CONSULTING
and
NEGOTIATING CONTRACTS
Alex Turner, Ph.D., FACMP
Medical Physics Associates, Inc.
Breckenridge, Colorado
Gaining Experience
Good judgement comes from
experience, and a lot of that comes
from bad judgement
Will Rogers
Contracting Experience
10 years experience with free standing RO
Began consulting in 1982
Volume based contracts
I provided equipment & personnel
Fee for patient services, fixed for physics
For 8 years, no contract renegotiations
Contracting Experience
About 1990, hospitals & facilities wanted to
change to a fixed reimbursement contract
Changing from volume based to fixed amount
required growth conditions
Difficult to plan for equipment and personnel
additions to meet growth
Medical Physics Consulting
The BUSINESS of providing medical physics
services, not the technical nature of the service
Incorporate?
No - Self employment tax
vs
Yes - State franchise tax & unemployment tax,
social security, corporation income tax, etc.
Preparing to be a Consultant
Identifying Skills
Personal – communication
Professional – specialist and/or generalist
Business – accounting, scheduling, reports, etc.
Marketing – develop strategy to reach clients
How Clients Find Consultants
Recommendations - Reputation
Active in local & national societies
Active in community affairs
AAPM Blue Book
Examples - What Clients Want
Good communicator with all staff
Services provided meet recognized standards
Serves professional & administrative staff
Problem solver
Compliance with State and NRC Regulations
Be visible
Stay current - technology, procedures, regulations
Examples – What Physicists Want
Who do I report to
What/who am I responsible for
Is in-house staffing appropriate
Radiation Safety - Do I report to management
who can make binding decisions for the facility
Is facility equipment satisfactory for services.
Does my equipment meet their needs
Compensation
Contractor or Employee
Tax Reform Act of 1986
Termed the “Right-to-control test” for the
purposes of Federal Employment Taxes and
Income Tax Withholding
Permits the IRS to apply 20 tests to determine
who controls how work is done – not all 20
tests have to apply
Contractor or Employee
Employee
Facility instructs worker on when, where and
how work is to be done
May be terminated immediately and arbitrarily
Contractor or Employee
Independent Contractor
Retains the right to control the manner in which
the work is being done, and must provide own
benefits
Termination clause specified in contract
Contracts
A contract is an agreement specifying the
relationship between parties – verbal or written
It should be executed in “good faith” by both
parties to avoid disputes over what was agreed
upon – in easy to understand language
Contracts
Small jobs - avoid excessive legalistic language
Letter of Agreement or P.O. may be sufficient
(do not mix moonlighting with day job)
Long term jobs – includes legalistic language
Often involves human resources and attorneys
A retainer is good fiscal policy – cash flow needs
Negotiating
Negotiating focuses on gaining the confidence of
a prospective client
The purpose of Negotiating is to resolve
situations where what the client needs conflict
with services you can offer
The aim of Negotiating is a win-win solution
acceptable to both parties
Negotiating Strategy
Talk services/value first, then cost
Provide details on services to be provided
You are in control – listen to client’s needs, then
tell client what has to be done
Offer client options if necessary
Do not be vague
Propose in writing, client has something to study
Preparation goal – a good outcome
Prepare, prepare & prepare
Know your strength’s and abilities
Understand your client’s interests and needs
Preparation goal – a good outcome
Timing
When negotiations are going well is the best time
to push for what you need to do
Pushing to hard may harm long-term relationship
Preparation goal – a good outcome
Leave ego behind
Don’t feel a need to get credit for a successful
deal
Make the client feel like the final deal was their
idea
Preparation goal – a good outcome
Listen
Let client address needs first
Make sure you are hearing their needs correctly
Gives you a chance to ask questions later
Preparation goal – a good outcome
Communication
Have I clearly defined my services
Am I speaking in a way the listener can
understand
Preparation goal – a good outcome
Offer and expect commitment
Commit to deliver on terms of agreement
Give client convincing arguments why your
services meet their needs and are fairly priced
Preparation goal – a good outcome
Close with confirmation
Recap areas of agreement
Both parties must confirm – written agreement
Do not leave any loose ends
General Principles
Remember
Prepare, Prepare & Prepare for negotiations
beforehand
Present and maintain a professional attitude
Meet with person who has authority to make
decisions – it may not be a clinician
General Principles
Remember
Look for personality conflicts – can I work with
these people
Provide details on approach to solving their needs
to build trust
Do
Communicate with clarity
Listen – Ask questions
Make all agreements part of the written contract
Minimize distractions – Stay focused
Verify legal clauses with an attorney
Discuss financials with your CPA
Don’t
Sacrifice quality for cost
Make unreasonable demands
Be inconsiderate of client’s business needs
Overestimate your needs and abilities
Be apprehensive about negotiating
Promise what cannot be delivered
The obvious
Be ethical
Smile throughout the negotiations
Control emotions
Keep impersonal
Fees
Be aware - Prospective client may try to “milk”
you for information without retaining you.
Remember – Each party is trying to get the best
deal
By sharing resources between several facilities
you should be able to offer a price below in
house services.
Pricing
It is unwise to reduce price arbitrarily.
To do so suggests that you priced high or are in
desperate need. It is advisable and adds to
creditability to negotiate any price cuts by
asking the client to give up something, no
matter how small. It invites questions and
discussion. The client must be satisfied that
they got something
Negotiations – a bad outcome
What client says when the answer is really NO.
“I’ll see what I can do”
“I’ll let you know”
“Maybe”
“I’ll ask”
“I’ll find out”
“I don’t have the authority…”
If win-win solution is not possible
If you feel victimized, the best outcome may be
to walk away.
Continuing with negotiations may undermine
trust and put a stamp on your professionalism.
CONSULTING CONTRACTS
THANK YOU
Alex Turner, Ph.D.
Medical Physics Associates, Inc.
Breckenridge, Colorado