Special feature: Competition for practices pushes up doc salaries
Competition for many specialists continues to drive physician salaries higher, annual survey shows
The trend by hospital and large medical groups to employ physicians is driving up compensation, but payers are not increasing reimbursement for healthcare services delivered, creating difficulties for those who must recruit and retain staff doctors.
“It’s a challenge to keep up with the market because we don’t see payments going up,” says Dr. David Spahlinger, senior associate dean for clinical affairs at the University of Michigan Medical School. “So we have to cover those salaries with other revenue.”
Spahlinger, also executive director of the faculty group practice, cites how Medicare reimburses 20% less than it did 10 years ago for an aortic valve replacement, but notes that cardiac surgeon salaries continue to rise. “That isn’t being driven by payer policy,” he says. “It’s driven by hospitals and systems fighting over them.”
In a breakdown of its recruiting assignments from April 1, 2011, to March 23, 2012, Irving, Texas-based staffing company Merritt Hawkins reports that 63% (1,710) were for hospitals, compared with 56% (1,495) the previous year and 11% (285) eight years ago.
Still, of the 23 specialties tracked in the 19th annual Modern Healthcare Physician Compensation survey, only seven saw average compensation increases at or above the 3.2% rate of infla- tion based on the 2011 Consumer Price Index. This includes a 10.3% increase for intensivists, who saw their average pay rise to $327,456 in 2011 from $296,768 in 2010 to finish 13th highest of the specialties included in the survey.
It was the first double-digit increase seen on the Modern Healthcare charts since the 2008 survey, when plastic surgeons registered a 10.9% increase. The next-highest increases in the current survey are for noninvasive cardiologists whose compensation grew 4.1% to an average of $424,359 in 2011 from $407,694 in 2010; and invasive cardiologists, whose pay rose 3.9% to $479,275 from $461,121.
According to the 16 associations, recruiting firms and staffing companies participating in the current survey, the specialties that had the three highest average compensation increases in last year’s survey were among the 10 specialties that saw their pay drop in this year’s findings.
Radiation oncologists’ average compensation increased 6.4% in last year’s survey, but their average pay fell 0.7% in the current survey, to $468,786 in 2011 from $471,901 in 2010. General surgeons’ average compensation rose 5.9% in last year’s survey, but fell 0.6% this year to $351,318 from $353,460. Meanwhile, plastic surgeons’ average pay increased 5.8% last year, but they appeared to give it all back this year and then some: They saw the biggest percentage drop in this year’s survey—6.6%—to $382,016 in 2011 from $408,864 in 2010.
Other specialists whose compensation tracked ahead of the CPI were hospitalists, 3.8%; and family physicians and pediatricians, both 3.6%. Gastroenterologists’ pay increase equaled the 3.2% increase in the CPI.
For the fourth straight year, orthopedic surgeons and invasive cardiologists finished first and second, respectively, on the list based on average compensation. Orthos topped the charts again despite a 0.4% decrease in average pay that saw their compensation fall to $499,533 from $501,298. Of the 14 associations and staffing companies tracking orthopedic surgeons’ pay in the Modern Healthcare survey, compensation ranged between $610,188 and $369,905.
Dr. Richard Marsden, senior executive vice president for Sanford Health’s Fargo, N.D., division, says the survey findings roughly reflect what he’s seen in his area. He added, however, that orthopedic surgeons specializing in the hand may be outpacing their peers.
“That’s a tough recruit right now,” says Marsden, who is responsible for keeping 596 physician staff positions filled.
He also says that gastroenterologists may be getting paid more in his region than the survey indicates, and that the 10.3% increase for intensivists is “a little out of the norm from our experience.”
While the $298,659 and the $198,892 average pay indicated in the survey for obstetrician/gynecologists and family physicians, respectively, are comparable to what Marsden has been paying, he says higher com-
pensation is sometimes needed to attract these specialists to some of the remote regions in Sanford’s coverage area.
“Getting them to come to the warm climate of North Dakota and South Dakota can be a challenge,” Marsden says.
He adds that neurologists (who, according to the survey, saw their average compensation increase 0.9% to $264,842 in 2011 from $262,370 in the previous year) are another “tough recruit,” while Spahlinger says pediatric neurosurgeons are hard to recruit—and retain.
“Our pediatric neurosurgeons are constantly being recruited,” he says. So, in order to retain the services of in-demand specialists, Spahlinger says the University of Michigan often offers deferred compensation in return for a commitment to remain for a certain number of years.
He notes that every few years, a different specialty draws high demand—between 2000 and 2005 it was radiologists. According to this year’s survey, radiologists’ compensation fell 2.8% to an average of $439,384 in 2011 from $451,976. But Spahlinger recalls how their pay was rising 10% to 15% annually at the beginning of the past decade and, one year, he says the university lost 18 radiologists.
Marsden says Sanford often offers signing bonuses or medical school loan-forgiveness packages as recruitment enticements in which a sum of $50,000 usually comes attached with a three-year commitment. A smaller sum usually means two years or fewer, while something higher means four years or more.
“Obviously, the more critical the specialty you’re trying to recruit, the higher the dollar figure and the more years it’s spread out,” Marsden says.
Spahlinger says the university doesn’t use signing bonuses that much, and instead it plays up its benefits package such as full medical and dental insurance plus a commitment to double what individuals put in their retirement account. “If you put in $5,000, we put in $10,000,” he says. “That’s a pretty generous benefit.”
Merritt Hawkins reports that 80% of its recruiting assignments included signing-bonus offers with the average being about $23,300. Other common incentives include paid relocation, paid continuing medical education, health insurance and malpractice insurance.
The poor economy has hindered physician relocation because of difficulties in selling homes. Marsden says Sanford is reluctant to step into these matters. “One thing we try to stay away from is real estate,” he says. “We don’t want to own real estate, we don’t want to buy out houses from people, and we don’t want to own their house when they get here.”
Spahlinger says the trend toward emphasizing flexibility and lifestyle continues. While the university is reluctant to hop on the paying-for-oncall-service bandwagon, he says it will accommodate doctors who want to work less-than-full-time hours—though it can be tough to create a cohesive unit when there is a sizable contingent of physicians working only between 50% to 80% as many hours as the rest of the staff.
“It’s becoming logistically harder because of the variability,” he says. “Now, it’s a calculus equation.”
TAKEAWAY: physicians’ While compensation has increased as hospitals and large medical groups compete for their services, payers haven’t kept pace with increased reimbursement for those services.
Cardiologists are among the specialties that saw their average compensation increase faster than inflation in 2011.