Surprise, surprise. Physician compensation has continued to inch upward, seemingly defying the forces of managed care and oversupply.
The latest data show that overall, doctors have fattened their wallets in recent years.
MODERN HEALTHCARE's 1998 report on physician compensation surveys, the fifth annual, shows increases in total compensation for 12 of the 14 specialties tracked. Last year's report showed across-the-board increases (July 28, 1997, p. 26).
The American Medical Association survey, designed to reflect the entire physician population except for federal doctors and residents, reported a 4.4% increase in median physician compensation in 1996, compared with a 4.6% boost in the previous year (March 30, p. 3). Inflation was 3.3% in 1996.
However, more recent data from other sources suggest that physician pay increases have moderated since 1996.
"They're not the dramatic increases we used to see in the past," says Rosanne Cioffe, director of reports at Oakland, N.J.-based Hospital & Healthcare Compensation Service.
The climb in pay was interrupted, however, according to the AMA, which says physicians suffered a one-year decline in 1994.
MODERN HEALTHCARE has added a new feature in this year's survey. Figures supplied by each firm were compared with the previous year's data from the same organization to show a percentage change. The median of the percentages for each specialty is shown.
Survey results vary because of sample size and makeup, including practice setting, experience level and geography. For example, figures from Weatherby Health Care, a physician recruitment firm, tend to be lower because they represent a disproportionate number of starting salaries. The Medical Group Management Association and the American Medical Group Association tend to show higher incomes because physicians in private group practice tend to earn more than those employed in other settings.
Annual changes sometimes reflect differences in an organization's sample as well as market forces.
This year's data suggest that gains were modest and far from universal. Physicians in some specialties continue to suffer stagnating and even declining incomes. And doctors who insist on practicing in oversupplied markets, mainly attractive urban centers, paid a price in lower pay and longer hours.
For example, Norwalk, Conn.-based Weatherby found that obstetrics/gynecology pay was up 8% on average but actually dropped in such crowded markets as northern New Jersey, Seattle and Washington, D.C. Starting OB/GYNs could command up to $170,000 in rural areas, compared with as much as $150,000 in most metro areas.
"I think what you have is suffering in some parts of the country and increasing demand in the other parts," says Roberta Margolis, senior vice president at Weatherby.
James Rodeghero, director of the physician compensation practice at consulting firm Ernst & Young, believes "holding your own" might be a good strategy for many physicians.
"There are only so many hours you can practice. There is only so much cost you can cut," says Rodeghero, who knows of specialists who split their time between cities like Seattle and San Diego to boost their incomes.
In addition, health plans in some markets are squeezing provider payments after seeing their profits tumble in 1997. And hospitals continue tinkering with productivity incentives as they try to turn around their unprofitable physician practices.
Kimberly Mobley, a principal with Sullivan, Cotter & Associates, a Detroit-based human resources consulting firm, says that has led to greater income opportunities for productive doctors. "For those who are less productive, which may be a small percentage, organizations are willing to cut back," she says.
Ernst & Young notes more increases for physicians who have little managed-care business. "Last year, the bigger increases were for the higher managed-care doctors," Rodeghero says.
Some markets may have shifted more heavily into managed care, causing a drop in productivity as physicians learn the ropes, he says.
Technological advances, changes in government reimbursement, local market forces and the financial fortunes of HMOs and physician practice management companies make physician compensation trends difficult to predict. For example, 1998 could go down as a bad year for the thousands of physicians who contracted through San Diego-based FPA Medical Management, which is cutting back its operations because of a financial crisis. On the other hand, it could be a record-setter for urologists, who are enjoying an influx of patients thanks to the impotence drug Viagra.