Medical group executives see salary increases in 2017, incentives play a bigger role

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Medical group executives saw their salaries increase in 2017, with incentives playing a bigger part. (flickr/Pictures of Money)

Leaders of medical groups saw their salaries increase last year, with incentives playing an increasingly important role in their compensation.

Medical group CEOs—both physician and nonphysician leaders—as well as chief operating officers (COOs) all saw increases in overall cash compensation from the previous year, according to a survey by the AMGA, a trade association advocating for transformation in the healthcare industry.

The 2017 survey of executives and leaders was based on data from 55 medical groups across the country, representing more than 1,300 individuals. The national medical total cash compensation for physician CEOs increased by 7.5%, for nonphysician CEOs jumped by 11.1% and for COOs increased by 7.2%.

The survey also found that incentives continue to play an ever-more-important role in compensation increases for medical group leaders, the AGMA said. Analysis of executive roles indicated that the median “earned bonus-to-base ratio,” a measure of the proportion of compensation driven by performance incentives beyond base salary, increased for several executive roles over 2016. For instance, the median earned bonus-to-base ratio for physician CEOs was 22.7% in 2017, versus 18.2% in 2016.

Physician CEOs last year earned a median total cash compensation of $645,784, according to the report. The median base salary was $540,000, with a median bonus compensation of $155,822. 

“At this time, value-based care is driving executive compensation incentives in a manner similar to physician compensation for many groups,” Fred Horton, president of AMGA Consulting, said in an announcement. 

Several of the other traditional C-suite positions in medical groups saw increases of up to 4.4% at median. The AGMA said some of the larger salary increases may be driven, in part, by differences in the demographics of survey participants year-over-year. However, the general upward trend is consistent with other compensation survey data.

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As medical groups move to value-based care, one role that is key to those efforts is director of care coordination, a job that saw a large increase, registering a more than 14% increase in median total cash compensation year-over-year. 

Approximately 63% of the individuals surveyed were from system-affiliated groups, while 37% work at independent groups. The survey is weighted toward mid- to large-size groups, with 73% of incumbents from groups of more than 100 full-time equivalent physicians.

The survey also showed an increase in the prevalence of supplemental executive retirement plans, a tool commonly offered to promote retention of key executives. In 2017, 62% of physician CEOs received a retirement plan, compared to 41% in 2016.  

“With the effort required to align resources for success under value-based care, it may be that more organizations are deciding that incentives to promote consistency in the leadership team are key to success,” said Horton.

The shift to value-based care has resulted in other changes as well. A national survey last year found many doctors would actually prefer being paid a salary. The survey found that 69% of doctors said their preferred way of being paid would be with a high proportion of their compensation as salary—with a low proportion of their pay based on incentives—or a straight salary with no incentives.