Search for physician execs could give sticker shock

Competition, demand fuel higher salaries

If your hospital system wants to have a physician in a high-level capacity, prepare to pay a top salary and offer job security through a written employment contract to attract the best prospects.

Salaries for physician executives jumped more than 50% between 1986 and 1995, according to a compensation study from the Physician Executive Management Center (PEMC), a Tampa, FL, physician executive search firm.

"It’s very competitive out there. The compensation has ratcheted up," says Jennifer Grebenschikoff, one of the center’s partners.

PEMC says the sharpest jump has come in the last three years, reflecting the rapid changes in health care. The firm has surveyed physician executives several times since 1986 in order to gauge the status of this employment sector. In the first survey, full-time group practice senior medical managers’ salaries averaged $116,000. In 1993 the average had risen to $160,000. Now salaries average nearly $208,000 and can easily top $250,000.

Demand for physician executives is fueled by two situations:

The number of group practices is growing.

Nationwide, more groups are being formed. In the past two years especially, hospital systems have formed their own physician networks or bought existing ones, creating a demand for executive talent, Grebenschikoff says.

Smaller groups are looking for doctors to fill their top jobs.

"For many years, groups of 20 physicians or more generally had physician executives in leadership roles. Now, smaller groups are adding physician executives part-time, if not full-time," Grebenschikoff says.

Salary increases are just one sign of the changes in the field. More than 70% of physician executives now have a written contract — many with a "golden parachute" of up to 12 months’ salary and benefits, according to the survey.

Grebenschikoff chalks up these specific developments to physician executives’ desire for security in today’s volatile market.

"A handshake is no longer good enough," Grebenschikoff warns.

Adding to the sometimes precarious nature of the field are the demands made on these executives, she says. Often they are asked to redo compensation formulas or take on capitation risk.

Managers’ clinical role decreasing

"You’re asking them to come in and be the messenger with a message that people may not like," Grebenschikoff notes.

The days of physician executives taking on clinical duties also are fading fast. The survey found that those who have a clinical practice has been cut nearly in half since 1986, dropping from more than 70% to 37%.

While still responsible for the quality of patient care, physician executives now are far more involved in the planning and operations of the practice. "The job has gotten so complex that it’s difficult to have any sort of practice and concentrate on being a clinician as well as a manager," Grebenschikoff says.

"If the organization bases a salary scale on what the physician might have made in a clinical setting, that’s not the way to do it. Any positions should be compensated based on the value of the position," she says.

One reassuring note: Grebenschikoff says physician executives are easier to find if you don’t restrict yourself to those already holding such positions. PEMC found a group of candidates for one client that includes: a vice president of private practice affairs who is part of a large integrated delivery system; another candidate who is a medical director for primary care and managed care in the system he works for now; and a third person who is largely in charge of buying and developing primary care practices.

"Titles and organization types don’t necessarily fit what the chief medical executive should be," she says.

Another reflection of the competitive nature of the market, the survey found, is that physicians with less than three years of experience in their current position earn more than those with more than three years. Grebenschikoff says that shows senior medical executives are quick to move to higher-paying jobs.

Because replacing a physician executive can take as long as nine months, Grebenschikoff says having a way to train potential replacements can be a smart move. In fact, when her organization places a good physician executive, there is little likelihood of repeat business from that group because the new executive often trains his or her replacement.