Finding a job right out of residency is a complicated and daunting task. Although many young physicians might think they have some idea about their expected income, they often have difficulty correctly assessing the effects of different practice settings and geographic regions on their relative worth.
Salaries, bonuses, contracts, oh my!
Once a salary and sign-on bonus has been agreed on, many new physicians fail to ask exactly what measuring stick their employer will use to evaluate their productivity and corresponding future income.
My experience with finding the perfect job was no different, and as practices started sending me contracts and benefit packages the size of small phone books, the same questions kept running through my mind: How do I know what I’m worth? How do I know which contract offers are fair, and which are attempts to take advantage of my financial inexperience?
After several hours of sifting through the various contracts, I knew I was in over my head, so I met with the business manager in charge of the cardiology practice where I was completing my fellowship.
Almost immediately, she recommended I consult the same resource their practice and hundreds of other practices use for answering these questions: the Medical Group Management Association (MGMA) manual.
Using MGMA compensation data
Every year, the MGMA sends out the Physician Compensation and Production Survey to medical practices in order to obtain current information about the compensation and productivity of physicians around the country.
These surveys are provided to all specialty types, practice structures and regions of the country. The results of these surveys are then organized and compiled into charts to help medical practices gauge their own productivity and compensation.
Medical groups often use this information to set their own internal benchmarks for establishing future compensation and productivity standards for current and new physicians.
What I learned from the MGMA manual was that, although there are a myriad of potential variables that go into what determines a physician’s salary, there are six major practice variables that are tracked and that appear to consistently affect a physician’s compensation. They are: practice ownership, group type, geographic section, demographics, partners in practice and call responsibilities.
How to calculate the compensation you deserve
I found that by using the information in the MGMA manual, I was further able to estimate the average salary of a specific job offer based on the characteristics of each practice.
For example, let’s assume you are an invasive cardiologist and receive three identical compensation packages from three different practices. Practice 1 is a non-hospital owned, single-specialty group type located in a large metropolitan city in the Eastern region, such as New York City.
Practice 2 is a non-hospital owned, single-specialty practice located in a smaller metropolitan city in the Midwest, such as Cincinnati.
Practice 3 is a hospital-owned, multispecialty practice group, located in a non-metropolitan city also in the Midwest, such as Dearborn, Mich.
The first step in determining the average salary of Practice 1 is to look up the average salary for an invasive cardiologist working in a city over 1 million people and record the value. Next, look up the average compensation for an invasive cardiologist working within that region of the country.
Do the same thing for an invasive cardiologist working in a non-hospital-owned practice setting as well as an invasive cardiologist working in a single-specialty practice.
If you add up the average salaries from all four variables and divide by four, you will get what is likely an even closer estimate of the average annual salary for an invasive cardiologist working in Practice 1.
If you then repeat this process for your other job offers, you can now compare the average expected salaries of all job opportunities side by side.
Although there is no doubt that this method is a relatively crude attempt to estimate the salary of a specific practice setting—and no doubt lacks dozens of variables important to the equation—the composite estimates are at their core based on actual reported salaries of physicians working in your specialty within each specific practice setting.
Although the process of averaging four different compensation values based on four different variables is imperfect, these values can help shed light on the current trends in compensation as well as your relative worth in a given practice setting.
Comparing different offers
In about an hour, I was able to construct a chart comparing the average expected compensation from my top three job offers. Although all of the initial salaries were within 10 percent of each other, I found that the proposed salary for my favorite was 25 percent lower than my estimate from the MGMA manual.
With this knowledge and the counsel of other advisors, I counter-offered for 25 percent more than my initial offer, plus a bonus salary based on my productivity.
To my somewhat surprise, the hospital agreed to my three-year salary proposal, but suggested that my bonus salary be based on a specific work revenue value unit standard, also known as wRVUs.
Their initial productivity goals seemed somewhat high and unrealistic to my lawyer and me. So by referring to the standards published in the MGMA manual for my specific practice structure, we were able to work out a wRVU standard that was more appropriate for my specific practice setting.
From my experience, I found the MGMA manual to be a powerful tool in sorting out my financial value across very different practice settings. However, I would advise anyone consulting the MGMA manual to remember that the data should be use as a general guide rather than as a weapon.
Don’t be afraid to negotiate with potential employers
Furthermore, if your potential employer intentionally or unintentionally tries to suggest that your proposed compensation is out of proportion to the average for your area, you may be able to use information in the MGMA manual to show otherwise.
Don’t overlook call responsibilities when discussing your relative productivity. Because call responsibilities often generate little to no direct revenue, make sure this variable is not overlooked when discussing your relative productivity.
Each practice is unique, and it is impossible to tease out the exact value of any particular variable, much less the exact value of a physician in that practice setting. However, using the variables that are known and understanding how they tend to affect compensation will help you better approximate your worth in a given practice setting and take some of the guesswork out of the negotiation process.
Although the process of estimating your worth is somewhat tedious, time-consuming and expensive, I would urge every physician to take the time and spend the money necessary to consult with physicians, practice managers and a lawyer experienced in physician contract law.
In the end, every hour and every dollar spent will likely pay dividends that go far beyond your starting salary.
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