Where are Physician Salaries Heading? 5 Current Trends

Hospital CEOs sent a clear message in a recent Thomson Reuters survey that physician alignment and cost reductions will be at the top of their priorities over the next few years. However, as more physicians are becoming hospital-employed, will cost reductions and physician alignment come at the expense of physician compensation? Opinions among physician specialists vary on whether their compensation is fair already, and hospitals will have to continue to grapple with the valuation of those salaries, one of the biggest chunks of a hospital's budget.

SullivanCotter and Associates' 2011 Physician Compensation and Productivity Survey recently gathered data from more than 60,000 physicians, residents, mid-level providers and medical group executives. Kim Mobley, principal at SullivanCotter and Associates, gives some insight on growing trends in the world of physician compensation.

1. Economics don't support significant increases in physician salary. According to SullivanCotter's survey, 62 percent of physician employers plan to provide salary increases to at least some of their physicians in 2011, and 16 percent plan to decrease certain physician salaries in 2011. However, physicians that will experience an increase pay shouldn't expect it to be significant, Ms. Mobley says. A competitive labor market coupled with declining reimbursements is causing healthcare organizations to save costs wherever they can. Some salary increases appear to be in the pipeline, but they might not be on par with physician expectations.

2. On-call pay is rising.
Last year, 54 percent of organizations said they provided on-call pay to at least some physicians, and this year that figure grew to 64 percent. Ms. Mobley adds that all types of physician specialties are seeing an increase in on-call pay, not just surgical specialties. In particular, there is a high demand for stroke neurologists, who can provide a significant amount of on-call coverage.

There are several factors that go into the amount of on-call pay. Ms. Mobley says the "on-call burden," or the likelihood of being called in, is a major factor. "A trauma surgeon is pretty likely to be called in," she says. "An ophthalmologist is not as likely. The amount of on-call pay should relate back to that." Other determinants include payor mix, hospital location and percentage of uncompensated care.

3. Different pay models are forming based on physician. Ms. Mobley says as more healthcare systems are forming medical groups to help improve their coordination of care, they are trying to find efficient and common themes in compensation models for their physicians. The three most preeminent models are for primary care physicians, hospital-based shift work physicians (such as emergency department physicians and hospitalists) and specialists.

According to SullivanCotter's survey, the average mix for physician compensation is 81 percent salary and 19 percent incentives — but those incentives vary. Primary care physicians and specialists are still mostly being paid with a base salary plus a productivity component, with specialists having a lot of pay tied to productivity. Physicians that do shift-based worked are being paid for their shift hours of work or salary plus quality incentives. Ms. Mobley says quality incentives, rather than productivity incentives, are the growing trend for those types of physicians.

4. Sign-on bonuses favor specialists.
Much like salary, sign-on bonuses are higher for medical and surgical specialists. These were the average sign-on bonuses last year for three categories of physicians:

•    Median primary care bonus: $13,000
•    Median medical specialist bonus: $15,000
•    Median surgical specialist bonus: $20,000

5. Relocation packages are increasing. Some healthcare organizations that want a certain physician pay to have them relocated, and according to the survey, relocation packages are on the rise. They were used by 80 percent of participants this year compared with 70 percent in 2010. The average total relocation package for staff physicians and program directors last year was $11,692.

Related Articles on Physician Compensation:

Half of Physician Pay at Minnesota's Fairview Health Depends on Patient Satisfaction, Quality Scores
25 Statistics on Physician Salary and Compensation
Highest-Earning Physicians Found in North Central Region of U.S.

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