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10 physician compensation statistics: How does your organization measure up?

In our engagements with health systems across the country, we come across many physician compensation survey statistics that inform our work in physician compensation model design, fair market value compensation studies, and commercial reasonableness opinions.

To help healthcare organizations sort through the copious amount of available information, we have culled 10 statistics we thought might be useful. These data points will help frame a statistical perspective of physician compensation, recruitment incentives, benefits packages, the relationship of a practice’s financial performance and physician compensation, and the movement to incorporate more quality measures in compensation.

1. Finding ways to care for all patients, including uninsured or unassigned patients, can be a challenge for providers. When a subsidy is provided to care for such patients, 88% of respondents to the 2016 Sullivan, Cotter and Associates, Inc. (SullivanCotter) Physician On-Call Pay Survey say they pay non-employed physicians a percentage of the Medicare fee schedule. The median percent paid to these physicians for uninsured or unassigned patients is approximately 100% of the Medicare fee schedule.

2. In addition to compensation, employers continue to offer a number of different incentives to recruit physicians. According to the Merritt Hawkins 2017 Review of Physician and Advanced Practitioner Recruiting Incentives, when offered, the average amount of physician relocation allowance, continuing medical education support/reimbursement, and signing bonus is $10,072, $3,613, and $32,636, respectively.

3. Understanding the financial performance of a physician’s practice can help in determining physician compensation. According to the 2017 Medical Group Management Association (MGMA) Cost Survey, for both private and employed physician practices the total operating cost (i.e., total general operating and support staff costs) as a percentage of total medical revenue for primary care, nonsurgical, and surgical specialties is approximately 65%, 53%, and 50% at the median, respectively.

4. With the 2016 SullivanCotter Physician On-Call Pay Survey reporting that approximately 49% of hospitals experience difficulty with securing physicians to provide on-call coverage, addressing on-call pay practices can be an important piece of a physician’s compensation. Approximately 75% of hospitals who responded to the survey provide call coverage compensation to some employed physicians; however, 60% of these hospitals require the physicians to provide a monthly minimum of gratis call coverage shifts (approximately six gratis shifts at the mean for all specialty groups). Further, the median hourly unrestricted call coverage rates for primary care, medical, and surgical specialties across all organizations is $16.67, $20.83, and $26.96, respectively.

5. Many physicians are compensated for the supervision of advanced practice providers (APPs), whose services are on the rise. In fact, per the 2017 SullivanCotter Physician Compensation and Productivity Survey, approximately 71% of hospitals surveyed have physicians who supervise APPs. Of these hospitals, 48% provide APP supervision compensation outside of a physician’s base salary with a median annual stipend of $10,000 per 1.0 full-time equivalent supervised APP.

6. Also worth noting, 50% of hospitals who responded will pay physicians who simultaneously provide call coverage to multiple hospitals an incremental amount for each additional hospital covered. And, when they do, 60% pay a percentage of the first hospital compensation for each additional hospital covered. This incremental amount is 50% of the first hospital rate at the median, according to the 2016 SullivanCotter Physician On-Call Pay Survey.

7. A physician’s compensation package includes a number of incentives, one of which is vacation. Per the 2017 MGMA Provider Compensation Survey, the average number of vacation weeks per year across all specialties reported was approximately five weeks at the median, and ranged from three weeks at the 25th percentile to seven weeks at the 90th percentile. Further, 12 vacation weeks was the greatest amount reported at the 90th percentile specific to the specialty of interventional radiology.

8. As the healthcare industry continues to move toward value-based payment models, more hospitals are incorporating quality measures into compensation plans. According to the 2017 SullivanCotter Physician Compensation and Productivity Survey, approximately 91% of hospitals include quality measures in compensation plans for some employed physicians. The average annual quality incentive payment for a staff physician for all specialty groups at the median is approximately $25,800, or 7.4% of total compensation.

9. In many physician specialties, demand continues to exceed the supply of physicians. As reported by the Merritt Hawkins 2017 Review of Physician and Advanced Practitioner Recruiting Incentives, the top five most requested specialties for the previous year in order of highest demand were family medicine, psychiatry, internal medicine, nurse practitioners, and obstetrics and gynecology.

10. The number of physicians participating on a call panel can greatly impact the burden placed on physicians providing call coverage services. Per the 2016 SullivanCotter Physician On-Call Pay Survey, the median number of physicians participating in a call coverage rotation for primary care, medical, and surgical specialties is four, five, and five physicians, respectively.

In summary, today’s physician compensation plans can vary immensely based on the vast array of services physicians provide. For employed physicians, hospitals are faced with compensating for unique situations such as concurrent call coverage, APP supervision, quality-based care, and recruitment shortages, while also maintaining the fair market value and commercial reasonableness of a physician’s compensation plan.

W. Lyle Oelrich is a valuation principal at PYA, P.C., where he consults with physician practices and healthcare systems in the areas of fair market value compensation, commercial reasonableness, and contract compliance. In addition, Lyle has a Master of Healthcare Administration and is a Fellow of the American College of Healthcare Executives. He is a Certified Medical Practice Executive and a Certified Valuation Analyst.

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