Salaries soar for doctors, so why aren't they happy?
Doctors' pay is slowly but steadily improving, Medicare’s sustainable growth rate is a thing of the past and demand for primary care physicians is surging under the Affordable Care Act. So why aren’t doctors happier when it comes to their salaries?
Lurking behind the pay hikes is a nagging unease about Medicare’s recently-announced reimbursement changes and a sense that medical salaries have a ceiling that’s difficult to break through, while pay in more entrepreneurial and tech fields seems to be surging.
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For now, at least, demand seems to be pushing salaries higher, according to several recent physician pay surveys.
More than two-thirds of physicians in Medical Economics’ 87th Annual Physician Report, published in April, said their practice was in the same or better financial shape as the previous year. The survey of employed and private practice doctors, using data collected in 2014, showed an $8,000 gain in average pay for internal medicine physicians, to $211,000.
Median annual compensation for internal medicine physicians in physician-owned groups rose nearly 1% to $255,889 in 2015, according to a study by the Medical Group Management Association (MGMA). In 2014, median pay was $254,211. Factoring in hospital-owned practices drove the median down to $247,319, according to the same report, a nearly 4 percent increase from $238,227 the year before.
A Merritt Hawkins study of job searches for employed physicians, meanwhile, found average salaries for recruited positions jumped by double digits in 2015. The biggest annual gains were in family medicine ($225,000), psychiatry ($250,000) and internal medicine ($237,000).
Over the five years ending in 2015, however, private practice internists earned slightly higher average annual pay increases (3.1%) than their hospital-owned counterparts (2.7%), says David Gans, MSHA, senior fellow, industry affairs for MGMA.
Hospitals tend to recruit primary care doctors as loss leaders, Gans says, meaning they bring in the doctors at an attractive salary without the responsibilities of running a practice. These physicians can then provide referrals for inpatient services.
With their five-year pay increases lagging slightly behind private practices, hospitals may be signaling that there is a limit to how much they are willing to lose. At the same time, signing bonuses are becoming less common, studies show.
And that raises questions about where physician pay is heading in the future. Experts say there could be plenty of disruption with value-based pay on the horizon and uncertainty as to whether there is, indeed, a supply shortage of physicians that would drive salaries higher.
Like many doctors, internist Pete Alperin, MD, remembers the long slog through medical school and residency and, finally, the joy of that first attending physician’s paycheck in 1997.
After a decade in private practice, however, the thrill was gone. Today he works hospitalist shifts to keep a hand in medicine, but spends most of his time as vice president of connectivity solutions for Doximity, an online physician network. Earlier, he worked for other tech-based healthcare startups. The chance to substantially boost his pay was a key reason for the switch.
“You make a big jump [in pay after training] and then your salary is in a very narrow range the rest of your life,” he says. After a few years, he says, that can make a career feel stagnant, made worse by watching friends in other professions move further up the pay-and-prestige ladder.