Physicians, historically loath to shell out money for practice expenses, are paying more for executive talent.
Medical group managers are enjoying higher pay, even as doctors who generate practice revenues swallow modest gains in their incomes, according to the Medical Group Management Association.
Primary-care doctors' compensation rose 9.1% between 1994 and 1998, and specialists' incomes increased 9.3%. During that period, compensation for key administrative jobs jumped between 15% and 43%, according to the MGMA.
The data are contained in the MGMA's newly released 1999 management compensation survey, which is based on data from 1998 for 38 positions. Surveys were received from 1,772 medical groups that belong to the MGMA. About two-thirds of respondent groups were owned by physicians, about 10% by hospitals and health systems, and the rest by other organizations, including physician practice management companies and management services organizations.
Physician practice management companies have nudged compensation upward in the past three years. MGMA officials speculate that the companies, many of which are start-ups, offer high pay as a recruitment incentive, partly to offset the risky nature of the PPM industry. Hospitals have also accelerated compensation by moving into practice management.
Overall, medical groups are busier than ever, according to the MGMA. The downside is that while physicians are earning more, they are also working harder for every dollar.
"It was a real good year," says Mike Burchardt, chief executive officer of the Nebraska Heart Institute, a 23-physician practice in Lincoln. He is a member of the MGMA's survey advisory committee. "Compensations are up, and volumes are up."
For the first time, the MGMA summarized compensation data by ownership. Median compensation for most jobs was higher at hospital-owned groups than physician-owned groups, probably because hospitals historically pay more across the board. Notable exceptions were the top jobs of physician CEO/president, CEO and practice administrator. The lower pay for these jobs at hospital-based systems reflects less responsibility and a lower level in the chain of command than executives might have in independent medical groups.
"What I've seen in the industry is a heightened awareness of the need for experienced, educated medical group administrators." Burchardt says. "I've seen groups actually competing against one another as far as salaries and benefits for experienced candidates."
MGMA officials said marketing and sales managers have more responsibilities, resulting in higher salaries. Thirty-five groups reported employing marketing directors last year, with median compensation of $48,000, up 9.4% from $43,864 in 1997.
"We're seeing more competition as groups get larger," says Burchardt, whose group recently hired a professional to oversee marketing to patients and foster relations with referring physicians.
For the first time the survey included compensation for compliance officers. Previously, there were too few compliance officers to generate data for the survey. Last year, 13 were employed: 10 by physician-owned groups and three by hospital-owned groups. Their median compensation was $42,124.