Doctors' productivity improves faster than compensation - Short Takes

Physician Executive, Nov-Dec, 1998 by James A. Hawkins

Doctors' salaries are not keeping up with the increased profitability of integrated delivery systems (IDSs), according Ernst & Young's 1998 Physician Benchmarking Survey. The survey shows that financial losses for the physician practices of IDSs are being reduced, while physicians' productivity is increasing faster than their compensation. Fifty-nine percent of IDSs reported losses in their physician practices averaging $86.915 per physician; last year, 76 percent indicated losses averaging $93,600 per physician.

The primary contributors to the improvement are continuing industry consolidation and an increased focus on the bottom line. The survey by E&Y found that physician productivity improved during the last year. with gross professional charges increasing 16 percent on average for primary care specialties. On average, gross professional charges for surgeons increased 4 percent. medical specialists 8 percent, and procedural specialists 6 percent.

Despite this increase in productivity. however, cash compensation for doctors did not keep pace. Physician income increased 6 percent for primary care physicians. 3 percent for surgeons, and 1 percent for medical specialists. The exception is income for procedural specialists. which rose 7 percent. which was faster than their production.

Changes in incomes varied by reimbursement mix, with the incomes of primary care physicians working under fee-for-service reimbursement increasing 8 percent to $140,000 and the median income for a managed care primary care physician increasing only 0.2 percent to $136,200. This reverses a trend from the past two years, which measured a slower annual increase for PCP income under fee-for-service than under managed care. This finding also marks the first time in four years that income for fee-for-service primary care physicians has surpassed that of their colleagues practicing in a managed care environment.

The survey represents data for more than 16.000 physicians. medical directors. and allied providers in 124 integrated delivery systems and group practices. It includes detailed analyses of organizational scope and results, the structure of physician reward plans, and pay and productivity data for 51 medical specialties. For a copy of the report. please contact Richard Cederholm at 213/977-3426.