As Paul Aguillon, M.D., neared completion of his residency in the Robert Wood Johnson Family Medicine Program at Rutgers University at CentraState, he shared his long-term plans with colleagues: return to rural Delaware and practice family medicine there.
Some of Aguillon’s peers warned that such a move would be a bad financial decision. Aguillon made the move anyway. For him, the decision to do private practice in a rural area made sense, both financially and for his desired lifestyle. Physician salary by state varies and can play into practice decisions.
In what states do physicians earn the most money?
In a 2017 Medscape Physician Compensation Report, culled from a survey of 19,270 physicians across more than 27 specialties, the top-earning states for physicians overall derived from more rural states like North Dakota ($361,000), followed by Alaska ($359,000), South Dakota ($354,000) and Nebraska ($346,000).
Contrary to what many would think likely, physician salaries in highly populated New York state and Washington, D.C., came out at or near the bottom.
The main driver in this flip in physician compensation from both coasts to the heartland is supply and demand. Pennsylvania attorney Dennis Hursh of Hursh & Hursh, PC says he has reviewed physician contracts for a rural area where the health system offered almost the 90th percentile of compensation for a physician.
“To entice [physicians] to move to the country, you must pay them very well,” says Hursh.
When recruiters came knocking at Aguillon’s door while in residency, he looked at the nearby cities of Baltimore, Washington, D.C., and Philadelphia—all about three hours away from his hometown of 1,500 in Blades, Delaware. But, he says, those areas didn’t even compare. “It’s the entire package, but money is number one,” he says.
To illustrate, Aguillon lays out the financial scenario, sharing that if a physician is offered $150,000 in Washington, D.C., and the same amount in Delaware, it may look equal on paper—but it’s not.
“Here, you would get a sign-on bonus that could be $20,000 or more, probably moving assistance and also have a chance to apply for student loan reimbursement, all because the area is rural,” he says. Aguillon also points to lower taxes and a lower cost of living that allows doctors who practice in rural areas to keep more of what they make.
In central New Jersey, where Aguillon did his residency, his peers didn’t see the financial potential that Aguillon saw in the rural area. They could see he had family there, but still thought his decision to move down to a rural part of the state was a poor career move. “Here, you can make a good living and not have to answer to the huge bureaucracy that comes with being owned or employed by a hospital,” Aguillon says.
The perks of practicing in a rural area
In addition to a lower cost of living, many physicians who practice in rural areas find that the lifestyle plays a key factor in their overall compensation decision.
Bruce Guyant, now director of provider growth and integration at Novant Health, used to recruit physicians to the West. He says, “Even though some physicians may be attracted to a specific position or location because they grew up there or have some tie or an affinity toward the area, others are attracted to the Rockies because of what the area has to offer by way of lifestyle, outdoor amenities, climbing, hiking, fly fishing, hunting and world-class ski venues.”
Guyant recently placed a family medicine physician in a small Utah town, two and a half hours away from Salt Lake City near the Colorado border. Although the physician did not grow up in or near the area where he now practices, he loves the red rocks of Utah and is an avid mountain biker and climber.
“While other places may have paid him more or perhaps in some ways might have been a bit more competitive in terms of the position itself, our location won him over, even though we are hours from anything,” says Guyant.
Though physicians can often have a better lifestyle and a much higher standard of living in rural areas, Hursh says that physicians generally aren’t attracted to these positions initially.
“I often hear that they are just going to take the position for a year or two, while they look for something ‘better.’” The funny thing is, Hursh continues, “I generally end up representing them at contract renewal at the same institution.”
Do the numbers still add up?
The Medscape report reveals that increases in physician salaries have not waned for the past seven years. Intense competition from a variety of delivery systems have driven up the average physician compensation.
Drilling down to family medicine, Guyant says for example, “in 2011 a family medicine physician made about $189,000 as a generally accepted national average.” According to the Medscape report, family medicine physicians now make an average of $209,000. In the end, overall happiness with the area in which you practice is what matters most.
Aguillon says: “Even if I made less money, I’d probably still be here because I’m much happier making my own decisions.”