Hospitals and health systems are continually confronted with challenges related to physician resources and coverage. In an environment where physician demand usually outweighs the available supply in many physician specialties, hospitals and health systems must secure and maintain a stable physician staff. However, that means recruitment of both experienced physicians and physicians just out of residency or fellowship. To successfully recruit these physicians, it is important to understand the potential compensation differential between physicians with this variance in experience.[1]
PYA has created the following table of specialties/specialty categories illustrating the percentage variance in compensation between experienced physicians (i.e., those physicians with three or more years of experience) and physicians with one to two years of experience.[2]
| Specialty Types | Variance | ||||
| Hospital-Based | |||||
| Anesthesiology | 30% | ||||
| Critical Care: Intensivist | 2% | ||||
| Hospitalist | 15% | ||||
| Radiology | 8% | ||||
| Average Variance | 14% | ||||
| Medical | |||||
| Hematology/Oncology | 30% | ||||
| Neurology | 14% | ||||
| Non-Invasive Cardiology | 21% | ||||
| Psychiatry | 14% | ||||
| Average Variance | 20% | ||||
| Primary Care | |||||
| Family Medicine (with Obstetrics) | 14% | ||||
| Family Medicine (without Obstetrics) | 18% | ||||
| Internal Medicine | 16% | ||||
| Pediatrics | 26% | ||||
| Average Variance | 19% | ||||
| Surgical | |||||
| General Surgery | 21% | ||||
| Obstetrics/Gynecology | 21% | ||||
| Orthopedic Surgery | 7% | ||||
| Urology | 14% | ||||
| Average Variance | 16% | ||||
| Note: Variance was calculated from the median difference between average starting salaries reported for each specialty in the 2019 versions of MGMA Provider Compensation Survey and MGMA Provider Placement Survey, and average median salary data from the following 2019 surveys: AMGA Medical Group Compensation and Productivity Survey, MGMA Provider Compensation Survey, and SullivanCotter Physician Compensation and Productivity Survey Report. | |||||
As illustrated by the benchmark survey data, the average premium in compensation for experienced physicians among all specialty categories generally ranges from 15% to 20%, with primary care specialties (such as family medicine, internal medicine, pediatrics, and obstetrics/gynecology) on the higher end of this range.[3] This premium is meant to compensate experienced physicians not only for the additional years of clinical practice, but also for several other reasons, including but not limited to the following:
- Experienced physicians typically have more advanced training/certifications, which employers usually reward with supplemental compensation.
- Experienced physicians generally see a greater number of patients than, or perform more procedures than, inexperienced physicians. Experienced physicians work diligently to develop efficient office procedures/processes as well as relationships with their office staff. In addition, experienced physicians in some surgical specialties will have established relationships with primary care physicians who they may depend on for their patient base. Alternatively, it can take time for surgeons coming out of residency/fellowship to develop trusted relationships with primary care physicians.
- More experienced physicians usually perform supplemental duties—such as medical directorships and supervision of advanced practice providers. Total compensation reported by the compensation surveys (previous table) may include additional pay for such duties.
Regardless of the circumstances that may drive compensation to vary between experienced and inexperienced physicians, a physician’s compensation should be commercially reasonable and set at a level consistent with fair market value to remain in compliance with the Stark Law and Anti-Kickback Statute.
PYA has a team of dedicated professionals who help hospitals and health systems with fair market value and commercial reasonableness opinions. We also have experience in designing compensation plans that help meet both hospital and physician goals and in developing economic alignment models in all specialties. If you would like information about fair market value and commercial reasonableness opinions, physician compensation, or economic alignment models, contact one of our PYA executives below at (800) 270-9629.
[1] PYA recognizes that various factors, in addition to experience, affect total physician compensation (i.e., physician supply and demand). However, this article highlights some compensation differentials between experienced and inexperienced physicians. This information can be useful when recruiting physicians.
[2] While experienced physicians are those who have three or more years of experience, most of the respondents in the surveys have many more years of experience. For example, approximately 65.8% of the respondents in the 2019 MGMA Provider Compensation Survey had eight or more years of experience, with approximately 21.4% of total respondents having more than 22 years of experience.
[3] The large gap within primary care specialties may be due, in part, to many of these physicians having more collective years of experience than other specialties. For example, and as previously mentioned, while approximately 65.8% of all respondents in the 2019 MGMA Provider Compensation Survey had eight or more years of experience, approximately 38.6% of total survey respondents specialized in a primary care specialty.
