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Except for some subspecialists who can expect double-digit increases, most physician pay raises will hover around the inflation rate, experts predict. One factor helping to hold the line on provider salary increases is the fact that more large not-for-profit institutions are tying compensation packages more closely to production incentives — while also raising the production bar.
With a median income in 1999 of $145,397, general internists remain among the best-paid generalists, but other primary specialties are fast gaining economic ground. According to the Englewood, CO-based Medical Group Management Association’s annual "Physician Compensation and Production Survey," the median income for primary care physicians such as non-obstetric family physicians and pediatric/ adolescent medicine physicians rose 9.56% to $141,493 between 1995 and 1999. During the same period, pay for pediatric/ adolescent primary care doctors rose 10.79% to $143,011.
Several subspecialties, however, far outpaced these pay hikes. For instance, hematologist/ oncologist compensation skyrocketed 35.32% to $255,167, while pay for gastroenterologists jumped 26% to $264,500. For the 17 categories of subspecialists tracked by MGMA, five-year median pay rose 13.86% to $245,910. In contrast, primary care pay only rose 7.98% to $143,970.
The methods used to reimburse physicians have a major influence on how much they end up making. For instance, practitioners whose compensation is based solely on production tend to be higher paid than practitioners who work under a mixed productivity/salary compensation package or who are paid a straight salary, according to the MGMA. About 37% of group practices pay physicians just based on productivity, says the survey.
In 1999, for example, general internists made a median of:
This connection is especially important because many experts say the trend is for more health care organizations, especially institutions employing physicians, to base a greater portion of their providers’ paychecks on productivity. Among the most popular productivity incentives and methods for calculating physician pay were gross and adjusted charges, net collections, patient encounters, patient panel size, and relative value units (RVUs).
Besides medical groups, other health care organizations are turning to production-based pay packages. According to Detroit-based Sullivan, Cotter and Associates, the most popular tools for measuring physician production among not-for-profit hospitals and medical centers are: patient encounters (79%); direct patient care hours (78%); patient satisfaction (60%); cost-effectiveness (49%); total RVUs (33%); work RVUs (32%); net collections (29%); and gross revenues (23%).
These incentives account for about 15% of total provider pay for generalists at these institutions, with some marked differences between primary care and subspecialist comp packages. For example, 69% of the organizations surveyed by Sullivan calculated primary care incentives only on individual performance, and only 3% used group performance to determine production pay. Patient satisfaction, net revenue, and patient encounters were the top three performance baselines used to reward individual physicians. In contrast, net revenue, patient satisfaction, and utilization are the leading performance compensation measures among primary care-driven groups.
For subspecialists, however, 65% of not-for-profit health care organizations based incentives on individual performance, while 10% considered group performance. Subspecialists’ incentives were most commonly based on gross revenue, net revenue, and patient satisfaction. This was also the same for subspecialty medical groups.
The Sullivan survey also found that about half of the health systems and hospitals that use physician performance standards planned to "raise the bar," making it potentially more difficult for their physicians to max out on their productivity-based bonuses.