Study: Harder work needed to maintain pay

Charges outstripping pay increases

Last year, primary care physicians realized only a 2.54% increase in annual compensation, to $139,244, while specialist pay jumped 5.22%, according to the Englewood, CO-based Medical Group Management Association’s (MGMA) recent Physician Compensation and Production Survey: 1999 Report Based on 1998 Data.

Meanwhile, gross charges increased 4.67% for primary care and 6.51% for specialists, says the MGMA.

The gap between the charges different physicians generate and related pay increases illustrates the fact that more providers must work harder and longer hours to maintain their present level of take-home pay after factoring in inflation, says David F. Thomas, CEO of Midwest Physician Group in Olympia Fields, IL.

Over the five-year period tracked by MGMA, compensation rose more than 9% for both primary care and specialty physicians. In contrast, gross charges jumped 11.59% and 29.33% respectively.

Pediatric/adolescent medicine — with a pay gain last year of 2.43%, to $135,000 — leads the primary care pack. However, internal medicine still tops the field, with an annual salary of $141,147. Pulling up on the outside was family practice (without OB) at $138,277.

Among the specialties, dermatology had the biggest one-year jump in compensation, rising 9.23% to $193,215. The next biggest gainers were hematology/oncology (8.95% to $212,516), noninvasive cardiology (7.29% to $278,900), and invasive cardiology (7.19% to $350,000).

The 5.22% pay boost among all specialists represents a "re-emergence of the specialists," says Susan A. Cejka, president of Cejka & Co., a St. Louis-based physician recruiting firm that helped fund the report.

Cejka says the recent focus on primary care, especially by hospitals buying up and creating their own primary care practices, dampened the market for many specialists. However, the red ink thus far generated by this primary care strategy is now giving specialists more leverage when it comes to pay talks.

While demand for primary care physicians will remain strong, Laurie Foote of Healthcare Management, a health care consulting company in West Springfield, MA, says primary care compensation will experience a "right-sizing."

When you analyze the MGMA study, two major capitation-related trends emerge: Specialists are undergoing pay cuts in heavily capitated markets, and there is a growing disparity in compensation between different areas of the country.

MGMA predicts that as managed care makes up a larger percentage of overall practice revenues, physicians can expect their compensation patterns to follow the following model:

— Once 51%-100% of a specialist practice’s total revenue comes from capitation, specialist compensation drops to about $100,000 less than for colleagues with no capitation.

— Primary care practitioners’ capitation compensation follows a similar path as specialists, until group capitated revenue reaches 50% capitation. Then, primary care pay starts to increase.

Southern docs make more money

Specialists in the South made $305,800 last year, while those in the West earned $210,073. Primary care physicians in the South outpaced the rest of the country, making $150,000 vs. about $135,000.

Why the big regional pay difference? "The western part of the country is heavily capitated, and the reimbursement rates there are lower," says Cejka.