Physician compensation plateaus during pandemic

As doctors’ offices shut down and hospitals paused elective procedures during the height of the COVID-19 pandemic last year, patient volumes for healthcare providers nosedived. And with them, productivity-based financial gains for physicians.

Physicians, who typically see cost-of-living pay increases each year, generally experienced much more modest salary gains in 2020, according to Modern Healthcare’s 28th annual Physician Compensation Survey, which analyzes data from surveys of 10 placement firms.

“There’s been this trend year-over-year of increases in salary but we saw that stop,” said Michael Belkin, a divisional vice president at physician staffing firm Merritt Hawkins.

In 2020, the overall average of the reported median physician compensation inched upward less than 0.5% from the previous year to $416,966. Compare that to 2019 when the overall average increased 2.7% from the year before.

There largely wasn’t a major drop in physician compensation, as might have been expected during the pandemic, said Dave Hesselink, a principal at workforce consulting group SullivanCotter.

“The reason for that is most large organizations helped protect physician compensation, especially during that large shutdown,” Hesselink said.

In a survey SullivanCotter conducted last fall, about two-thirds of the organizations that responded said they had protected physician compensation to some degree in 2020. In some cases, those were short-term protections that lasted during the shutdown and, in others, adjustments were made to the salary floor, said Patty Bohney, a principal in SullivanCotter’s physician workforce practice.

“There have been some winners and there have been some specialties that have not bounced back as fast as others,” Belkin added. “Specialists have continued to be in high demand.”

In 2020, medical oncology saw the largest year-over-year gains, recording a 5.6% increase to an average compensation of $458,127, according to the survey. Pediatricians’ compensation, meanwhile, took the biggest hit, falling 3.3% to an average of $245,783.

On top of that, the number of physician jobs Merritt Hawkins was asked to fill was down about 25% from the previous year, Belkin said.

“The biggest detriment to the searches for our clients was the shutdown of elective procedures. There was a significant decline in volume. … Pair that with certain patients’ reluctance to go in,” Belkin said. “Our clients didn’t feel the need to recruit as heavily as they did in the past.”

At the same time, the demand for advanced practice providers and nurse practitioners has climbed with the widespread of adoption of telehealth during the pandemic, he said. And that has helped ease some of the demand for primary-care physicians.

“They’re still in demand; it’s just not such a ridiculous race to the alter to snatch up your next family physician,” Belkin said.

Family practitioners saw their compensation fall just shy of 1% in 2020 for an average of $259,622, according to the Modern Healthcare survey. Only pediatrics, where patient volume is still low as vaccine access remains restricted, sources said, had a lower average compensation last year.

Belkin said more clients are offering doctors straight salaries, like Danville, Pa.-based Geisinger Health started doing back in 2017.

Typically, about 70%-75% of contracts incorporate productivity. But in 2020, only about 60% did, he said.

Because volumes were so low industry-wide, many physicians never received productivity bonuses, he added.

The salary floor provided “a safety net” of sorts for physicians who saw their productivity fall, said Andrew Swanson, vice president of industry insights at the Medical Group Management Association.

“While it was good for physician compensation, it wasn’t really good for health system pocketbooks,” said Swanson, who noted there may be some changes to compensation models as systems reevaluate pandemic performance.

Hesselink said it will be important for organizations to take the effect the pandemic had on compensation into account when designing future compensation plans. SullivanCotter plans to consider both numbers that have been adjusted for the pandemic and ones that have not to make sure organizations are setting realistic productivity expectations, he said.

“We’re expecting a volatile period for the next four years,” Hesselink said.

That volatility will be tied to the pandemic, to planned changes in the Medicare physician fee schedule by CMS, and to anticipated coding changes by CMS, Bohney said.

“It is going to be messy for a little bit,” Bohney added. “We think that more than ever we need data to be able to help guide those changes.”

DATA: Physician Compensation: 2021