Cardiologist Dr. Edward Fry recalls making one-sixth as much as top earners in his field when he began practicing medicine in 1990.
Today, he says, beginning cardiologists typically start out earning as much as two-thirds the salary of a full partner at his practice, which is a part of Ascension Health. “The starting salaries of especially specialists coming out now are way higher relative to the top earners than when I started 25 years ago,” said Fry, chair of cardiology at Indianapolis-based St. Vincent Medical Group.
Fry's field, invasive cardiology, is one of 20 physician specialties that received a pay hike in 2014. Only three specialties saw their average pay decline from 2013 to 2014, according to Modern Healthcare's 22nd annual Physician Compensation Survey.
The largest pay increase last year was in urology, where compensation rose 5.25% to an average of $423,260. Invasive cardiology saw the second-largest increase, at 4.76%, followed by dermatology at 4.7%, and gastroenterology at 4.2%. Radiation oncology rounded out the top five with an average increase of 3.92%.
Of the specialties that saw a pay increase in 2014, 16 averaged below 4%. Of the three specialties that saw a decrease in compensation in 2014, oncology/hematology had the biggest decline at 1.97%, followed by plastic surgery, which fell by 0.15%, and obstetrics/gynecology with a 0.13% decrease.
In 2014, 19 specialties received a pay boost that exceeded the consumer inflation rate of 1.6%. In contrast, in 2013 only five out of 12 specialties got a pay hike that exceeded the Consumer Price Index of 1.5%.
The Modern Healthcare physician compensation figures in this article for each specialty are averages compiled from physician pay surveys published by a dozen associations and companies, including recruiting firms, healthcare management groups and consultants. Among the firms contributing data for the survey were the Medical Group Management Association, the American Medical Group Association, Irving, Texas-based Merritt Hawkins, and the Dallas-based Medicus Firm (Read about the survey firms). Organizations use different methodologies for their doctor-pay surveys.
Data on pay for primary-care specialties varied widely by source so it's difficult to generalize about trends for those specialties. But a recent MGMA report found that pay for primary-care physicians rose 3.6% in 2014, compared with 2.3% for other specialists.
A variety of factors led to modest gains for some physician specialties in 2014. A key factor was the continuing constrained growth of healthcare spending, due in part to the slow economic recovery and to Affordable Care Act provisions curbing healthcare costs.
“What you're picking up as a relatively small increase in physician compensation is consistent with the small rate of increase in overall spending,” said Richard Scheffler, director of the Global Center for Health Economics and Policy Research at the University of California at Berkeley.
Not every high-paying specialty saw increases in 2014. While dermatologists had an average increase of 4.7% and gastroenterologists saw a 4.2% hike, radiologists saw only a 1.9% bump in 2014. Still, radiology remains one of the highest-paid specialties, with compensation ranging from $271,000 to $497,000.
Primary-care specialties, including family practitioners, pediatricians, internists and hospitalists, all saw their average compensation rise in 2014. But there are questions about whether pay growth for primary-care doctors is sufficient to draw more doctors into those specialties.
Some argue that the gains primary-care doctors have made over the past several years are modest considering the wide pay gap between them and other specialties. Others say that the substantial rate of increase demonstrates the growing importance health systems place on primary care, and that this greater demand eventually will narrow the pay disparities.
Todd Evenson, chief operating officer at the MGMA, said primary-care physicians' pay has increased by 9.2% since 2012, while other specialists have seen a 3.9% increase over the same period. “We continue to see the expansion of compensation figures for the primary-care specialties at a rate that's surpassing that of the (other) specialties,” he said.
One of the key factors identified in the MGMA report for the increase in primary-care physician compensation is an uptick in demand as a result of a growing elderly population. There's also a shortage of primary-care physicians.
For years, the number of medical school students entering residencies in family practice and internal medicine was on the decline. That's not surprising, given the large compensation disparity compared with other specialties. Primary-care physicians also work longer hours.
Indeed, primary-care specialties have consistently ranked among the lowest-paid of all specialties. That was true again in 2014.
Pediatrics had the lowest compensation range in 2014, from $185,000 to $248,000, according to the Modern Healthcare survey. Family medicine was a close second among the lowest-paid specialties, with annual pay ranging from $189,000 to $250,000. The range expands when all primary-care specialties are included, from $185,000 to $280,000.
Doctors “want to make more money,” said Bob Collins, a managing partner at Medicus. “So they're going to do cardiology, or they're going to do pulmonology—they're going to subspecialize so that they can make additional compensation.”
Still, the differentials may be narrowing, according to some experts. Collins said hospitals that are shifting to value-based payment and delivery models need primary-care physicians to serve as care coordinators. The competition among health systems for the limited number of primary-care doctors is driving up compensation. “There's an insatiable need for primary-care physicians so there's greater competition across the board,” he said.
But the evidence of greater demand for primary-care physicians isn't yet reflected in a faster rate of compensation growth. Consultants say many primary-care physicians are simply being asked to do more, including serving as care coordinators. They've also been given additional responsibilities as health systems consolidate smaller hospitals into larger networks, without a significant bump in pay to reflect the scope of their new responsibilities.
“The primary-care doctor is still required to do an inordinate amount of work for pretty much the same compensation,” said Dr. Joel Shalowitz, professor of health enterprise management at Northwestern University.
The drive by public and private insurers to pay providers based on patient outcomes hasn't affected the way physicians are compensated, Shalowitz said. Payment models for the most part do not reward physicians who help their patients avoid expensive procedures or hospitalizations. The largest rewards still go to doctors who perform procedures.
Many healthcare organizations are struggling to find what Travis Singleton, senior vice president at Merritt Hawkins & Associates, refers to as the “Goldilocks zone” on physician compensation—striking the right balance between incentivizing productivity and rewarding quality. “Like it or not our system is still very much one that rewards procedural-based medicine and does not favor diagnostic medicine,” Singleton said. As long as that continues, “specialists will be the big winners when it comes to compensation overall.”
Shalowitz said many primary-care physicians are not yet willing to accept the financial risk associated with capped or bundled payment models. “The only way that primary-care doctors will start to get adequately paid is if we take risk for the larger amount of resources that can be spent on patient care,” he said.
Instead, a growing number of physicians are choosing to become salaried employees of health systems rather than operating independent practices. A 2015 Merritt Hawkins review found that more than 90% of physicians are being recruited into employee positions as opposed to entering into independent practices.
“The trends in compensation are changing from the self-employed model to the employee model,” Shalowitz said. “When you're self-employed, there are different ways of internal compensation. When you're employed by a large system, the trend moves more toward a base salary with a bonus.”
Evenson said the growing number of salaried physicians is a product of increased competition between health systems to recruit doctors, which has driven up compensation for primary-care physicians. “It's really a reflection of the competition that's going on in the marketplace for those primary-care providers, specifically at the health system level,” Evenson said.
Increased competition for primary-care physicians has forced many health systems to use methods other than higher salaries to recruit candidates. Many systems offer signing bonuses and reimbursement for medical school loans. Others offer physicians more flexible hours or four-day workweeks. Such non-economic incentives are popular with younger physicians looking for a better balance between their professional and personal lives, experts say.
“Younger physicians' willingness to sacrifice income or location for quality of life is greater than it's ever been,” Collins said. “What's important to this generation compared to previous ones is just different.”