“Golden Rules” of Physician Contract Negotiation

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As a negotiator by trade, I am frequently asked for my best pointers on negotiation. I came up with what I call “Greg’s Golden Rules” and I use these as guiding principles for every negotiation I do. If you are interested in my advice or help with an upcoming contract negotiation, get in touch and I’d be happy to talk with you.

Rule #1: Almost everything is negotiable.

No joke, I negotiate the electronics store when I’m making a big purchase. Most people think the price that’s posted is what you pay, but in my experience that’s often not the case. I’ll go to the register with my $225 item to purchase, and then ask if that’s the best they can do on price or if they have any manager’s specials going on. I’d say about 50% of the time they’ll tell me they have something going on that can get me 20% off. Costs me 10 seconds to ask and saves me close to $50!

Rule #2: Your chance of success is directly related to your preparation.

A huge driver of your success in a negotiation is how well prepared you go in. The more research you do up front and the more time you spend organizing your information, the more confident you go in for whatever they may throw at you. The more confidence you have, the better off you are going to be.

Rule #3: The worst that someone can say is no.

My favorite line I hear in physician negotiations is “We’ve never agreed to that before.” My immediate response? “There is a first time for everything – let’s start there.”
Worst case, if a hospital or physician group sticks to their position that they will not negotiate, then you know you have the best offer they are willing to give. You won’t know if you don’t ask.

Rule #4: Asking for something or opening a negotiation is not offensive.

I think about it like this – when I’m hiring someone to work for me and I offer them a compensation package, I want them to negotiate it! It gives me confidence I am hiring the right person. Opening a negotiation says they have business savvy, they know their value, and they are going to be an asset to the practice as a result. It’s not offensive – I’d go as far as to say it can be appreciated.

Rule #5: Know your value.

Know what unique value you bring to the group or hospital and leverage it! I think about a neurosurgeon I talked with whose credentials were a main reason the hospital was a Level II Trauma center – a fact which they shared loud and proud in all their regional advertising to position themselves above the competition.
Think about what sets you apart. If you have phenomenal production numbers or a certain specialization that others don’t have, you can use that to set yourself apart from the other doctors they may be looking at. That gives you a very strong foundation to negotiate on.

Not sure how to quantify your value? Our team at Vestia Contract Negotiation has access to benchmark physician salary data by specialty and we can help you benchmark where your productivity falls.

Rule #6: You always have some kind of leverage (know your leverage points).

If you are involved in a negotiation, you have some sort of leverage. If you had nothing to offer the hospital or group, they wouldn’t be talking with you! This goes back to thinking about your unique value and coming to the negotiation prepared so you can make best use of the leverage you have.

Rule #7: You can push harder than you think

You will probably get a feel for when you are reaching the end of what the other party is willing to offer. The concessions get smaller, the tone can get a little rougher, and they start saying things like “this is the best we can do.” There may still be a little more to get at this point though. You want to be aware of how far you can push, but know it’s often a little further than you think.

Rule #8: Tentatively commit

A couple great lines to keep top of mind – “If I could agree to this today, what could you do for me?” or “If I was to do that, what would that look like?” In other words, tentatively commit with an “if” statement, and test out whether that will get you what you want. You haven’t actually committed, so if you don’t get the intended result it’s easy to walk back.

Rule #9: Relationship may or may not matter

The way you approach the negotiation is going to be different if you are negotiating with the managing partner of the practice you’re trying to join versus their business manager who you won’t run into again until your contract comes up for renewal. If the relationship matters, you’re going to approach the negotiation in a different way because it’s essential you have a good working relationship with this person for years to come. If the relationship does not matter, you can be a little bit more disagreeable and a bit firmer throughout that negotiation because you aren’t investing in where that future relationship goes.

Rule #10: Know the power of “No”

There is a reason one of the greatest things in a negotiation at the car dealership is the walk out.
Saying no has a lot of power – if the other side wants to keep the negotiation going, then they have to figure out how to get you to pull back your no and open things back up. I like the line “I don’t see how I’m going to be able to agree to that.” That may get them to pivot and say something like “well what if we did this instead?”

Rule #11: Listen and Learn

You have two ears and one mouth – use them in that proportion in a negotiation. The more you can listen in the conversation and absorb information, the more likely you will get a successful result.
There is great power in silence because people are uncomfortable with it. People will fill the uncomfortable silence by saying things they probably didn’t plan to say – they may even start negotiating with themselves!
I’ve seen something similar to the below play out countless times.

Them: Well, we could never agree to that.
You: Sit in silence, maybe cock your head in thought…
Them: I guess I can’t say never because there are exceptions.
You: Stay silent
Them: Yeah, I guess we could agree to that.

It’s amazing how fast people back off of their positions when they are uncomfortable.

Rule #12: Stay Agile

“Agile” is the one word that describes me when I am really on my game in a negotiation. I can pivot at any moment because I’m well prepared and I’m always listening. If they hit me with a piece of information I wasn’t expecting, I can shift. If they say something that’s to my advantage, I can immediately recognize it and pounce. If there is one key I can share to conducting the best negotiation you can, it is to be agile!
The way to stay agile is to run your negotiation by these Golden Rules. You will know the information better than the other party, and you will be able to respond to whatever turns the negotiation takes. Stay agile, be ready to pivot, know you can call a time out if you need to, and most of all know that you do not have to agree to a bad deal! Many doctors think the other party has all the power and all the leverage, but I often find that is not the case. Every doctor I talk with has a unique value proposition, and once we uncover what that is, we can get to work and highly leverage it to get you in the right place. Contact me if you’d like my help with your next contract negotiation.

 

Greg Allen is a Negotiator with Vestia Contract Negotiation. If you are interested in more of Greg’s insights, you can view his Negotiate Like a Pro webinar or hear him on Episode #3 of the Doctor’s Eyes Only podcast.

 

Vestia Contract Negotiation provides strategy coaching and consulting. It is not in the business of providing legal, financial, or tax advice. You should always consult professionals for advice in those areas. Vestia Contract Negotiation, LLC and Vestia Advisors, LLC are affiliated but separate entities. Clients of Vestia Personal Wealth Advisors should consult our Form ADV and ask their advisor to understand the relationship and potential conflicts of interest.

 

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