Viewpoint: Why data anomalies help explain physician compensation

Physician compensation is far more than just a number, and several data anomalies may shed light on what physicians' earnings mean, two authors write in a STAT op-ed.

The op-ed was written by Halee Fischer-Wright, MD, the president and CEO of MGMA, formerly the Medical Group Management Association, and Todd Evenson, the company's COO.

To better understand the physician compensation landscape, the authors looked at MGMA's 2018 Physician Compensation and Production Report — based on 2017 data from 136,000 providers working in various U.S. practices — for anomalies that may be instructive.

Here are three data anomalies the authors discussed:

1. Non-metro areas rule. Although salaries are typically thought to be higher in big cities, that's not always the case for healthcare professionals, the authors said. For example, in MGMA's data, the median income for a metro-area anesthesiologist was $444,846. In non-metro areas (areas with populations of 50,000 or fewer), the median anesthesiologist income was $469,057. "An extra $25,000 a year sounds pretty good — even more so if that anesthesiologist is residing where the cost of living is likely lower than it is in the nearby metro area," the authors wrote.

When attracting specialists, healthcare organizations must pay more to get the good ones, explaining this anomaly.

"Of course, there are anomalies within the anomaly. This trend doesn't hold true for every specialty — rural cardiologists make about 10 percent less than their urban colleagues — but we found it was true for most of them," the authors said.

2. Quality is still ignored. Value-based care and quality incentives are projected to determine physician compensation in the future, but at least 80 percent of compensation plans in 2017 did not have quality incentives. Productivity was still the core metric when it came to physician pay, the authors said.

"The inclusion of quality incentives in compensation plans depended on practice size: Independent and smaller practices were much less likely to provide any kind of quality incentives, while larger providers and hospitals were more likely to include them," the authors said.

3. Compensation flattens over time. Workers in most industries make more as their careers progress, but this trend does not hold true for physicians, the authors said. Primary care physicians see an upward trend in pay for the first few years of their career, but most physicians' compensation is maxed out sometime around year eight.

This is because primary care physicians are building their base of patients during the first years of their career, and their compensation increases with the size of their patient panels.

"But there are only so many patients a physician can see in a day or week or year, and sooner or later he or she will max out," the authors wrote. "At that point, compensation in primary care tends to level off."

Specialists' compensation, on the other hand, tends to follow a bell curve. Orthopedic surgeons, for example, start off in years one to two making an average of $543,000 per year. That number tops out at $750,000 in years 13 to 17, then drops back down to $530,000 after 23 or more years of practice.

"These anomalies aren't just odd data points that make you say, 'Huh,'" the authors wrote. "They are important for anyone who wants to better understand physician compensation, which is far more than just a number."

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