Falling Productivity Stifles Physician Compensation Boost in 2017

July 31, 2018 - Physician compensation increased by just 0.89 percent in 2017, marking the first year that provider salaries have grown less than two percent in over a decade, AMGA recently reported.

The 31st annual AMGA Medical Group Compensation and Productivity Survey also revealed a significant decrease in physician productivity. Overall, physician productivity declined by a weighted average of 1.63 percent, showed the data from 270 large, multispecialty medical groups and integrated health systems, representing more than 105,000 clinical providers.

“The 2018 survey’s results are surely different from those of years past, where we experienced an annual cash compensation increase of 2 percent to 3 percent almost across-the-board,” explained Wayne Hartley, MHA, COO of AMGA Consulting. “Production has stalled, and since many compensation plans are driven by production, total cash compensation has been impacted.”

In particular, primary care physicians saw less pay in 2017, the showed. Physician compensation for primary care doctors increased by just 0.8 percent.

Productivity also modestly declined among primary care physicians. Medicare work relative value units (RVUs) fell 0.2 percent between 2017 and 2018.

Specialists fared better than their peers in primary care in terms of physician compensation. Overall, providers in medical specialties saw a weighted average change in median physician compensation of 1.2 percent.

However, specialist productivity significantly declined as compensation generally increased in 2017. Specialists experienced a 1.5 percent reduction in median work relative value units (RVUs).

But some specialists made out better than others in 2017. Medical specialties, like cardiac and thoracic surgery, saw higher than average boosts in their pay, while ophthalmology and other medical specialties experienced significant compensation decreases.

For example, the data on 140 physician specialties and 27 other provider specialties found the following percentage changes among physicians in medical specialties:

• 6.4 percent increase in pay for cardiac and thoracic surgery
• 1 percent boost in compensation for emergency medicine
• 0.9 percent growth in compensation for general OB/GYN
• 0.9 percent increase in pay for orthopedic surgery
• 0.7 percent rise in salary for general surgery
• 0.4 percent boost in pay for otolaryngology
• 0.1 percent decrease in compensation for urology
• 2.3 percent decline in salary for ophthalmology

As evident from the highlighted percentage changes, surgical specialties fared better than their peers in other medical specialties. The weighted average change in median surgeon compensation was 0.7 percent, while the weight average change in median work RVUs from 2017 to 2018 was negative 1.1 percent, AMGA reported.

Primary care pay increases usually exceed specialist compensation, past AMGA surveys showed. In 2016, primary care doctors saw a compensation increase of 3.2 percent, while other medical specialists experienced a 2.8 percent boost.

Similarly, primary care physician compensation rose 3.6 percent in 2015, while medical specialists saw a pay bump of just three percent that year.

But falling physician productivity is driving the flattening of primary care and specialist compensation, AMGA explained.

“Medical groups today consistently report several factors that have an impact on their clinical output,” said Fred Horton, MHA, AMGA Consulting’s President. “These include the use of electronic health records, increasingly complex patients who require more face-to-face time, and various administrative and compliance requirements. The production levels reported this year could be a consequence of any or all of these factors.”

EHR documentation, quality reporting, and other administrative tasks that take away from patient care may also be taking away from physician compensation. Eighty percent of organizations that use production-based compensation plans for physicians base their plans on work RVUs.

Only 23 percent of organizations use net collections, while even fewer use gross productivity (12 percent) and cost accounting (10 percent).

Detracting from patient care would, therefore, reduce a physician’s work RVUs and consequently his pay.

Piling administrative responsibilities on physicians could also reduce his compensation by impacting patient satisfaction. The most commonly used non-productivity incentive and discretionary compensation metric was patient satisfaction, with 85 percent of organizations using the metric to determine some of a physician’s pay.

Other popular determinants of physician discretionary compensation included clinical quality and outcomes with 80 percent of organizations, citizenship with 48 percent, and patient access measures with 43 percent.