Has Physician Compensation Reached Its Limit? Why Pay is Flattening Out

The Medicus Firm's 2011 Physician Compensation Survey found that in general, compensation was flat from 2009-2010. The average change in compensation from 2009-2010 across 19 physician specialties was negative 0.14 percent compared to positive 4.9 percent from 2008-2009. Steve Marsh, managing partner and one of the founders and owners of The Medicus Firm, explains possible reasons for the flattening compensation and what it means for physician recruiting in the future.

Why compensation has flattened
One of the reasons for physicians' flattening compensation, according to Mr. Marsh, is the increase in hospital employment. In fact, a report by Accenture estimates that only 33 percent of physicians will remain independent by 2013. Mr. Marsh says that hospitals may be offering physicians as much compensation as they can afford due to cuts to their own funding. Similarly, physicians may have reached a temporary limit to their compensation because they are still paid primarily based on volume and they may be treating as many patients as they can. "The only way to generate more income is to generate more volume. The problem is that most physicians are doing the maximum amount of volume they feel comfortable with without sacrificing quality of care," Mr. Marsh says. Due to hospitals' limited funds and physicians' limited volumes, coupled with decreasing reimbursements, Mr. Marsh predicts physicians' compensation will remain flat or decrease slightly.  

Future physician recruitment

A possible effect of physicians' stagnant compensation levels is that incentives other than pay will become more important in physicians' employment decisions. Factors such as quality of life and geography, for instance, may have a greater pull than salary on where physicians work. "Since financial packages are flattening out across the board, I think that work schedule and call coverage are going to be much bigger factors in physicians' choices," Mr. Marsh says.

Physicians' flat compensation levels may also exacerbate the physician shortage by triggering older physicians to retire early or potential medical students to choose other career fields. Mr. Marsh says that opportunities outside of direct patient care, such as pharmaceutical positions and executive roles may become more attractive and create a greater need for primary care physicians.

Learn more about The Medicus Firm.


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