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August 18, 2021

How physicians get paid

Greggory Woitte, M.D.

Compensation is more than just money. "It’s important… that your well-being and personal life is valued," says Greggory Woitte, M.D. - Photography by Josh McCullock.

Of all the challenges you’ll face navigating your job search, making sure that you’re paid what you’re worth - and in a manner that fits your style or goals - is critical.

Let’s take a closer look at the ways you might get paid, and both the upsides and downsides for your career.

Salary: Part of a Mixed Bag

For most physicians, compensation is based on multiple methods, with salary plus productivity topping the list and bonuses a prevalent add-on.

Whether you’re looking at an employed position or even an independent practice partnership track, you’ll likely have a sure-fire stipend for at least one year and possibly more before moving to the standard compensation formula. Then, you’ll be expected to cover your base and contribute to overhead expenses.

"Nobody will give you a guaranteed salary forever," says George M. Abraham, M.D., president of the American College of Physicians. "You’ll have some sort of base and then most of it is productivity. Otherwise, there is no incentive to work hard. If I’m guaranteed my salary, it doesn’t matter what I do."

What does that mean for your career? Your initial salary may be lower than you might expect, but with the promise that as you prove your worth you’ll earn extra, either for productivity or some other metric. Anything you generate above and beyond will result in a bonus or some sort of profit-sharing split between you and your employer.

As to a salary grace period, there are upsides to having your employer carry the initial freight. "The positive is that you can focus not on productivity, but on value," says Fred Horton, MHA, president of AMGA Consulting. You have a chance to align yourself with the incentives - whatever they might be - before they really affect your personal bottom line.

Into the weeds

Regardless of your earning expectations, you’ll want a clear idea how a salary will figure into your career strategy. If it’s guaranteed, for how long? If it’s straight salary and nothing else, what does that mean? Are there automatic increases in your future, or cost-of-living adjustments?

Likewise, if there’s a bonus attached, will those extra dollars be based on your work product, the group’s overall financial performance or quality measures? How might those bonuses escalate?

At Atlanta-based Piedmont Internal Medicine, for instance, physicians take a monthly salary draw based on their previous production history. With direct expenses and overhead eventually deducted from any calculations, the good news is that the practice’s operational expenses don’t really fluctuate as they might in a larger system. So, the more energized the 11 board-certified physicians are, the more revenues they can generate and keep, without worrying about unexpected overhead costs dinging the bottom line.

"They basically get a share of the remainder earnings," says Kelly Ladd, FACMPE, COPM, Piedmont’s chief operating officer. "At the end of the day, their take-home pay is whatever is left after the bills and staff are paid."

Productivity drives pay

Productivity will be key in some way, shape or form.

Granted, independent medical practices have historically compensated based on number of patients and fees for services billed. What likely won’t apply there - at least in terms of your compensation - is the RVU or relative value unit system.

But if you’re joining a larger, integrated or hospital-based employment model, your productivity likely will be measured - and reimbursed - via those work RVUs. By placing a numeric value on your effort and skills in performing specific services, they will be key in turning productivity into financial rewards.

"It used to be just how many patients can I see in a day, because that’s what I’m going to bill for…that’s what my collections are going to be tied to," says Andrew Swanson, MPA, CMPE, vice president of industry insights for Medical Group Management Association. "This is just a different model. But they’re both relatively volume-driven."

RVU plusses and minuses

So, what are the career positives and negatives with RVUs? For starters, there are variations on the theme, depending on your specialty and what you do. If you’re a surgeon or other proceduralist, for instance, you’re primed for a system built to incentivize and measure therapeutic and/or diagnostic tasks provided during face-to-face encounters. You get "X" for a catheterization or hernia repair, for instance, with the more you do, the more "Xs" you’re paid.

It’s more of a mixed bag, however, for those in primary care, psychiatry or other specialties that either aren’t so procedurally oriented or don’t even control their workflow.

For instance, as system chairman of pathology and laboratory medicine for New Orleans-based Ochsner Health System and Foundation, Gregory Sossaman, M.D., immediate past chairman of the American Society for Clinical Pathology Institute for Science, Technology and Public Policy, helps lead a large multispecialty employed medical group, one of the first such models in the South. It has evolved from pure fee-for-service to a structure in which there’s some salary parity, but with opportunities for potential bonuses, based largely on overall group RVU targets and individual performance with some value-based activities in the mix.

The downside for Ochsner’s pathologists? They don’t have as much control over RVU production as other specialists who count on attracting new patients and delivering continual care.

If your pay eventually rests on productivity, you’ll want to know the specifics.

Attending to details

There is no one compensation formula that will work in all settings - or perhaps even for your entire career. That goes for the reimbursement structures you might be involved with, too. If you’re in primary care, for instance, a covered lives panel format might suit you well while RVU production makes sense if you’re a surgeon or other proceduralist.

But ultimately, any compensation plan, Horton says, "really needs to reflect the guiding principles and culture of the organization. You can go into a salary discussion and say, ’I want to be paid this or that.’ But if it doesn’t align with the culture, it would be an absolute disaster." More importantly, will your practice style and goals be in sync with your employer?

"To me, compensation is all about alignment," Swanson says. "Yes, you absolutely want to be paid fairly. You want to get the upper end of whatever ’fair’ is. So maximizing your earnings is essential. But being aligned with the group is key."

In any case, if the offer is competitive, compensation shouldn’t be your first agenda item. It’s clearly important for now and your future, but so are those quality-of-life factors that round out the picture. What will make you and your family happy?

As Tammy D. Hager, MBA, CRPR, FABC, executive director of recruitment and privileging of Surgical Affiliates Management Group (SAMGI), notes: "You really want to think about where you are in your career and what’s really important to you."

If you’re a surgeon interested in helping provide 24-hour quality care in a setting that gives you earning power and a work/life balance, you may be drawn to a hospitalist entity such as SAMGI. It employs some 350 general and other surgeons in 50 locations throughout seven states. Its primary focus? Staffing smaller community hospitals that often can’t attract surgeons along with some larger organizations that want the services.

As chief medical officer of the Indian Health Service’s Oklahoma City Area and a practicing OB/GYN, Greggory Woitte, M.D., also advises physicians to look at all facets of an offer, particularly in terms of their personal well-being. The emphasis among the IHS medical corps, for instance, is not just providing the highest, culturally appropriate care possible to American Indian and Alaskan Native communities, but also to retain staff.

"It’s important in the Indian Health Service that your well-being and personal life is valued," Woitte says.

Along with a base salary, there’s a list of benefits, including student loan repayment. As to bonuses, IHS takes what Woitte refers to as a "holistic approach to productivity." That is, since its mission is to raise the physical, mental, social and spiritual well-being of American Indian and Alaska natives - and assure them access to care - the spotlight isn’t about productivity based on RVUs. Instead, the emphasis is on overall performance in determining if extra cash or time off is merited.

Final thoughts

Knowing what your salary might mean to your career, both now and in the future, is critical. Leaving no compensation stone unturned can mean the difference between just satisfying your soul - and satisfying your pocketbook as well.

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