By David Litzau, Survey Analyst II
MGMA Survey Operations
The new Medical Group Management Association physician compensation survey data is here, and like the previous three years, we're starting to count on a trend: While physician compensation rose slightly in 2008, physicians did not really see a gain. Most increases were outpaced by inflation.
According to MGMA's Physician Compensation and Production Survey: 2009 Report Based on 2008 Data:
- Primary care compensation increased only 2.04 percent to $186,044, an inflation-adjusted drop of 1.73 percent.
- Specialty care physicians fared only slightly better with an overall increase of 2.19 percent to $339,751, a 1.59 percent decrease when adjusted for inflation. Interesting to note: Anesthesiology and pulmonary medicine were the only specialties to see increases of more than 10 percent in the past five years.
I took a deeper look into the data to see what is going on in different practice settings, and which practices are the most efficient in their payout.
Physicians in nonhospital-owned practices earn more – and work more
According to the survey, both primary and specialty care physicians working in nonhospital-owned practices generally earned more than those in hospital-owned practices. How much more? Specialty care physicians see the biggest difference with 27.72 percent more; primary care physicians in nonhospital-owned practices make 2.31 percent more than their counterparts in hospital-owned practice.
But there's more to the story. Although these differences may seem to reflect lower pay rates in hospital-owned practices, our data show it's due to differing physician workloads. When compensation is evaluated per physician work RVU (relative value unit, the standard work measurement unit), the data show there is little difference between group ownership.
- Primary care physicians earned $39.35 per work RVU in hospital-owned practices and $41.05 in nonhospital-owned practices.
- Specialty care physicians produce 15.6 percent more work RVUs in a nonhospital-owned setting but earned $51.08 per work RVU, compared with $51.21 per work RVU in hospital-owned practices – a 13¢ difference.
Hospitals passing "the bucks" to physicians
While hospital-owned groups lagged behind in total compensation and were about even in compensation-per-work RVU, they clearly outpaced nonhospital-owned groups when it came to compensation-to-collections ratio. This is a measure of how much of each dollar collected for professional work by the physician is passed to the physician in the form of compensation.
In hospital-owned practices, primary care physicians earned 53.5¢ for each dollar of professional collections, while specialty care physicians earned 77.5¢ – at least 8 percent more than in nonhospital-owned groups.
How RVUs are like cans of soup
The other aspect of MGMA's physician compensation survey is production. To achieve a work/life balance, many medical practices use a compensation plan using work RVUs as a productivity measurement. The challenge is rewarding the highest-producing physician without letting compensation get out of control. The more work RVUs, the more you get paid, right?
It depends on how you measure compensation. Think of your latest grocery shopping trip. Say in the soup aisle you have an option to buy a 6-ounce or an 8-ounce can of soup. The 8-ounce can of soup costs more, but if you look at the cost per ounce (the numbers at the top of the price tag), you're actually getting a better deal with the bigger can. The cost per ounce is lower on an 8-ounce can than a 6-ounce can.
Work RVUs for physicians are similar. The more RVUs a physician works, the lower the price per RVU. More productive physicians still earn more overall, like this graph on Internal Medicine demonstrates – they just earn less per RVU.
Note: MGMA surveys depend on voluntary participation and may not be representative of the industry. Readers are urged to review the entire survey report when making conclusions regarding trends or other observations.
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