Physician compensation metrics are pertinent within the growing hospital strategy of acquiring physician practices, similar to the 1990s, and some specialties have been the cornerstones of compensation and acquisition strategies. At the Becker's Hospital Review Annual Meeting in Chicago on May 17, Tim Reed, physician practice valuations practice leader of SullivanCotter and Associates, discussed the compensation trends of five key areas — cardiology, neurosurgery, medical oncology, orthopedics and primary care.
Mr. Reed looked at data from several prominent physician compensation surveys, including SullivanCotter, Medical Group Management Association, American Medical Group Association and NERVES socioeconomic survey for neurosurgery.
Cardiology
Hospital acquisitions of cardiology practices, including the subspecialties of non-invasive, invasive non-interventional, invasive interventional and electrophysiology, are still very active, but the wave has slowed over the past few years. However, data from the 2011 surveys shows that compensation is still on an upward trend. The median for non-invasive cardiologists hovers around $400,000 and is even higher for the other cardiology subspecialties.
Health system involvement has stabilized compensation as well, and Mr. Reed also noticed a spike in the number of hospitals laying out professional service agreements with cardiologists. "This is a new trend — the utilization of professional service agreements has steadily increased," Mr. Reed said. "I typically see that at hospitals that got burned in the 90s."
Neurosurgery
Neurosurgeons consistently have some of the highest compensation packages — the median cash compensation is around $600,000, and the top neurosurgeons can make upwards of $1 million — and there are several factors, Mr. Reed said.
Currently, there are not many hospital acquisitions of neurosurgeons, as transactions are normally driven by demand for services and supply of neurosurgeons. This specialty demands higher compensation due to their low supply, high on-call coverage and the complexity of neurosurgeon cases. Mr. Reed said some hospitals are required to have neurosurgeons on staff to keep their trauma status, and that usually results in a healthy compensation total.
Oncology
Outside of cardiologists, medical oncologists have been some of the biggest drivers of health system-physician transactions among physician specialties, Mr. Reed said. Compensation is also on the rise, as the median hovers around $350,000, and both work relative value units and collects are up.
However, Mr. Reed pointed out that many private practice oncologists are still making good money, as much as $1 million in some cases. Drug costs are also driving up the income as well as the expenditures, though, and from a regulatory standpoint, Mr. Reed said this creates some variation and discomfort from the legal and valuation end.
Orthopedics
Out of the five specialties reviewed, orthopedic surgery showed the smallest change in compensation. Physicians in this field, similar to neurosurgery, have held their own in terms of base pay with median cash compensation just under $500,000, and on-call pay also boosts their total income. Mr. Reed also said there are some transactions involving orthopedic practices, but because orthopedic surgeons can make more in a private setting, the trend of hospitals buying orthopedic practices is not omnipresent.
Primary care
Primary care, which Mr. Reed defined as internal medicine and family practice, is seeing some of the most activity from a transactional perspective, and the Patient Protection and Affordable Care Act's emphasis on preventive care is part of that growth in interest. "Activity has dramatically escalated, and there is a large disparity in the valuation of practices," Mr. Reed said. "Compensation trends are also moving away from pure productivity models."
Cash compensation is still among the lowest for primary care physicians — $200,000 in the 90th percentile — and most compensation plans are geared toward wRVUs, Mr. Reed said.
Mr. Reed looked at data from several prominent physician compensation surveys, including SullivanCotter, Medical Group Management Association, American Medical Group Association and NERVES socioeconomic survey for neurosurgery.
Cardiology
Hospital acquisitions of cardiology practices, including the subspecialties of non-invasive, invasive non-interventional, invasive interventional and electrophysiology, are still very active, but the wave has slowed over the past few years. However, data from the 2011 surveys shows that compensation is still on an upward trend. The median for non-invasive cardiologists hovers around $400,000 and is even higher for the other cardiology subspecialties.
Health system involvement has stabilized compensation as well, and Mr. Reed also noticed a spike in the number of hospitals laying out professional service agreements with cardiologists. "This is a new trend — the utilization of professional service agreements has steadily increased," Mr. Reed said. "I typically see that at hospitals that got burned in the 90s."
Neurosurgery
Neurosurgeons consistently have some of the highest compensation packages — the median cash compensation is around $600,000, and the top neurosurgeons can make upwards of $1 million — and there are several factors, Mr. Reed said.
Currently, there are not many hospital acquisitions of neurosurgeons, as transactions are normally driven by demand for services and supply of neurosurgeons. This specialty demands higher compensation due to their low supply, high on-call coverage and the complexity of neurosurgeon cases. Mr. Reed said some hospitals are required to have neurosurgeons on staff to keep their trauma status, and that usually results in a healthy compensation total.
Oncology
Outside of cardiologists, medical oncologists have been some of the biggest drivers of health system-physician transactions among physician specialties, Mr. Reed said. Compensation is also on the rise, as the median hovers around $350,000, and both work relative value units and collects are up.
However, Mr. Reed pointed out that many private practice oncologists are still making good money, as much as $1 million in some cases. Drug costs are also driving up the income as well as the expenditures, though, and from a regulatory standpoint, Mr. Reed said this creates some variation and discomfort from the legal and valuation end.
Orthopedics
Out of the five specialties reviewed, orthopedic surgery showed the smallest change in compensation. Physicians in this field, similar to neurosurgery, have held their own in terms of base pay with median cash compensation just under $500,000, and on-call pay also boosts their total income. Mr. Reed also said there are some transactions involving orthopedic practices, but because orthopedic surgeons can make more in a private setting, the trend of hospitals buying orthopedic practices is not omnipresent.
Primary care
Primary care, which Mr. Reed defined as internal medicine and family practice, is seeing some of the most activity from a transactional perspective, and the Patient Protection and Affordable Care Act's emphasis on preventive care is part of that growth in interest. "Activity has dramatically escalated, and there is a large disparity in the valuation of practices," Mr. Reed said. "Compensation trends are also moving away from pure productivity models."
Cash compensation is still among the lowest for primary care physicians — $200,000 in the 90th percentile — and most compensation plans are geared toward wRVUs, Mr. Reed said.
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