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Knowing the Facts About Physician Starting Salaries

As a primary-care physician resident, you've worked hard for the money. Now you're expecting groups, hospitals, and HMOs to make you six-figure offers for handling a much smaller workload. 

But before you savor the sweet task of choosing among those offers, you need to know the difference between market-based and productivity-based compensation. Otherwise, you risk joining the legions of newly employed physicians who, after a year or two, find themselves suffering from a malady not taught in medical school: incredible-shrinking-salary disease.

Market-based compensation is the competitive salary and perks that an employer must offer to get you to bite. When you're looking at jobs paying $160,000 to $180,000, it's easy to assume you'll still be receiving at least that much two or three years down the line. That may be a costly mistake.

A high starting salary will keep flowing in for a year or two at most. Then, many employers will switch to productivity-based compensation. To keep pulling down $130,000 to $150,000 a year, you must earn it.

Asking the Right Questions

Before you start interviewing, you should familiarize yourself with all the common compensation models and how the models are structured.  The compensation plan may affect practice dynamics, group-member relations, and your long-term earnings prospects.

As you already know, the actual number of patients you'll be expected to see will vary, depending on the job. Even so, count on at least 20 to 25 patients a day if you're a family medicine doctor or pediatrician; 15 to 20 if you're an internist. But why guess. During your job interviews, ask the following:

What is your compensation model?

If you’ve already done your homework, you’ll have a basic understanding of the different models. However, you should ask for a comprehensive demonstration of how the plan offered works in practice.

Once I move to productivity-based compensation, how much work will I have to do to continue to earn the salary you're now offering me?

This is a legitimate question to ask because this model can sometimes be complicated. Physicians are paid a percentage of either billings or collections, or they are paid based on the resource-based relative value scale (RBRVS) units assigned to procedures or patient-visit types.

How many patients will I be expected to see per day?

Hospital work can reduce your earning potential because it's an inefficient use of your time. First, you must drive to the hospital and back, for which you don't get paid. And when you get there, you may have only one patient to see. The more time you must spend on hospital rounds, the fewer ambulatory patients you can see.

In a capitated environment, how large will my patient-panel size be?

If I'm paid capitation, will my panel be age- and sex-adjusted. If the answer is No, think twice about taking the job. An unadjusted panel could kill your earning power if you're assigned many sick or elderly patients. Patients over 65 go to the doctor more often than younger patients, for example. While there are different adjustment methods, a typical method might weight a 17-year old at 0.25; a 65-year old at 4.8. In other words, the 65-year old counts as 4.8 people, whereas the 17-year old counts as 0.25. 

Under this point system, you aren't penalized for having elderly patients. You may not be able to see as many patients as a doctor with a younger panel, but regarding points, you'll do fine.

Additional Suggestions:

  • Obtain the most recent salary and productivity survey data for your specialty.
  • As mentioned, make sure you completely understand the proposed compensation formula, so there are no surprises down the road.
  • Ask what types of monthly reports you will get to measure your productivity compensation and your earned bonus.
  • Speak to colleagues who have worked under the proposed compensation model and ask questions related to longevity (those who have been under contract for six months, one year, three years, etc.).
  • When it comes time to accept an offer and negotiate your contract, be sure to consult an attorney. Specifically, one who specializes in healthcare and physician employment agreements.