A survey of the pay and benefits of top physician executives confirmed at least one thing doctors already knew -- last year was not a banner year for the healthcare industry.
Not unexpectedly, the pay of chief medical officers and medical directors remained almost unchanged from 2002 to 2003, according to the annual Physician Executive Compensation Report by the Physician Executive Management Center, or PEMC. The Tampa, Fla.-based group, a physician executive search firm, has conducted the survey since 1986. This year it again released the report exclusively to Modern Physician.
The survey addresses pay, benefits and several intangibles of job satisfaction. This year, 264 CMOs were ranked in the pay portions of the survey in four categories -- hospitals, integrated health systems, managed-care facilities and physician practices. A full 500 CMOs completed a series of questions about their profession. The larger group included a number of physician executives in smaller categories such as part-time, military, consultants and other groups that had sample sizes too small to be ranked in the pay sections, according to the PEMC.
The average total compensation for a CMO at a hospital was $242,507 in 2003, according to the report. Total compensation includes base pay, incentives and bonuses. That represents a 3% drop from the previous year. CMOs in group practices also saw a 3% drop in pay compared with the previous year, earning $231,464.
For the first time since 2000, the PEMC saw enough CMOs in managed-care facilities respond to be included in the survey. The 73 CMOs who responded had an average income of $240,657, according to the data. The average pay of a CMO in an integrated hospital system rose 4%, according to the study. Even with the modest gain, none of the CMOs on average saw the healthy increases seen through most of the 1990s, says David Kirschman, president of the PEMC.
A mediocre economy may be partly to blame, but there may also be a long-term trend at work. After more than a decade of rising salaries, Kirschman says, the CMO profession may be maturing.
"Doctors have been executives for a long time now, since the 1960s, 1970s," Kirschman says. "What has happened over the years is salaries have continued to go up, and now we may be seeing a leveling off."
The decline also could reflect the overall financial health of the healthcare industry, which has not seen a dramatic increase in profitability in the past three years, says Richard Afable, M.D., executive vice president and CMO of Catholic Health East. The system, based in Newtown Square, Pa., operates 33 hospitals.
"CMO pay generally is affected the same way as senior executive pay; when an organization is status quo, then so is executive pay," Afable says.
The survey did uncover a few surprises. While CMO pay remained relatively stable, the number of CMOs reporting an increase in clinical duties rose. A full 31% of surveyed CMOs working in hospitals reported having clinical duties, up 7 percentage points from 24% in the previous year. Kirschman says he was struck by the trend, which was first seen with CMOs at integrated systems last year.
Given CMOs' wide range of management duties, he questions how these doctors-turned-executives find time to see patients.
James Tucci, M.D, says he would agree. As senior vice president of quality and CMO at St. John Health, an eight-hospital system based in Detroit, Tucci has no clinical duties. The former practicing neurologist says he could not imagine reasonably fitting patients into a schedule that already demands a 65- to 70-hour workweek.
"I see it as a problem among some of my fellow CMOs," Tucci says. "I think they are clinging to their clinical work because they fear the instability in their positions."
When hospital chief executive officers change, he says, there are cost-cutting measures and then physicians begin pushing back. CMOs can find themselves caught up in the changes, Tucci says. The lure of practice can also be tough to resist.
"I have to admit, I was one of those physicians," Afable says.
After nearly eight years of devoting himself to management, Afable recently began working one-half day per week at a not-for-profit clinic serving the poor. He agrees that finding time to treat patients is a tough fit for full-time executives, but the new duties allowed him to get some real-world experience with new regimens for medication management and other techniques that have cropped up in the past decade.
"But also, I found after seven, eight years, I missed it," Afable says.
Aside from the increase in clinical duties, the survey found that the number of physicians who have sought advanced management degrees continues to rise.
The number of CMOs at stand-alone hospitals currently working on a degree rose from 2% to 9%; nearly half of them already have degrees. At integrated hospital systems, the number of people working on advanced management degrees dropped slightly, to 8% from 10%, but 55% have advanced management degrees.
In group practices last year, no CMOs reported working on advanced management degrees, while 6% are currently working on one. A full 59% of CMOs in group practices already have a management degree. Kirschman has seen a continuing trend toward management degrees over the past decade.
Though it may be counterintuitive, the survey also found that earning a master's degree in medical management or business administration had no real impact on CMO pay.
Kirschman speculates that physicians as a group are prone to tackling new challenges with training and education, regardless of whether it increases their own bottom line. So extra pay is probably not driving the trend. Unlike 20 years ago, advanced management degrees are also increasingly seen as a given among executives and their employers.
"I can tell you that was my experience," says William Cors, M.D., senior vice president of medical affairs at Somerset Medical Center in Somerville, N.J.
"I finished my triple M on this job and it did not increase my pay. If you take your job seriously as a physician executive, it's something you do." Aside from the experience, Cors says it probably helped his credibility, if not with the doctors, at least with other managers.
"My physicians couldn't care less whether I have a management degree," says Cors, who oversees a staff of 604 doctors. "This was for my board and for my fellow executives."
The survey found that CMOs are becoming increasingly prone to changing jobs. The average CMO is 53 to 55 years old, and for most of the CMOs surveyed, this was not their first management position. Among CMOs in integrated hospital systems, 77% had previous management experience, a drastic change from the first surveys in the mid-1980s, Kirschman says.
Medical director positions were once filled with senior clinicians who were near the end of their careers and who had spent most of their years practicing in the community and had earned the respect of their peers.
Not only had the CMOs in the latest PEMC survey listed previous management experience, most of them expected to make at least one more move before they ended their careers, indicating that CMOs are beginning to mirror the career paths of other healthcare executives, Kirschman says.
"You have to move around a bit if you want to get ahead," Afable says. He says he didn't think it was the sense of accomplishment that drives CMOs to positions with larger institutions. "You can't get more accomplished than being a successful practicing physician," Afable says. It's the chance to impact patient care that draws physicians into management, he says.
Doctors also were asked a series of questions about their profession and their job satisfaction. The survey found that 60% of the CMOs said having an impact on patient care is the best part of their job. A full 57% listed the volume of meetings and lack of patient contact as the worst part of being a physician executive.
"I feel I can play on a much broader stage and can affect more people positively than when I was a practicing physician," says William Bithoney, M.D., CMO of Mercy Hospital of Philadelphia.
Being on the same page with the CEO and the chief operating officer about patient quality has a great deal of influence on a CMO's job quality, Bithoney says.
He says the toughest part of his job was dealing with shrinking reimbursements while trying to keep his hospital up to date with the latest technology. But when prompted about the number of meetings, Bithoney agrees.
"There seems like there are an infinite number of people who want to meet with you," he says.
Steve Walsh is a freelance writer based in Valparaiso, Ind. He can be reached at [email protected]
For a recap by David Kirschman of survey results on physician executive job satisfaction levels and career development plans, see the Web exclusive at modernphysician.com.