MGMA: Hospital-employment trend rippling out to affect compensation

Despite a rocky economic climate, median compensation in primary-care specialties increased modestly--between 7 and 10 percent from 2007 to 2008--according to data from the Medical Group Management Association (MGMA) 2009 Physician Placement Starting Salary Survey: 2010 Report based on 2009 Data. Specialties as a whole saw a 10 percent bump. Across all practices, primary-care physicians reported median first-year guaranteed compensation of $160,000 in 2009 while specialists commanded $230,000.

One of the most notable physician placement trends overall--the movement toward hospital or corporate employment and away from private practice--is noticeably affecting the entire compensation arena, notes an article in the New England Journal of Medicine Career Center. In years past, it was generally expected that private practicing specialties would pay more in initial compensation than hospitals or health systems; but that's shifting, as hospital-department practice salaries are in many cases either matching or exceeding single-specialty and multi-specialty group compensation, according to Todd Evenson, MBA, MGMA's assistant director of survey operations.

Indeed, 65 percent of established physicians and 49 percent of doctors hired out of residency or fellowship were placed in hospital-owned practices last year, according to the MGMA survey, which included information on 4,100 physicians and more than 1,500 doctors hired out of residency.

Historically, hospital-owned practices have been more successful at attracting experienced physicians (those not hired out of residency or fellowship). On average, since 2006, nearly 60 percent of experienced physicians reported in the MGMA data have been placed in hospital-owned practices. During the same three-year period, starting pay has risen 17.4 percent for PCPs and dropped 2.1 percent for specialists in single-specialty practices. In multispecialty practices, however, primary care pay increased 14.3 percent and specialty pay increased 3.2 percent.

"Physicians are moving to hospital-owned practices for a number of reasons," said Brenda Lewis, president of B.E.L. & Associates, Inc., and MGMA survey advisory committee member. "There is uncertainty of reimbursement for the future. Physicians are looking to sustain income to pay office overhead and have a paycheck to take home, and those with large Medicare populations are more likely to want to move to hospital-employed positions."

In addition, practices, hospitals and health systems are offering loan assistance to candidates in nearly all specialties, while benefits such as health and disability insurance, retirement and vacation are stable or increasing slightly, NEJM's Career Center points out. Both relocation assistance and continuing medical education allowances are also on the upswing, with some prospective employers offering training stipends of up to $2,500 a month for highly sought specialists in the final months of their residency.

"Hospitals, especially, are reacting to what supply is demanding--higher initial income guarantees, flexible work hours, higher sign-on bonuses and even retention bonuses, to their top candidates," Brian McCartie, vice president of business development for St. Louis, Mo.-based Cejka Search, a leading physician recruiting firm, told the Career Center. "Today, more and more hospitals are moving into employing physicians, in all specialties. Many are willing to pay more in initial income guarantees than private practices are," he added, even if in the longer term employed physicians might earn less than they would in the private-practice sector.

To learn more:
- read MGMA's press release
- see this piece in the New England Journal of Medicine Career Center