Academic pay rises faster for PCPs than specialists; groups divide comp by function

Physician Compensation Report, June, 2003

Compensation for medical-school and teaching-hospital doctors rose faster in 2002 for primary care physicians than for specialists, MGMA reports. Academic practice managers indicate that many institutions devote great care to distribute pay to each individual physician according to his or her functions in and revenues from the four pursuits of clinical work, research, teaching and administration.

MGMA's Academic Practice Compensation and Production Survey for Faculty and Management: 2003 Report Based on 2002 Data, published in April, is the association's first benchmarking report using 2002 data.

Looking back over the last four or five years, the report suggests that academic institutions have kept pay hikes for PCPs roughly in line with those earned by nonacademic PCPs. The 1998-2002 increase for all academic PCPs was 9.9%, reaching a median of $132,000 in 2002. This is very similar to MGMA's most recent four-year increase for nonacademic PCPs: 9.7% in 1997-2001, to $149,000 in 2001. The academic PCP pay hike from 2001 to 2002 was 3.9%.

But for specialists, the institutions appear not to have been able to keep pace with nonacademic pay hikes. The 1998-2002 increase for all academic specialists was 12.9% to a median in 2002 of $175,000. The nonacademic specialist increase in 1997-2001 was 19.4% to $263,000. The academic specialist increase in 2001-2002 was 2.4%.

MarieAnn North, CMPE, senior vice president of The Hunter Group in Tampa, says the "significant increases for some specialties" detected in the academic survey show efforts by "academic practices [to] increase compensation when large disparities with the private sector develop." For instance, academic anesthesiologists had a 2002 pay hike of 9.2% to $217,000; gastroenterologists were up 13% to $177,000; and diagnostic radiologists were up 8% to $239,000. "Academic practices find it's more difficult to attract new physicians when their compensation is considerably less than the private sector," North explains.

Two or Even Three Paychecks

Timothy Mashburn, vice president for adult multispecialty operations for UT Medical Group--the faculty practice plan affiliated with the University of Tennessee Medical School in Memphis--says each faculty member in the Department of Internal Medicine (which includes several specialties such as cardiology, dermatology and gastroenterology) has two or even three employers:

* The University of Tennessee, which is an arm of the state government and pays for teaching undergraduate medical students. Also, research grants run through the state, and so physician research earnings come in this paycheck.

* UT Medical Group, which pays for clinical work. A salary is set for such work based on the anticipated production of the work; bonuses are possible for exceeding that level of production, but have not been paid in the last few years because the medical group could not afford them.

* The local veterans hospital, for physicians who work there part-time. The VA has guidelines for physician pay rates, usually figured by the hour.

A physician's pay is the sum of the two or three paychecks that he or she receives. Mashburn and the internal medicine department chair administer the pay system. For instance, if a primarily clinical physician obtains a research grant, Mashburn and the chair might add state money to, and subtract medical group money from, the individual's compensation to reflect the anticipated change in time spent from clinical to research work.

John O'Laughlen, administrator of the psychiatry department at the University of Washington Medical School and current president of MGMA's Academic Practice Assembly (APA), says physicians there get two paychecks. Similar to the Tennessee setup, the University of Washington pays straight annual salaries for teaching and administration and serves as a pass-through for research compensation. These salaries also reflect the physician's length of service and rank at the medical school (assistant or associate professor, etc.).

The second check comes from the nonprofit practice plan, again mainly for clinical work. The plan pays a base salary that varies by specialty, and incentives calculated on RVUs, gross charges or other methods set by each department. The incentives typically equal about 10% of pay, but can run as high as 20%, he says.

Equity Within Departments Is Important

At Duke University, physicians also work for two entities--the university and the practice plan, known as Duke Private Diagnostic Clinic, says Billy Newton, Jr., pediatrics administrator for the plan. In the pediatrics department, the chair and specialty division chief set a guaranteed base salary based on many factors, Newton says. The three most important factors are national benchmarks, equity (fairness of pay within the department in light of the work that each faculty member contributes), and productivity. The amount and precise method of calculating base salary vary not only by department but even by individual, he notes.