How earnings break down
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The gulf between earnings of primary care doctors in small practices and those in medium-sized and large groups widened in
2007 (see "Group practices pay better," November 16, 2007, available at http://www.memag.com). But physicians in groups of 3 to 10 fared quite well: Their median compensation totaled $237,500. David C. Scroggins, a
practice management consultant in Cincinnati, attributes their higher earnings to the fact that their practices are big enough
to invest in midlevel practitioners and ancillary services, but small enough to avoid expensive layers of administration.
Earnings rose in every region...
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In contrast, solo and two-doctor practices tend to have high overhead and usually can't afford to buy ancillary equipment
such as echocardiography units, Holter monitors, and bone densitometry machines, notes Keith Borglum, a consultant in Santa
Rosa, CA. Even if they can afford it, he says, one or two physicians don't use such equipment often enough to make it a worthwhile
investment.
Regional highs and lows Earnings rose throughout the country, but were highest in the East. For many years, the South held that distinction, and our
2006 survey gave the edge to doctors in the Midwest. Mosley believes incomes are rising in the Northeast largely because of
primary care shortages, coupled with the high cost of living. He also cites recent reports that the expansion of insurance
coverage in Massachusetts has increased demand for PCPs. Here, too, regional findings are not universal: Richard Lander knows
of many physicians in the Northeast who are "underpaid" in comparison to their peers in other regions. Overall, a fifth of PCPs earned less than $120,000 last year, according to our survey. Nearly half (46 percent) of GPs (who
tend to be older than other primary care doctors), 29 percent of FPs, 22 percent of internists, and 23 percent of pediatricians
were also in the under-$120,000 category. That may partly reflect the increasing number of female doctors working part time
while raising families. 
Where are you on the earnings ladder?
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Despite the overall growth in earnings, PCPs are still struggling to get decent reimbursement from health plans. For example,
Lander notes, some insurers in New Jersey pay only 55 percent of the Medicare fee schedule, and 65 percent is not unusual.
That's why he's held on to one of his capitated plans, which pays better than some of his fee-for-service contracts. Ken Hertz
sees a similar pattern. His physician clients who have pre-paid patients report that capitated HMOs pay more than Medicare,
while about half of their fee-for-service plans pay less.
Capitated contracts are up, but revenue down Survey results show that 50 percent of primary care physicians had some capitation business in 2007, up from 43 percent the
previous year. Pediatricians were most likely to have capitated contracts, followed by internists and family physicians. Among
physicians with capitated revenue, however, the percentage of patients they saw who were in prepaid plans dipped from 20 to
16 percent. If revenue from capitation is on the wane, experts concur that it's not by most physicians' choice. Rather, it's because payers
have decided they can make more money paying fee for service. Not surprisingly, it's the biggest physician groups that are
most likely to have capitated business, and to have a lot of it. "They can deliver a lot of covered lives, so they have a
better negotiating position than the typical solo or two-doctor practice," notes Ken Bowden, a consultant in Pittsfield, MA.
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