Money Talk with Malik | Financial Planning for Builders

Key Takeaways

Signing bonuses range from $20,000 to $100,000+ depending on specialty and location
Tail coverage (malpractice insurance after you leave) can cost $50,000 to $200,000
Relocation packages should cover moving costs, temporary housing, and travel
Most physicians don't negotiate anything beyond base salary and lose significant value
The first offer is almost never the final offer

What Physicians Should Actually Negotiate in Their First Attending Contract

When you finish residency or fellowship and you're negotiating your first attending contract, the default move is to focus on base salary.

The hospital offers $250,000. You counter at $275,000. They meet in the middle at $262,500. Done.

But salary is only one piece of the compensation package. For most physicians, the other components (signing bonus, relocation, tail coverage, CME allowance, malpractice terms) are worth $50,000 to $150,000 in total value.

And most physicians don't negotiate them at all.

I work with a lot of residents and early-career attendings. The biggest regret they have is not understanding what to negotiate for before they signed their first contract. Here's what actually matters.

Signing Bonus: The Low-Hanging Fruit

A signing bonus is a one-time payment when you start. It's separate from your salary. It's usually paid in the first paycheck or within 90 days.

Signing bonuses for physicians range from $10,000 to $100,000+ depending on your specialty and the market. High-demand specialties in underserved areas get the biggest bonuses. Primary care in rural markets can get $75,000 to $100,000. Subspecialties in competitive urban markets might get $20,000 to $30,000.

The best part about signing bonuses is they're easier to negotiate than salary. Salary is a long-term commitment. A signing bonus is a one-time expense. Hospitals are often more willing to offer a bigger signing bonus than to raise base salary.

If the hospital offers you $250,000 in salary and no signing bonus, ask for a $50,000 signing bonus. They might say yes. Even if they counter at $30,000, that's $30,000 you wouldn't have gotten otherwise.

The catch is most signing bonuses come with a clawback provision. If you leave within the first one to three years, you have to repay part or all of the bonus. Read the fine print.

Relocation Package: More Than Just the Moving Truck

Relocation packages should cover the full cost of moving. That includes hiring movers, shipping your car, temporary housing while you find a place, and travel costs for house-hunting trips.

A reasonable relocation package is $10,000 to $30,000 depending on how far you're moving. If you're moving across the country with a family, $30,000 is realistic. If you're moving one state over with no kids, $10,000 might be enough.

Most hospitals offer a flat amount. Some offer reimbursement for actual expenses up to a cap. Reimbursement is better if your costs are high, but it requires saving receipts and filing expense reports.

Here's what a good relocation package should cover:

Professional moving company (not a U-Haul you drive yourself)
Temporary housing for 30 to 60 days while you find a permanent place
Travel for house-hunting trips (flights, hotels, rental car)
Shipping one or two vehicles
Closing costs or realtor fees if you're buying a house

Most physicians just accept whatever relocation package is offered. That's a mistake. If the offer is $5,000 and your actual moving costs are $20,000, negotiate for more. They'll usually meet you halfway.

Tail Coverage: The $50,000 Trap

Tail coverage is malpractice insurance that covers claims filed after you leave your job. It's one of the most misunderstood parts of physician contracts.

Here's how it works. Most malpractice policies are claims-made, not occurrence-based. A claims-made policy only covers you if the claim is filed while the policy is active. If someone sues you two years after you leave the hospital, your old policy doesn't cover you unless you bought tail coverage.

Tail coverage can cost $50,000 to $200,000 depending on your specialty. OB/GYN and neurosurgery are at the high end. Psychiatry and dermatology are at the low end.

If your contract says you're responsible for tail coverage when you leave, you could be on the hook for six figures when you quit or get fired. That's a disaster.

The solution is to negotiate who pays for tail coverage before you sign the contract. There are three common arrangements:

Employer pays tail - This is the best option for you. When you leave (for any reason), the employer pays for tail coverage. You owe nothing.
Employer pays tail if they terminate you - If the employer fires you or doesn't renew your contract, they pay tail. If you quit, you pay tail. This is OK but risky if you want to leave voluntarily.
You pay tail - You're responsible for tail coverage no matter how you leave. This is the worst option and you should negotiate to change it.

A lot of physicians don't even know what tail coverage is until they try to leave their first job and get hit with a $75,000 bill. Don't let that be you.

CME Allowance and Time Off

CME (Continuing Medical Education) is required to maintain your license and board certification. Most hospitals offer a CME allowance of $2,000 to $5,000 per year, plus a few days of paid time off to attend conferences.

This seems small, but it adds up. If you go to one major conference per year, the costs are:

Registration: $500 to $1,500
Flights: $300 to $800
Hotel: $200 per night x 3 nights = $600
Meals: $100 per day x 3 days = $300

Total: $1,700 to $3,200 per conference.

If your CME allowance is only $2,000, you might have to pay out of pocket for part of it. If your allowance is $5,000, you're covered.

Also check how many CME days you get. Some contracts give you 5 days per year. Some give you 10 days. More is better.

If the offer is 5 days and $2,000, ask for 7 days and $4,000. They'll usually say yes.

Malpractice Coverage Type: Occurrence vs Claims-Made

This is technical, but it matters.

Occurrence-based malpractice insurance covers you for any incident that happens while the policy is active, even if the claim is filed years later. Once you leave the job, you don't need tail coverage.

Claims-made malpractice insurance only covers claims filed while the policy is active. If you leave the job, you need tail coverage or you're not protected.

Most hospital-employed physicians have claims-made policies. That's fine as long as the employer pays for tail.

If you're joining a private practice, ask if the malpractice coverage is occurrence or claims-made. Occurrence is better because you don't have to worry about tail coverage.

Non-Compete Clauses: The Silent Career Killer

Non-compete clauses restrict where you can work after you leave. A typical non-compete says you can't practice within 10 to 25 miles of the hospital for one to two years after you leave.

This can destroy your career if you live in a small market. If there are only two hospitals in town and you can't work at either one for two years, you're forced to move or change specialties.

Some states (California, a few others) don't enforce non-competes for physicians. Most states do enforce them.

If the contract has a restrictive non-compete, try to negotiate it down. Ask for a smaller radius (10 miles instead of 25 miles). Ask for a shorter duration (6 months instead of 2 years). Ask for exceptions (you can work at certain types of facilities, or you can buy out the non-compete for a fixed fee).

A lot of hospitals will negotiate on this. They don't want to lose you, but they also don't want you working across the street a month after you leave.

What If They Say the Offer Is Final

They're lying.

The first offer is almost never the final offer. Hospitals expect you to negotiate. If you don't, they assume you don't know what you're doing.

If they say "this is our standard offer and we can't change it," call their bluff. Ask for specific items. Signing bonus. Relocation. Tail coverage. CME allowance.

If they say no to everything, you're probably talking to the wrong person. Go up the chain. Talk to the department chair or the VP of medical affairs. They have more authority to approve changes.

If they still say no, you have to decide if the job is worth it. But at least you tried.

How to Actually Negotiate

Here's the process I tell physicians to follow.

First, get the offer in writing. Don't negotiate over the phone or in person until you have the written terms.

Second, identify what you want to change. Make a list. Salary, signing bonus, relocation, tail coverage, CME, non-compete, whatever.

Third, prioritize. What's most important to you? What are you willing to walk away over?

Fourth, make your counteroffer in writing. Email or letter. Be specific. Don't just say "I want more money." Say "I'd like to request a base salary of $275,000, a signing bonus of $40,000, and a relocation package of $20,000."

Fifth, be prepared to compromise. They probably won't give you everything. But they'll give you some of it.

Sixth, get the final agreement in writing before you start. Don't trust verbal promises. If they say they'll pay for tail coverage, it needs to be in the contract.

Summary

Signing bonuses range from $20,000 to $100,000+ and are easier to negotiate than salary. Always ask for one.

Relocation packages should cover moving, temporary housing, and house-hunting. $10,000 to $30,000 is reasonable.

Tail coverage can cost $50,000 to $200,000. Negotiate for the employer to pay it, or don't take the job.

CME allowances and time off seem small but add up. Ask for more.

Non-compete clauses can destroy your career in small markets. Negotiate them down.

The first offer is never the final offer. Always negotiate. Get everything in writing.

Most physicians don't negotiate anything beyond salary and leave $50,000 to $150,000 on the table. Don't be that person.

Physician Contract Negotiation: Signing Bonus, Relocation, and Tail Coverage Actually Matter More Than Salary