I recently had a wonderful physician contracts presentation opportunity with the Council of Osteopathic Student Government Presidents, a very thoughtful and motivated group of medical students. Their questions were so on-point that I wanted to share our Q&A in this blog post! Here are their top questions.
What happens if I don’t wish to accept the terms of my first contract? What’s next?
The best practice is to start your job search 9–18 months in advance and consider multiple offers within your desired geographic region and practice setting. This gives you ample time to negotiate and walk away if a position isn’t the right fit.
If you complete the interview process, review the offer letter and contract, attempt to negotiate, and then realize the role isn’t for you, it’s okay to walk away!
When submitting your first set of contract negotiation requests, it’s best to include all of them in one comprehensive response. If the employer denies key requests that are dealbreakers, it’s appropriate to respond with a clear explanation of your non-negotiables (usually just a couple) and give them a chance to “win” the negotiation by accepting those points. Be clear and professional in stating that you cannot accept the role without these terms.
If they rescind the offer, that’s okay—as long as you’re fully prepared for that possibility. Navigating this process with guidance from a lawyer experienced in physician contracts is highly recommended.
How much does it cost to have a lawyer review a contract? Should I hire a lawyer to go over my first physician contract? Is this common for doctors to do?
Our contract evaluation and negotiation package for residents and fellows is $1,600, with the option to spread payments over 12 months. Lawyers with expertise in this niche area of law are rare, and it can be challenging to find one who offers comprehensive representation for significantly less.
If your budget is $500–$1,000, you may find someone, but it’s unlikely they’ll be highly experienced in physician contracts or provide end-to-end negotiation support. Instead, they may only explain the contract terms without negotiating on your behalf.
It’s reasonable to spend $2,000–$3,000, particularly for comprehensive negotiations or if you’re considering multiple offers. Ideally, your lawyer should have access to Medical Group Management Association (MGMA) compensation data, which is costly and often warrants higher fees to cover those expenses.
A smart approach is to schedule an initial consultation during your interview process—before receiving a contract—with a lawyer who provides data-driven insights on compensation norms for your specialty, subspecialty, practice setting, geographic region, and expected workload. While physicians can negotiate these deals on their own and certainly should be deeply informed on the legal and business side of medicine, it can be difficult for an individual physician negotiating only a few contracts to gain the same insight and expertise as a lawyer who devotes their practice to this. Bottom line: you can and should evaluate and negotiate your contracts, and best practice is to do it with a thoughtful guide.
What aspect of your first contract will be the highest value in terms of establishing a stronger sense of agency for yourself?
The three key questions in physician contracts are:
- Work Obligations: What are you required to do as outlined in the contract, and does it align with the promises made during the interview and your personal career and life goals?
- Compensation: How will you be compensated for those obligations—both initially, with base salary and signing bonuses, and in the long term? Most compensation models factor in volume, so understanding future compensation structures is crucial for ensuring fair, long-term pay.
- Exit Strategy: If your goals or the employer’s expectations change, what legal and financial penalties will you face for leaving the role?
We believe you can maintain personal agency by seeking balance and clarity in all three areas. However, many residents and fellows underestimate the likelihood that their first job won’t be a long-term fit and overlook the impact of punitive exit clauses. Exit-related terms—such as noncompete and nonsolicitation clauses, malpractice tail coverage, termination rights, moonlighting restrictions, and compensation clawbacks—can make leaving a job costly and difficult, potentially leading to burnout and moral injury.
It’s essential to assess the financial and professional implications of your exit strategy before signing a contract. Consider negotiating these clauses down or building a personal and financial plan to address them if unexpected changes occur.
As a physician’s spouse, I never want my partner to feel trapped in a role due to harsh penalties impacting me and the family. Powering through an unhappy medical career should never be Plan A.
Do you ever work with physicians to have employers cover malpractice insurance for work outside of primary employment?
The question continues with the following: As an aspiring ER physician who hopes to spend weekends working with a street medicine program or free clinic, I’m wondering if having my primary employer cover that additional malpractice insurance is a possibility. I see it as a form of additional compensation—though maybe that’s not the right perspective.
If this is your goal, negotiating for greater freedom in the “moonlighting and outside activities” clause should be a priority. Many employers, particularly those offering full-time benefits (e.g., 401(k) match, health, dental, life insurance), prefer to retain the right to deny any external clinical work.
Even when employers allow moonlighting, they typically require physicians to secure and pay for separate malpractice coverage for work outside their primary role. While it’s potentially worth asking, most employers are hesitant to cover costs for external work that doesn’t directly benefit them financially.
How much leeway do you have in negotiating a new physician contract?
The narrative around physician contracts can be conflicting: we hear about a physician shortage, yet job availability varies widely depending on specialty and location. This dynamic also shifts based on whether you’re negotiating with a private group or a hospital employer.
Most employers present their contracts as “boilerplate,” “standardized,” and “non-negotiable.” This approach makes sense—they’re negotiating 7-figure deals, as many physicians will earn over $1M within their first five years of practice. It’s natural for employers to set a strong starting position.
However, our experience across specialties, practice settings, and regions shows that most employers are open to moderate adjustments, even those who claim they don’t negotiate. You won’t know until you ask. To avoid appearing overly nit-picky, we advocate for focusing on key priorities rather than minor details.
Timing also impacts your leverage—start negotiations 9–18 months before your start date. Specialties that generate lower profit margins for employers may have less negotiating flexibility. The same is true for highly sought-after roles, top-paying employers in a region, and saturated markets.
Physician-owned private practices often offer more flexibility, especially if your requests don’t affect their bottom line. In contrast, large hospital systems and private equity-owned groups tend to have more rigid contracts and stricter negotiation stances.
Final Thoughts: The consolidation of healthcare employers and private practice acquisitions has reduced competition for physician services in recent decades, potentially limiting leverage. If this trend continues, we may see more employed physicians pursuing unions or collective bargaining to protect their interests. While we believe strong competition and viable independent practices are best, the case for collective bargaining is growing.
If you choose to leave and have a noncompete, does that mean you can’t be a locum in the area while the noncompete is in place, or does it depend?
Most first-draft employment agreements include a noncompete that applies to any practice of medicine, not only full-time employment, so a locum role would also be prohibited. We sometimes negotiate for ‘inside the bubble’ carveouts for things like working for the VA or other government entities, small private practices, academic roles with a primary teaching and research component, or something similar. Adding temporary locum roles could make sense, but it’s not something we commonly see in our practice. We believe most employers do not see an important distinction between full-time practice in the area and temporary locum service in the area.
What are your thoughts on the most effective way to pay off loans?
There’s no universal “best” approach—it depends on your circumstances. Many of our clients benefit from additional support from financial planners who regularly work with physicians to help them make informed, strategic decisions. Here are the three methods we most commonly see in our practice:
- Live Like a Resident (White Coat Investor-style)
Pay off loans aggressively over 2–5 years by maintaining a modest lifestyle. This is often the best approach if:- Your loan balance is manageable (e.g., ~$150K) relative to your expected income (e.g., ~$300K).
- You’re in a shorter training program (e.g., Emergency Medicine, Family Medicine, Pediatrics).
- You didn’t train at a nonprofit and haven’t accrued PSLF-qualifying months.
- Public Service Loan Forgiveness (PSLF) or Similar Programs
PSLF can be an attractive option if you have a substantial loan balance and your training years count toward the 120 months of public service required for forgiveness. This is particularly helpful if:- You’ve had a long training period at qualifying nonprofits.
- You’re entering a specialty where the most attractive jobs are with large nonprofit employers that qualify for PSLF.
- Keep in mind that loan payments come from your post-tax income, which can make aggressive repayment under Option 1 more challenging than expected. However, PSLF forgiveness is not currently taxable, meaning you won’t face a tax bill when the remaining balance is forgiven. Note: We’re not tax attorneys or CPAs—seek independent legal and tax advice!
- Slow Repayment Over Time
Paying loans off slowly, even with substantial interest, may make sense if:- You have significant family expenses or are part of a single-income household.
- You plan to live in a high-cost-of-living area.
- Your career goals align with private or for-profit employment that doesn’t qualify for PSLF.
This is often the elephant in the room for many physicians. Give considerable thought here before you decide on the preferred practice setting and geographic region for your first post-training position because it will have a sizeable impact on your future financial health.
How do you evaluate physician contracts that help with loan repayment?
Here is a similar question: Are there any tricks to negotiating a progressive loan repayment schedule, such as 5% beginning in year 1 and 10% in year 2?
Some employers offer “student loan assistance” in the form of lump-sum payments—sometimes paid directly to you and sometimes to your loan servicer. These payments are taxable income and typically insufficient to fully resolve most student loan debt. They often come with service obligations and repayment clauses, making it expensive to leave that job before the service commitment tied to that payment is resolved.
We recommend viewing these payments as just another component of your total compensation package rather than giving them outsized weight. In fact, many employers understand the psychology behind student loans and may label compensation as “student loan assistance” to make it more appealing.
For example, consider two offers: one with a $400K total compensation package and another with $300K plus $100K in student loan assistance. The latter may sound enticing, but the loan assistance payments often aren’t permanent. Don’t let this “student loan” label be the deciding factor in your compensation analysis—focus on the full package. The progressive or regressive nature of these payments should probably not be your primary negotiation focus. Consider prioritizing a negotiation around the clawback terms.
What can we be doing now as medical students to set ourselves up well financially for the future?
We recommend focusing on learning how to be a great physician! Being a physician means you have the option of having a big financial shovel, which is a wonderful advantage compared to others. While it’s prudent to avoid credit card debt and overspending during this period, it’s often impractical to build wealth right now. That’s coming. We also recommend pursuing a specialty that you feel would make you happy, as essentially all specialties offer the eventual opportunity for a comfortable financial future. Now, obviously, your projected total earnings as an orthopedic surgeon will likely be more than as a pediatrician or a subspecialized pediatric physician, but happiness and career longevity are exceedingly valuable. We also believe it’s valuable to learn the basics of physician contracts and personal finance during this time, creating a base knowledge for future growth.
I am worried about venture capitalists and other for-profit interests buying healthcare systems. It worries me not only about patient care but also about changing our contracts and how we operate. How do we, as physicians, protect our patients and ourselves?
We see greater happiness and career autonomy when physicians are in charge. Unfortunately, the corporate practice of medicine doctrine has been eroded in favor of corporate interests, often at the expense of both physicians and patients.
Despite having the most expensive healthcare system among advanced nations, we do not see corresponding value in health outcomes or equity. Reversing this trend will require grassroots advocacy by current and future physicians who are willing to challenge the status quo. Removing the ban on physician-owned hospitals would be a great start. The 15-year moratorium on physician ownership has primarily benefited large healthcare systems, contributing to rising administrative costs without improving care.
We believe independent, physician-owned practices—especially in primary care—are key to a healthier system. When primary care is controlled by large systems, referrals tend to stay within the system, significantly impacting independent specialty care. The growing support for direct primary care (DPC) models reflects this sentiment. If I were a primary care physician (and increasingly, this applies to specialists), I’d opt for an independent DPC model over employment by a large system.
Finally, more physicians should engage in advocacy and public policy. Many decisions at the state and federal levels directly shape how healthcare is delivered, and physicians deserve a stronger voice in those discussions.
Are the hospitals hoping we never learn about this information? The information you gave us today is INCREDIBLE and so surprising they don’t teach us this!
LOL! We believe Megahealth benefits when physicians don’t understand contracts and don’t fully comprehend their leverage and value. We also believe many academic institutions believe their primary responsibility to you is learning how to be a great physician and do not apply appropriate resources to teaching you the business and legal side of medicine. Most are simply not set up to do this comprehensively. We believe a great starting point is in the educational platform Michael is developing, physiciancontracts.com, with hopes of building out a comprehensive catalog to close the information gap here.
