Many physicians try to negotiate the restrictive covenants, including the noncompete, in a YES or NO way. The physician asks the employer to waive it… the employer says nope… then the physician signs the contract. This is NOT the way to negotiate a restrictive covenant! Employers want to be able to tell physicians that they make everyone sign noncompetes. What they often leave out is that they are sometimes willing to modify the noncompete. Your contract leverage to modify the noncompete is strongest before you sign the contract and when the competition for physicians in your specialty is heavy. There are tons of options to reduce it in a way to improve your exit strategy!
Noncompete restrictions are primarily based on Location, Geography and Time.
- Ask for the noncompete to apply to only ONE location! I want to only draw ONE bubble on the map…
- Scan the market and see if reducing the geography by a little bit will open up some good options. Does 20 miles instead of 30 miles help improve your exit strategy?
- 24 months may be a long time, but could you use a moonlighting gig to help you survive a 12 month noncompete? Negotiating an open moonlighting clause can help a ton with improving your exit strategy.
You can request creative carve outs within the protective bubble.
- The VA! What employer really competes with the VA?!? VA positions can be quite nice actually.
- An academic institution. If you are primarily teaching residents and doing research, are you competing?
- A small 1-2 physician practice. MegaHealth may not be as worried about this.
- Different payors, such as all cash vs. primarily DHS.
- Buyout. The noncompete is unenforceable if I pay $X. However, I have yet to see reasonable numbers for such a buyout.
- Back out of a subspecialty to be a generalist. For example, an addiction psychiatrist backing out to do adult outpatient, or an interventional pain-anesthesia backing out into anesthesia.
You can request restrictions for when the noncompete applies.
- Make it severely reduced or unenforceable if the employer terminates WITHOUT cause or if you terminate the contract WITH cause
- Sunrise clauses (If I leave in less than one year, the noncompete only applies for the length of the employment)
- Sunset clauses (if I stay for X years, the noncompete is reduced by Y)
There are more… What creative change would help your exit strategy?
Sound off below or check me out on IG @PhysicianContracts if you have another idea! The point here is that a simple YES or NO is not the best way to negotiate. Use these to brainstorm creative ways to make your next best option a little better!