Physician Executive Compensation: How Are Top Physician Leaders Paid?

A recent New York Times report showed that more physicians are seeking business degrees to build a foundation of skills and knowledge about the business of healthcare. Currently, there are 65 joint MD/MBA degree programs at universities compared with only five or six in the late 1990s.

As more physicians look to strengthen their business backgrounds and accept executive positions at hospitals, more data becomes available on their compensation trends. The 2011 Physician Executive Compensation Survey, published by Cejka Executive Search, scoured through results reported by 1,985 members of the American College of Physician Executives. Here are some of the highlights of physician executive pay at various hospital institutions. Note: All data from the survey is from the 2010 calendar year and includes salary, bonuses, incentives, research stipends and other forms of compensation.

Physician CEOs and presidents saw the rate of growth in their total compensation packages slow down significantly over the past two years, reporting their lowest two-year increase since 2001 at 2.5 percent.

Physician Executive Median Compensation: 2-Year and 10-Year Comparison

% Change

Physician Executive Title

Response

2011

2009

2001

2-Year

10-Year

All Physician Executives

1,985

$305,000

$288,000

$210,000

5.9%

45.2%

Chief Executive Officer / President

166

$393,152

$383,500

$250,000

2.5%

57.3%

Chief Medical Officer

437

$343,334

$324,750

$225,000

5.7%

52.6%

Department Chair / Division Chief

195

$340,000

$330,000

$233,000

3.0%

45.9%

Vice President of Medical Affairs

127

$315,000

$299,000

$215,750

5.4%

46.0%

Medical Director

473

$269,050

$250,088

$250,000

7.6%

34.5%



Physicians who take on the role of chief medical officer in the C-suite reported a better two-year growth at 5.7 percent. Hospital CMOs saw a 4.5 percent increase from 2009 and a gain of 54.2 percent over a 10-year period. Notably, CMOs at health system corporate offices gained a significant 16.5 percent in the past two years.

Physician CMO Median Compensation: 2-Year and 10-Year Comparison

% Change

Type of Organization

2011

2009

2001

2-Year

10-Year

Health System Corporate Office

$453,000

$389,000

$300,000

16.5%

51.0%

Hospital

$393,260

$324,500

$220,000

4.5%

54.2%



Overall, physician executives at the health-system level saw the greatest median annual compensation figures in 2011, earning roughly $385,000, an 8.7 percent increase since 2009 that outpaced the 5.9 percent reported by all physician executives. Not surprisingly, this figure towers over physician executives at other hospital-related organizations, such as academic medical centers, hospitals and hospital management companies. Physician executives are most prevalent at general acute-care hospitals, but they reported annual median compensation that is $71,100 less per year than those at the health-system level. A similar and somewhat consistent finding revealed that median income was highest among physician executives whose main responsibilities are regional or whose organizational location spans a combination of urban, suburban and rural locations.

Physician Executive Median Compensation: 2-Year Comparison

Type of Organization

Response

2011

2009

2-Year % Change

Academic Medical Center

282

$300,000

$294,000

2.0%

Health System Corporate Office

177

$385,000

$354,178

8.7%

Hospital

586

$313,900

$290,000

8.2%

Hospital Corporation/Management Company

75

$302,000

$286,500

5.4%



Physician executive salary is also influenced by regional differences. According to Medscape's 2011 Physician Compensation Survey, the highest-earning physicians were in the North Central region of the United States, but that area differs for physician executives. The highest-earning physician executives worked in the Northeast and Central areas, averaging roughly $310,000 per year in salary and benefits. Physician executives in the Central region also saw the largest increase in median compensation from 2009, as they make 11 percent more on average.

Physician Executive Median Compensation by Region: 2-Year Comparison

Geographic Region

% of Response

2011

2009

2-Year % Change

Northeast

28%

$310,000

$289,000

7%

Southeast

19%

$308,250

$289,000

7%

North Central

24%

$306,587

$289,912

6%

Central

13%

$310,000

$280,000

11%

West

16%

$292,000

$286,095

2%



As mentioned earlier, a growing number of physicians are working toward an MBA, and as the survey showed, compensation favors physician executives who have post-graduate business management degrees. Physician CEOs, CMOs, department chairs, service line medical directors and vice presidents of medical affairs with MBAs all make more than their counterparts who do not have an MBA. CMOs witnessed the largest discrepancy between the two groups, as CMOs with an MBA received roughly 14 percent more on average in total annual compensation than CMOs who do not have the degree.

Physician Executive Median Compensation By Degree

Position With an MBA

2011 Median Compensation Without MBA

2011 Median Compensation With MBA

$ Difference in 2011 Compensation

% Difference in 2011 Compensation

CEO/President

$399,500

$423,500

$24,000

6%

Chief Medical Officer

$322,000

$365,525

$43,525

14%

Department Chair/Division Chief

$340,000

$366,600

$26,600

8%

Medical Director of a Service Line

$260,200

$282,500

$22,300

9%

Vice President of Medical Affairs

$309,900

$332,500

$22,600

7%



While executive compensation at hospitals remains a point of scrutiny, especially at non-profits, physician executives still have seen modest raises to their annual total compensation. Physician executive compensation is significantly higher than it was 10 years ago, which may lead to a plateau in the near future. However, current trends indicate a growing pathway toward the increase of annual physician compensation for physician leaders who seek a broader horizon of system responsibilities and build the foundation of business-focused training these jobs require.

Looking for more information about the 2011 Physician Executive Compensation Survey? Two easy ways:

Visit cejkaexecutivesearch.com/Comp201l
Call Mary Barber at 866-346-7125

Related Articles on Physician Executive Compensation:

Physician Executive Compensation Experiences Lowest Growth Rate in 10 Years
Physician Leadership Incentive Compensation Plans
10 Statistics About Compensation of Physician Executives Based on Management Experience

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