The Complete Guide to Physician Contract Negotiation for Residents

Understanding the Basics of Physician Contract Negotiation

Transitioning from residency or fellowship into your first attending position is one of the biggest financial and professional milestones of your career. Yet many new physicians spend more time researching cars or apartments than they do their first employment agreement. Physician contract negotiation is not just about salary—it’s about career trajectory, lifestyle, financial security, and professional autonomy.

A physician employment contract typically governs:

• How and how much you are paid
• How hard and how long you work
• What benefits and protections you receive
• What happens if the relationship ends
• Where you can practice next

Approaching attending salary negotiation thoughtfully can literally mean hundreds of thousands of dollars over a few years—and far more over a career.

Why Contracts Matter More Than You Think

Physician employment contracts are legally binding. Once signed, your options to “fix it later” are limited. Common consequences of a poorly negotiated agreement include:

• Being “stuck” in a job you dislike because of an aggressive non-compete
• Surprising call responsibilities not clearly outlined
• Lower compensation than colleagues doing the same work
• Owing a large tail insurance premium when you leave
• Not being paid for work done if termination terms are unclear

Your goal is not to “win” against the employer but to create clarity, fairness, and alignment—so both sides know what to expect and can work together productively.

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Key Components of a Physician Employment Contract

Before you can negotiate, you need to understand the moving parts. Most contracts contain similar core sections, though the details vary among academic centers, private practices, and hospital-employed positions.

1. Position Description and Duties

This section should clearly define:

• Clinical responsibilities (inpatient, outpatient, procedures)
• Number of clinics per week or expected patient volume
• Call duties (frequency, type, in-house vs home call)
• Administrative, teaching, or research expectations
• Location(s) of practice (including satellite clinics)

Red flags:

• Vague language like “other duties as assigned” without limits
• No clear boundaries on travel between sites
• No maximum number of sessions/clinics per week

Action step: Ask for specific language where possible. For example: “Physician will staff four half-day clinics per week and maintain an average of 16–18 patients per clinic session.”

2. Compensation Structure and Attending Salary Negotiation

Compensation is often the focal point of physician contract negotiation, but you must understand the structure, not just the headline number.

Common models:

• Straight salary – Fixed annual base, often in academic settings or early years of employment
• Salary plus productivity bonus – Base pay plus RVU-based or revenue-based bonus
• Pure productivity – Comp primarily tied to RVUs or collections (more common in private groups)

Key items to identify:

• Base salary amount and term (e.g., guaranteed for 2 years)
• RVU thresholds and conversion factor (e.g., $50 per wRVU over 6,000)
• Collection percentages if based on revenue
• Timing of bonus payments (monthly, quarterly, annually)
• How compensation changes after the initial term

Benchmarks to use: MGMA, AAMC, and other specialty-specific data can inform your market value, but regional variation is significant.

Action step: Ask the employer for recent data on:

• Median and 75th percentile compensation for your specialty in that region
• Typical wRVU production for physicians in your role
• Average total compensation (base + bonus) for recent hires

3. Benefits and Perks

Benefits are often undervalued by new physicians yet can be worth tens of thousands per year.

Core items to review:

• Health, dental, and vision insurance (employer vs employee cost)
• Retirement plans and employer matching (401(k), 403(b), 457(b))
• Disability and life insurance
• Paid time off (vacation, sick time, holidays)
• CME time and funds (e.g., $3,000/year, 5 days)
• Licensing, DEA, board fees, professional society dues
• Relocation assistance, signing bonus, student loan repayment
• Malpractice coverage (claims-made vs occurrence; tail coverage responsibility)

Action step: Assign approximate dollar values to these benefits when comparing offers. A “lower salary” with richer benefits can sometimes be the better deal.

4. Term, Renewal, and Termination

You need to know how long the contract lasts and how it can end.

Key elements:

• Initial term (e.g., 2-3 years)
• Automatic renewal vs renegotiation at end of term
• Termination with cause (misconduct, loss of license, etc.)
• Termination without cause – typically requires 60–180 days’ written notice by either party

Pay particular attention to:

• How long you’re locked into the initial compensation model
• Whether there is a guaranteed period (e.g., salary can’t be reduced for 2 years)
• What notice period you must give if you choose to leave

Action step: Aim for symmetry—if the employer can terminate without cause with 90 days’ notice, you should have similar flexibility.

5. Restrictive Covenants (Non-Compete and Non-Solicitation)

Restrictive covenants can significantly affect your future mobility.

Common elements:

• Non-compete clause – restricts practicing within X miles for Y years after leaving
• Non-solicitation – restricts poaching patients, staff, or referral sources
• Geographic scope – distance from your primary or any practice sites
• Duration – typically 6–24 months

Reasonableness varies by state and specialty. Some states are now limiting or banning non-competes for physicians, especially in certain settings.

Action steps:

• Clarify which locations the radius applies to
• Try to limit:
  • Duration to 12 months or less
  • Radius to a realistic distance (e.g., 5–15 miles in urban areas)
• Ask for carve-outs (e.g., academic, telemedicine, or VA work)

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How to Prepare for Physician Contract Negotiation

Successful attending salary negotiation starts long before you see the written agreement. Preparation gives you confidence, leverage, and clarity about what you truly want.

Step 1: Clarify Your Priorities

Not all parts of the contract carry equal weight for you personally. Before negotiations start, list your top priorities, such as:

• Geographic location and commuting time
• Compensation level
• Work-life balance and call schedule
• Procedural volume or subspecialty focus
• Academic opportunities (teaching, research, leadership)
• Partnership track in private practice
• Loan repayment or signing bonus

Rank them: what’s “non-negotiable,” what’s “very important,” and what’s “nice to have.” This helps you focus negotiations and avoid getting stuck on minor points.

Step 2: Research the Market

You need data to support your physician contract negotiation positions.

Sources:

• MGMA or specialty society compensation reports (often via your program or mentors)
• AAMC data (for academic roles)
• State or regional medical societies
• Specialty-specific Facebook groups, forums, and LinkedIn communities
• Recent graduates from your residency or fellowship program
• Recruiters who place physicians in your specialty and region

Aim to understand:

• Typical starting base salary range for your specialty in that geographic area
• Common RVU expectations and conversion factors
• Average call burden and practice settings
• Typical benefits and non-compete norms

Step 3: Assemble Your Team

Physician employment contract review is complex. Strongly consider:

• Health care attorney: An attorney who regularly reviews physician contracts is invaluable. They understand regional norms, spot hidden pitfalls, and suggest specific language changes.
• Financial planner or advisor: Especially if evaluating multiple offers or complex compensation models.
• Mentors: Senior physicians in your specialty who can provide practical context (“this call schedule is heavy for our field”).

Action step: Budget $500–$2,000 for professional contract review. The return on investment is often enormous relative to your career earnings and risk reduction.

Step 4: Time Your Negotiations Strategically

Negotiating is easier:

• Before you sign a letter of intent (LOI) or early in the process
• When there is clear mutual interest and the employer has invested time in you
• Before the position is “urgent” on your side (avoid negotiating from desperation)

If you receive multiple offers, sequence your conversations thoughtfully to compare them effectively without burning bridges.

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Practical Strategies for Effective Attending Salary Negotiation

Many physicians feel uncomfortable negotiating; they worry about appearing ungrateful or difficult. But professional, data-driven negotiation is expected and respected in most settings.

Use a Collaborative Tone

Frame your requests around alignment and clarity, not confrontation. For example:

• Instead of: “This salary is too low.”
• Try: “Based on recent MGMA data and my training background, I was expecting a base closer to $X. Is there room to move in that direction?”

Key principles:

• Be polite, direct, and specific
• Focus on “we” and long-term fit
• Avoid ultimatums unless you’re prepared to walk away

Negotiate the Package, Not Just the Salary

Your total compensation and professional satisfaction depend on multiple levers:

• Base salary
• Bonus potential and structure
• Relocation allowance
• Signing bonus and retention bonuses
• PTO, CME funds, and protected time
• Call differentials or moonlighting opportunities
• Loan repayment or stipend for board exams

If salary movement is limited, you might say:

“If the base can’t be adjusted further, could we explore increasing the signing bonus, adding a student loan repayment component, or enhancing CME support?”

Anchor with Data

Use your research to:

• Provide a salary range rather than a single number
• Cite specific benchmarks (e.g., “75th percentile for starting hospitalists in this region is approximately $X”)
• Explain how your skills justify the higher end of the range (procedural skills, fellowship training, language abilities, leadership experience)

Make it easy for them to justify your request internally.

Ask Clarifying Questions

Sometimes the written terms don’t match what was discussed verbally. Use questions to uncover and resolve discrepancies:

• “Can you walk me through how RVUs are calculated and credited?”
• “What has been the typical total compensation for new hires in this role over the last few years?”
• “How often have physicians met or exceeded the RVU targets outlined in the contract?”
• “What is the average call frequency for physicians in this group right now?”

These questions often open the door to adjustments or clarifications.

Get All Changes in Writing

Verbal promises are not enforceable. If something matters, it must appear in the written contract (or an official amendment).

Examples:

• “Partnership track at 2 years” → specify criteria, timeline, and buy-in expectations
• “Light call” → define call frequency in explicit terms
• “Support for research” → define percentage of protected time and any funding

Action step: After negotiations, request a “clean” updated contract incorporating all agreed changes. Review it again carefully before signing.

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Common Contract Pitfalls and How to Avoid Them

Certain clauses frequently cause problems for new attendings. Understanding these in advance is central to a smart physician employment contract review.

1. Vague or Unlimited Call Responsibilities

Look for:

• Clear call frequency (“1 in 4 weekdays and 1 in 4 weekends”)
• Definition of in-house vs home call
• Whether post-call days are granted
• Compensation for extra or unassigned call

Pitfall: A contract that says “Physician will participate in call schedule as determined by the group” with no limits.

Solution: Request language specifying maximum expected call frequency and a process for addressing significant changes (e.g., if partners leave).

2. Unrealistic Productivity Targets

In RVU-based systems, targets may be set at levels that are achievable only with extreme workloads—or not at all.

Warning signs:

• RVU targets significantly above local or national averages
• Lack of clarity on what services generate RVUs and how quickly they are credited
• No transparency about scheduling support or patient volume

Solution: Ask for:

• Production data from current physicians in your role
• A transitional period with guaranteed base pay while your practice builds
• Lower initial targets that ramp up over time

3. Aggressive Non-Compete Clauses

Non-competes can be especially problematic if:

• You have strong geographic ties (family, partner’s job, children’s schools)
• The radius is large and applies to any location you ever worked at for that employer
• Duration exceeds 12–18 months

Solutions:

• Request reduction in radius and duration
• Limit to your primary practice site or a small number of locations
• Seek a buy-out option (an agreed payment that allows you to void the non-compete)
• In states restricting non-competes, confirm compliance with current law

4. Malpractice Tail Coverage Surprises

With claims-made malpractice policies, tail coverage is often required when you leave. Tail can cost 150–250% of your annual premium—sometimes tens of thousands of dollars.

Key questions:

• Is the policy occurrence or claims-made?
• Who pays for tail if you leave voluntarily? If terminated without cause? If terminated with cause?
• Is there prorated responsibility based on years of service?

Ideal scenario: Employer covers tail, especially if they choose to terminate you without cause or if you complete an agreed-upon term of service.

5. “Moving Goalposts” for Partnership

In private practice, partnership can significantly increase long-term compensation and autonomy—but only if the path is real and transparent.

Red flags:

• No written details on timeline or criteria
• Partnership described only verbally as “likely” or “if things go well”
• Prior hires who never reached partnership

Ask for:

• Written description of the standard timeline (e.g., 2–3 years)
• Objective criteria (productivity, citizenship, quality metrics)
• Estimated buy-in range and financing options
• Income range for recent partners vs associates

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Putting It All Together: A Negotiation Roadmap

To make all this concrete, here’s a stepwise roadmap for physician contract negotiation from first draft to signature.

1. Receive and Organize the Offer

• Request the full written contract as early as possible
• Ask if this is the “standard template” or if there is room for customization
• Create a comparison spreadsheet if you have multiple offers (salary, bonus, call, PTO, non-compete, etc.)

2. Conduct a Detailed Contract Review

• Read the entire document once without marking it—get the big picture
• On the second pass, highlight:
  • Compensation
  • Duties and call
  • Termination and non-compete
  • Malpractice and tail
  • Partnership or promotion pathways
• Write down questions and unclear terms

3. Consult Your Attorney and Mentors

• Share the contract with a health care attorney for detailed analysis
• Ask mentors: “What concerns would you have if you were me?”
• Clarify which issues are legal risks vs lifestyle or preference issues

4. Prioritize Your Negotiation Points

Group your requests into:

• Must-have (deal-breakers)
• Important (strong preference)
• Flexible (nice to have)

Examples of must-haves:

• Reasonable non-compete given your family situation
• Employer-covered tail insurance if they terminate without cause
• Clear and sustainable call schedule

5. Schedule a Focused Negotiation Call

• Email the employer contact (recruiter, HR, department chair) to request a call
• Share a short list of topics in advance: “I’d like to review compensation structure, call expectations, the non-compete, and malpractice coverage.”

During the call:

• Start by expressing appreciation and enthusiasm for the role
• Present your questions and requests calmly, using data where possible
• Listen carefully to constraints and be prepared with alternatives
• Take notes on all verbal agreements

6. Review the Revised Contract

• Confirm that all agreed-upon changes are incorporated
• Check for unintended new language or changes in other sections
• If needed, loop your attorney back in for final review

Only when the written contract matches your understanding and priorities should you sign.

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FAQs: Physician Contract Negotiation

1. When should I start thinking about physician contract negotiation during residency or fellowship?
Begin learning the basics in your PGY-2 or early PGY-3 year (or first year of fellowship). Actively engage with contracts 6–12 months before your desired start date. Earlier understanding helps you recognize good opportunities and avoid rushed, last-minute decisions.

2. Is it really necessary to hire a lawyer for employment contract review?
While not legally required, it is strongly recommended. A physician-focused attorney understands typical market terms, identifies hidden risks, and suggests precise language changes. The cost is small compared to your potential financial and professional exposure over a multi-year agreement.

3. Will negotiating hurt my chances of getting the job or start the relationship on a bad note?
Professional, respectful negotiation is expected in most physician hiring processes. Employers anticipate questions and some requests for modification. Problems arise only if you are aggressive, inflexible, or uninformed. Framing your negotiation around long-term fit and clarity usually strengthens, rather than harms, the relationship.

4. What if the employer says, “This is our standard contract and not negotiable”?
Some elements (like benefits in large systems) may indeed be standardized. However, there is often more flexibility than initially stated—particularly around salary, start date, call schedule, or bonuses. Ask specifically which parts are truly fixed versus modifiable. If nothing is negotiable and significant concerns remain (e.g., an overly broad non-compete), you must decide whether the risks are acceptable or whether to walk away.

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Thoughtful physician contract negotiation and thorough employment contract review are critical investments in your future. By understanding the key components, preparing with data and support, and advocating collaboratively for your needs, you set yourself up for a sustainable, rewarding attending career.