tend to be more frugal than larger institutions like hospitals. MGMA and other entities provide data on overhead calculations on a national and regional basis. Sometimes it is better, or worse, depending on which side you are on, to use national rather than some actual hospital experience with overhead, but a negotiator needs to be familiar with the options available and how they can impact the client.
4. Jailbird Blues. Hospitals frequently cite regulatory constraints such as non-profit “private inurement” prohibitions, Stark Law and Anti-kickback statute concerns to leverage physician compensation in employment agreements. Knowledge and experience in working through the parameters of regulatory oversight is invaluable in scoring fair and safe compensation for a physician. Intimate knowledge of regulatory matrices permits an agent to sort out the authentic issues from the ephemeral ones and places the agent in a position to be able to suggest imaginative structures that meet the needs of the parties without jeopardizing compliance.
5. Buyer’s Remorse. Employment agreements can contain traps for the unwary. Failure to adequately plan for conflict resolution, for the unique and different culture in an employment rather than private practice setting, possible mutual future disengagement, covenants not to compete, tail coverage, confidentiality bonus accrual, and other sensitive subjects can result in the post employment blues.
6. Shock Absorption. Negotiation through intermediaries has the shock absorbing and insulating effect of permitting a frank discussion in the heat of negotiations, while avoiding hurt feelings and misunderstandings between the principles that can lead to a negative tailspin in negotiations. Agents can have a buffering effect in smoothing out the rough edges in communications and steering the process of communications in a constructive and positive direction. Emotional distance and a broader perspective from experience permits an agent to absorb the impact of hyperbolic or angry communications and to present the substance back and forth in a less damaging context. An agent can also raise trial balloons on sensitive subjects without committing his or her principle to test areas of potential mutual agreement and expand the range of options.
7. Off of the Dime. Negotiations through principals sometimes stall because of stalemates or absorption by the parties or other distractions. Agents tend to remain focused and push things along toward a conclusion. Agents tend to be goal oriented and enjoy the satisfaction of putting a deal together that meets the needs and objectives of the principle. Communications from outside agents are often useful in getting a prospective employer to approach things differently or to see things from a different perspective. Knowledgeable negotiators can be a boon to both sides in the expedited identification and resolution of the many central and peripheral issues that surface in hospital/physician negotiations.
8. Coaching. Outside agents serve as listening posts. The can and should provide feedback and encouragement. They can prepare a physician to present himself or herself to a potential employer at maximum advantage. They can help curb disappointment and discouragement in the negotiation process and keep negotiations on track.
2. Apples and Oranges. Hospitals frequently use physician compensation surveys to their advantage in employment contract negotiations as a frame of reference. There are surveys and there are surveys. There are over 16 major physician compensation surveys, which frequently arrive at different conclusions depending on the specialty surveyed. Knowledge and access to the surveys by agents can enhance a physician’s negotiating position and can provide a point of departure for a demonstration as to why a particular physician is worth more than median value survey results. If the negotiations involve the sale of a professional practice, money may be left on the table without a clear understanding of components of a practice appraisal and how small changes in assumptions can have a dramatic effect on the bottom line.
3. Relative Value. Practice overhead calculations in a hospital based practice negotiation can vary widely depending upon the sophistication of the hospital in physician billing (not usually good) depending upon whether the hospital is located in one of the 22 or so mandatory Medicare states. Further, physicians managing their individual practices tend to be more frugal than larger institutions like hospitals. MGMA and other entities provide data on overhead calculations on a national and regional basis. Sometimes it is better, or worse, depending on which side you are on, to use national rather than some actual hospital experience with overhead, but a negotiator needs to be familiar with the options available and how they can impact the client.
4. Jailbird Blues. Hospitals frequently cite regulatory constraints such as non-profit “private inurement” prohibitions, Stark Law and Anti-kickback statute concerns to leverage physician compensation in employment agreements. Knowledge and experience in working through the parameters of regulatory oversight is invaluable in scoring fair and safe compensation for a physician. Intimate knowledge of regulatory matrices permits an agent to sort out the authentic issues from the ephemeral ones and places the agent in a position to be able to suggest imaginative structures that meet the needs of the parties without jeopardizing compliance.
5. Buyer’s Remorse. Employment agreements can contain traps for the unwary. Failure to adequately plan for conflict resolution, for the unique and different culture in an employment rather than private practice setting, possible mutual future disengagement, covenants not to compete, tail coverage, confidentiality bonus accrual, and other sensitive subjects can result in the post employment blues.
6. Shock Absorption. Negotiation through intermediaries has the shock absorbing and insulating effect of permitting a frank discussion in the heat of negotiations, while avoiding hurt feelings and misunderstandings between the principles that can lead to a negative tailspin in negotiations. Agents can have a buffering effect in smoothing out the rough edges in communications and steering the process of communications in a constructive and positive direction. Emotional distance and a broader perspective from experience permits an agent to absorb the impact of hyperbolic or angry communications and to present the substance back and forth in a less damaging context. An agent can also raise trial balloons on sensitive subjects without committing his or her principle to test areas of potential mutual agreement and expand the range of options.
7. Off of the Dime. Negotiations through principals sometimes stall because of stalemates or absorption by the parties or other distractions. Agents tend to remain focused and push things along toward a conclusion. Agents tend to be goal oriented and enjoy the satisfaction of putting a deal together that meets the needs and objectives of the principle. Communications from outside agents are often useful in getting a prospective employer to approach things differently or to see things from a different perspective. Knowledgeable negotiators can be a boon to both sides in the expedited identification and resolution of the many central and peripheral issues that surface in hospital/physician negotiations.
8. Coaching. Outside agents serve as listening posts. The can and should provide feedback and encouragement. They can prepare a physician to present himself or herself to a potential employer at maximum advantage. They can help curb disappointment and discouragement in the negotiation process and keep negotiations on track.
One of the joys in serving a client in contract negotiations is the pleasure of overcoming problems and roadblocks through imaginative design. Most major sport’s figures rely on agents to negotiate their contracts. Why not physicians? The skill sets and knowledge base required is different than Jerry McGuire’s, but the same need is there.
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