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Physician Compensation at Non-Academic Hospitals Up to $123K More

Non-academic hospital systems paid higher physician compensation rates across the board compared to academic systems, but the providers also worked more RVUs, a survey found.

Physician compensation

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By Jacqueline Belliveau

- Physician compensation at non-academic hospital systems was almost $123,000 more than the amount paid to physicians in academic systems, a new Medical Group Management Association (MGMA) survey showed.

The 2017 DataDrive Physician Compensation and Production Survey revealed that physicians in non-academic hospital systems earned more than their peers in academic settings across the board. Specialty care providers who were fully clinical experienced the greatest physician compensation difference, with those in non-academic settings earning $122,795 more than their peers in academic hospital systems.

Non-academic hospital systems paid primary care physicians about $57,129 more, the survey of 120,000 providers across over 6,600 medical groups uncovered.

“This data arms practice owners and operators with the information needed to better run their practices and stay educated about what others in the industry are doing,” stated Halee Fischer-Wright, MD, MMM, FAAP, CMPE, MGMA President and CEO.

Whether a physician’s work was primarily research-based also signified physician compensation differences, the MGMA survey stated. Specialty care providers who were full-time and fully clinical earned a base compensation of $67,290 more than their peers whose workload was 67 percent or more research.

However, the physician compensation trend was reversed for primary care providers. Primary care physicians who were full time and primarily did research made $9,556 more in base compensation than their counterparts who were full-time, yet mostly clinical.

MGMA also found that new hires who were first-year post-residency or fellowship also made more starting out in a non-academic setting regardless of specialty.

The largest compensation difference was in the primary care space, with new hires earning $86,000 more than their peers in academic settings.

General physician compensation differences were not the only disparities observed between academic and non-academic hospital systems. The survey also uncovered physician productivity differences between providers working in academic and non-academic systems, with the greatest difference emerging among specialty care physicians.

Specialty care providers in non-academic hospital systems reported working 1,200 more work relative value units (RVUs) per year than the same physicians in academic settings.

Researchers attributed the specialty care physician productivity disparity to academic providers reporting less billable clinical time.

Regardless of academic or non-academic system employment, providers across all settings may need to start upping their productivity. A recent American Medical Group Association (AMGA) survey found that physician productivity remained flat, with an average work RVU increase of just 1.54 percent from 2016 to 2017.

“We are seeing signs of a perfect storm gathering as costs continue to rise, productivity is flat, and collections are flat, with 51 percent of specialties this year reporting a decrease in median net collections,” stated Tom Dobosenski, CPA, AMGA Consulting President. “These trends are driving enhanced efficiency and consolidation, but the cost curve will only bend so much.”

Little improvement in productivity could trouble physicians who earn their annual pay based on these measures, researchers explained. Approximately 83 percent of medical groups determined physician compensation based on work RVUs.

Stagnant physician productivity rates could also spell trouble for hospital profitability in both academic and non-academic systems. The Congressional Budget Office (CBO) advised hospital leaders in 2016 to increase productivity to offset Affordable Care Act provisions that decrease federal reimbursement rates and enforce value-based penalties.

Hospitals that can raise productivity at the general economy rate of 0.8 percent would need to also boost total revenues or reduce costs by an additional 0.2 percent per year, while hospitals that cannot reduce costs through greater productivity would have to increase revenues and cut costs by 0.5 percent per year.

“Those hospitals may face significant pressure in the future, but the extent of that pressure and their profit margins will depend crucially on their productivity growth,” CBO wrote. “If they achieve the same productivity growth as the economy as a whole—and if they use those gains in productivity to limit the growth of their costs and do not respond to financial pressures in other ways—then the share of those hospitals with negative margins would rise to 41 percent in 2025.”

“But if those hospitals do not improve their productivity at all, or do not use any of their productivity gains to limit their costs, then that share would rise to 60 percent in 2025,” added federal agency.

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