The need for clinicians is spiking. New searches for physicians from hospitals and medical groups hit a 34-year record high in the fourth quarter of 2021, said Tom Florence, president of physician permanent placement for staffing firm Merritt Hawkins/AMN Healthcare. The demand continued into the first two quarters of 2022, he said.
“Even during COVID, none of the underlying factors driving the physician shortage went away,” Florence said.
The U.S. population is aging, and patients have delayed care during the pandemic, Florence said. More doctors will be required to handle the increasingly complex cases as a result.
In a 2021 report, the Association of American Medical Colleges predicted a physician shortage of anywhere from 37,800 to 124,000 by 2034.
“The volume is back. We’re adding physicians. We’re not laying anyone off or downsizing. We need to grow,” Florence said.
As demand has increased, so has physician compensation—though not enough to outpace inflation. Average pay was up 3.8% in 2021, according to Doximity’s 2021 Physician Compensation Report, compared with the 6.2% 12-month inflation rate determined by the Consumer Price Index.
Despite economic conditions, doctors can nearly always expect to see at least some increase in base compensation from year to year, Halverson said.
Broad industry averages can be misleading, however. The year-to-year compensation rate by specialty changed anywhere from -13.8% for cardiologists to 20.7% for plastic surgeons, according to Modern Healthcare’s 28th annual Physician Compensation Survey, which analyzes data from eight placement and consulting firm surveys.
“Within geographies and within some specialties, we are seeing supply and demand issues,” Halverson said.
Still, he said, “There’s usually a floor under which people don’t go. Even when there’s a surplus of physicians in the market, compensation usually doesn’t go down, or it goes down much slower than it goes up.”
Experts also noted numbers don’t tell the whole story behind compensation trends—particularly when it comes to shifts in payment structures.
Productivity-based compensation remains the most common form of payment for 80% of primary-care physicians and 90% of specialists, according to a 2022 RAND Corp. study. But more employers are trying to deemphasize the role productivity-driven measures (work relative value units, known as work RVUs) have in their compensation plans, said Dave Hesselink, a principal at workforce consulting group SullivanCotter.
While RVUs likely won’t go away altogether, the volatility of patient volumes during the pandemic caused employers to question if they should be the primary mechanism to determine compensation, he said. Instead, they are incorporating elements of value-based payment, such as tying fee-for-service to quality.
Florence attributes moves away from productivity-driven models to the need for doctors.