For physicians, compensation is up but productivity remains flat or declining, survey finds

Medicine Money
Physician compensation is up, but productivity is not, a new survey found. (Getty/utah778)

With an ongoing demand for their talents, physicians continue to see a year-over-year increase in their compensation, according to a new survey.

Market supply and demand for physicians continues to drive increases in doctors’ total cash compensation, which includes their base salary along with annual incentives, according to a survey from SullivanCotter, a consulting firm that works with healthcare organizations and non-profits.

The survey results indicate that physician compensation programs are evolving—including adding more value-based incentives—as organizations address a variety of new challenges in a rapidly changing healthcare environment, the company said.

The survey, based on data from nearly 700 organizations on more than 206,000 physicians and advanced practice providers, found increases in median compensation across all major specialty categories, including primary care, hospital-based and medical and surgical specialties. That has been the case for the past 10 years.

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Despite those increases in compensation levels, productivity remains relatively flat and in many cases is even declining, the survey found. For instance, over a five-year period, from 2014 to 2019, median compensation for primary care physicians increased by 14.7%, while work RVU (wRVU) productivity declined by 0.2%.

“As organizations look to expand their primary care providers, there is upward pressure on family medicine and internal medicine compensation without significant changes in wRVU productivity,” the survey report said. As they look to meet population health goals, organizations are adding other measures of performance such as panel management and telehealth for primary care doctors.

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Productivity, however, is up among hospital-based physicians, who saw the largest growth in median wRVU productivity at 5.2%. This was the only major specialty group to see an increase greater than 1.5%, the survey found.

“With a looming physician shortage placing pressure on organizational recruitment and retention strategies, this demand continues to push physician compensation upwards without being supported by corresponding gains in productivity or reimbursement—resulting in higher levels of organizational investment per physician," said Dave Hesselink, principal at SullivanCotter.

Healthcare organizations are incorporating more value-based incentives into physician compensation programs, however, those still only comprise a small portion of compensation. From 2018 to 2019 the prevalence of value-based incentives, which rewards performance on measures such as clinical quality, patient experience, and access, increased by 5% to 7% across all four major specialty categories.

For primary care, the use of value-based incentives was up 5% from last year, with 62% of organizations incorporating these incentives into their physician compensation programs. Medical, surgical and hospital-based specialties all fell in the range of 55% to 57%.

The actual amounts paid for value-based performance remain relatively small at 6.2% of compensation across all specialties. However, that was up from 5.6% in 2018. Primary care is highest at 7% of total compensation from value-based incentives with hospital-based specialties following at 6.3% and medical and surgical specialties at just below 6%, the survey found.

The report cited several key factors driving the need for new approaches to physician compensation and performance programs including:

  • new models of care focusing on population health, supporting the transition from volume to value, and enhancing access, quality, service and affordability
  • growing demand for key talent amidst a looming shortage of physicians, resulting in a more competitive labor market
  • a need to align physician performance with overall organizational goals
  • challenges associated with CMS quality programs such as the Merit-based Incentive Payment System (MIPS) and potential changes to the Stark Law