What you need to know about the forces reshaping our industry.


August 2, 2017

The highest-paid physicians, according to Modern Healthcare

Daily Briefing

Read Advisory Board's take on this story and physician compensation models.

Orthopedic surgery has the highest median annual compensation of 23 provider specialties, according to Modern Healthcare's 24th annual Physician Compensation Survey.

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For the 24th annual Physician Compensation Survey, the American Medical Group Association between January and May 2017 surveyed 102,261 physicians and 269 organizations that represent 140 positions/specialties.

Key findings

The latest findings show that the specialties with the highest median annual compensation in 2017 include:

  • Orthopedic surgery ($579,000);
  • Invasive cardiology ($575,810); 
  • Radiation oncology ($515,999);
  • Gastroenterology ($495,300); and
  • Radiology ($477,390).

According to Modern Healthcare's Steven Ross Johnson, the specialties that traditionally have had the highest average compensation continued to do so in 2016. By contrast, the median salaries for many specialties focused on primary care services "all remained on the bottom end of the physician pay scale," Ross Johnson reports. For instance, the median compensation for a pediatrician in 2016 was $228,530—only about 40 percent of the medial annual compensation for an orthopedic surgeon in 2016.

A shift toward primary care, population health

The survey also shows that while specialties focused on primary care services remain among those with the lowest compensation, they are experiencing some pay increases as demand for such services grows. According to Modern Healthcare's Ross Johnson, primary care specialties include:

  • Emergency medicine;
  • Family practice;
  • Hospitalist care;
  • Internal medicine;
  • Pediatrics; and
  • Obstetrics and gynecology.

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As Ross Johnson points out, the new survey found substantial average percentage gains in compensation for many of these fields. In fact, the highest three average percentage gains between 2015 and 2016 in compensation were reported for:

  • Emergency medicine, which experienced an average percentage gain of 7.9 percent, the most significant gain reported among all specialties;
  • Neonatology, which experienced an average percentage gain of 6.9 percent; and
  • Hospitalist care, which experienced an average percentage gain of 6.1 percent.

Experts attribute the increase in compensation to greater competition among health care organizations trying to hire physicians with certain medical specialties, many of which fell in the primary care field. As Steve Look, EVP of the health care recruiting firm Medicus, put it, "The biggest movement that we've seen over the past 18 months in terms of rapidly shifting compensation are within primary care."

Population health, care quality drive demand for primary care physicians

According to Ross Johnson, part of the demand for physicians in primary care specialties stems from an ongoing shortage of such physicians. Currently, according to Kaiser Family Foundation, physicians serving in primary care specialties comprise 48 percent of the overall doctor workforce in the United States. However, the country needs an additional 8,500 physicians specializing in a primary care field to meet demand among the more than 65 million Americans residing in the more than 6,500 areas where there is less than one provider for every 3,500 people, Ross Johnson reports.

Another reason for the growing demand for physicians in primary care specialties stems from an increased focus on population health, as well as a greater focus on wellness and care quality, Ross Johnson writes. As Travis Singleton, SVP at Merritt Hawkins, put it, "As we get into this new era of population health and chronic disease management, we look at those physicians [who] are maybe spending more time to manage that chronic population." He added, "We are fairly confident that quality is going to be a major driver of our health care system. The debate now is about by how much."

And according to Ross Johnson, some stakeholders believe MACRA's performance-based reimbursement models have "already" influenced changes in pay for physicians in primary care specialties. For instance, as hospitals and health system seek out primary care providers under MACRA, some health organizations are offering signing bonuses for physicians in primary care fields of between $5,000 and $15,000, while others are providing loan forgiveness or relocation expenses.

Further, as MACRA becomes a larger determinant in how much providers are paid, some stakeholders think it could potentially dampen pay for non-primary-care specialties, Ross Johnson reports. Michael Valentine, VP of the American College of Cardiology, said, "As MACRA becomes more firmly in place, and we begin to see quality parameters outstrip volume, then we do think that compensation will decline some." He added, "We don't expect it to be a major drop, and we don't think it will be career-changing for anyone. We think this is just a natural progression in the health care system" (Ross Johnson, Modern Healthcare, 7/24).

Advisory Board's take

Ron Charpentier, MBA, National Partner

As compensation disparity continues to persist across specialties, many of the health system leaders I speak with are thinking about redesigning their compensation models to attract and retain physicians. But knowing how and when to move forward is complicated.

For instance, our team recently partnered with a multispecialty physician group in the South that was far along in the process of redesigning its compensation plan—but rightly hit pause after it became clear that major cultural issues would hinder the plan's rollout, adoption, and success.

Low levels of trust between physicians and leadership and other cultural or operational challenges are early red flags that should give a health system pause before implementing a new compensation model. But when the time is finally right, the big question remains: What should the model look like?

There are a wide variety of compensation models, and the answer depends on system goals. We recommend pursuing a plan that fosters physician alignment with the system vision and creates a cohesive medical group culture. 

Crucially, organizations shouldn't try to have their compensation model do it all when it comes to impacting physician behavior, as some behavior can be shaped more effectively through alternate strategies. For example, when it comes to increasing productivity, its often more effective for medical groups to develop and control a set of standardized provider schedules, while using compensation plans to incent other performance metrics such as quality, patient satisfaction, and good citizenship.

No matter which model you choose, having the right operational support and efficient clinical workflow is crucial to ensuring success in physician performance.

To delve deeper into the questions to consider before rolling out a new model, request a session on physician compensation planning with me or one of my colleagues. You can also click here to learn more about how we're using our industry-leading expertise to help medical groups achieve lasting clinical, financial, and strategic success.

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