Your market value report will get you about 65% of the way to a great deal on your physician salary. The remaining 35% will require some leg work.
Author: Robert A Felberg MD
Topic: Negotiation, Professional and medical business skills
Keywords: Doctor negotiation, Health care negotiation, Doctor salary
It’s your single most important number in any negotiation. Before you can begin to bargain on your worth, you need to know what you are worth! Getting a solid, well-researched market value report will help you understand the market and develop your negotiation strategy. You can develop an Anchor number or counter-offer, BATNA, and concession strategies. In fact, the market value report is so valuable, you’d be crazy to even sit down at the table without one! But, like any data set, if you aren’t careful it can lead you astray.
[Editor’s Note: To truly succeed in your medical career you’ll need three complementary skill sets. Of course, you need to be skilled in the practice of medicine. Secondly, you’ll also need to understand finance. Finally, you need Professional and Medical Business skills. Of all of the professional skills, negotiation is the most important. This is one of an ongoing series from Physician Advocates LLC introducing the science and practice of negotiation to healthcare professionals. Sign up for our newsletter to be kept up to date.]
The main problem with relying 100% on your market value report is that the compensation values listed are derivative to economic conditions in the region and do not completely reflect the environment of the individual practice you are joining. OK, long and complex sentence. I get it- don’t give up on the idea quite yet. Let me walk you through it.
- Something is considered “derivative” if it’s value depends or is “derived” by the value of something else. For instance, you get a personalized autograph from a rookie professional baseball player. The value of that piece of paper is essentially zero, unless that player makes it to the hall of fame. Then, suddenly it’s quite valuable! The value of the autograph is based or “derived” on the performance numbers of the player’s stint in major league baseball.
- Now, let’s imagine you go to sell that autograph. You investigate the 30 most recent sales and the current conditions on Ebay- your market value report. However, since there is little intrinsic value to paper and ink you are selling, all the value has to do with the perceived value of the player who gave you the autograph. And like nearly all derivatives, the value is leveraged and may fluctuate dramatically based on initial conditions.
- To further explain, here’s a few possible scenarios. Consider how each starting condition may alter the value of the autograph:
- The player is elected to the hall of fame that morning
- The player rescues a bald eagle from a burning building on live TV
- The player gets caught in a tawdry scandal involving twitter
- The player is suspended for using performance enhancing drugs
- The above is publicly available information. There may also be some irrational or unknown values that could affect the value
- The player’s son wants to buy the autograph and give it to the player for Christmas
- The buyer went to the game where the autograph was signed with his school class and highly desires to purchase it as a keepsake.
- The company that made the paper that was used for the autograph is putting together a travelling market event called “great moment in sports” and needs your autograph as the centerpiece.
- The player’s wife wants to get a copy of his thumbprint from the autograph to open his smart phone starter screen
As you can see, your market value report gives you a good idea of the current compensation package based on or “derivative” to economic conditions. But, it does not give you a breakdown of the starting conditions of your negotiation that could greatly affect the final compensation package – like the many examples listed above can affect the value of your autograph.
Even if you knew every single salary of every single physician in a region, you still would not have the ability to 100% accurately predict your final compensation package. You’d have a good idea of the upper and lower ranges, but you wouldn’t be able to know exactly where you’ll land. Small details in the starting conditions of the negotiation could lead to dramatic changes in the final package. For instance, they might be facing the emergent retirement of a busy partner due to an unforeseen medical issue, a major competitor could be moving into town and building a hospital across the street, or they could be willing to pay more to avoid losing you to the competing practice across town. Any one of these conditions could lead to a superior package far beyond the market value median.
There is also the common situation where your negotiating partner is aware of the market data and “hides” behind it. For instance, they run a busy practice where your collections will easily exceed the 80th percentile. To get more return on their investment, they gladly offer you salary at the 60th percentile. You’re overjoyed at the above average offer… for now. Or, maybe they want to avoid negotiation altogether and quote a policy that they pay everyone the same.
Here are some tips to help use your market value report to the best advantage
- Use the market value report to develop a BATNA or best alternative to negotiated agreement. This is your walk away point. (note: I’ll post about BATNA in the future. Please sign up for our newsletter to keep informed.)
- Develop an Anchor number or counter offer from the market value report. Remember to aim high and use the report as an objective criteria source.
- Spend time thinking about the other party and their interests. Is there an information you’ve gathered that can be used to gain concessions? Can you work together to mutually create value?
- Obtain at least three competing job offers. Use these offers to get a feel for the market. You can also question different negotiating parties to learn about economic and other intangible conditions in the market.
- Use your competing offers to set new BATNAs as the negotiations move forward. Use the competing offers as leverage to gain concessions. Anyone who has been involved in a bidding war on a house will be familiar with this concept.
- Don’t forget to master some basic negotiation techniques.
Obtaining your market value report if the first and most important step in your doctor contract negotiation. Although this information is extremely valuable in determining the starting point and ranges of a negotiation, they can lead you astray if you don’t pay attention to the individual starting conditions. Be certain to take these into account and don’t let your negotiating partner talk you into a salary based solely on regional or national norms. In simple terms- if they are willing to pay the national average, they are probably willing to pay a little to a lot more.
Negotiation is the most vital of all of the of physician professional and medical business skills. The good news is that most doctors can become excellent at negotiation with study, training and practice. Obtain your market value report, develop your negotiation strategy, and consider taking a CME approved course designed for physicians. Soon, you’ll become a master negotiator and succeed… really succeed.
So what do you think? Do you just wing it? Do you go with the average salary and pray for the best? Do you set a goal and go for it? Share your thoughts.