Physicians entering practice for the first time have something to be excited about, and it is not just the fact that they have finally finished their training. Reports show that the salaries offered to new doctors upon graduation are on the rise. In both a study conducted by Modern Healthcare and Merritt Hawkins, starting salaries were shown to be growing rapidly. In fact, 2016 presented one of the biggest jumps in starting physician salaries seen in several years.
Several reasons were cited for the recent increases. The two big factors are the intensifying physician shortage and the mounting demand for medical services. With a third of doctors nearing retirement and huge swaths of the U.S. population reaching old age, new doctors are needed more than ever. These two forces amplify each other and physician practices, hospitals and other medical employers are finding that they must pay the price to secure their next crop of doctors.
In order for hospitals to compete for the best trained doctors, they have to exceed both the wage expectations of these new physicians and the wages offered by their competition. As practices and hospitals compete in this employment race, the price tag on these newly trained physicians is driven higher and higher. Additional benefits such as substantial signing bonuses or loan repayment options are also offered to entice potential employees. These types of benefits were once mostly employed by rural hospitals, who were forced to up the ante in order to stay competitive. Now, these recruitment strategies are used nationwide.
This competitive dynamic has also been spurred on by the fact that newly trained physicians are opting for employed positions rather than venturing into practice on their own. In a typical private or group practice, partners would have to shell out part of their own salaries in order to increase their salary offer to a new physician. However, in a hospital system, plenty of operational cash is available to fund additional benefits. $20,000 to $40,000 is not a large sum when measured relative to a health system’s total revenue source. Conversely, small practices really can’t pay, or aren’t willing to pay, an extra $30,000 for a new doctor. Thus, offers for newly trained physicians are driven upward as health systems take a larger share of the employment market.
Another factor that may be contributing to higher pay for starting physicians involves how physicians’ productivity is measured. An innovative incentive has been presented to physicians that rewards the quality and outcomes of their treatments in addition to the volume of patients seen. While this is much harder to measure and record, giving physicians the opportunity to earn more has become an increasingly popular way to incentivize them.
Compensation increases were not limited to just one specialty, as physicians across several specialties saw greater compensation offers in 2016. However, only some of the specialties outpaced inflation, while others either kept pace or fell below. Of course, in the specialties where the physician shortage is more dire, the salaries tend to have a greater upward trend. For example, in Modern Healthcare’s study, primary care physicians’ pay rose over 7% and internal medicine salaries rose 5.2%. Reference these percentage increases with a 1.6% increase in inflation. In contrast, orthopedic surgery salaries rose only 0.3% and dermatology rose only 0.6% over the course of the year, being outpaced by inflation. It is important to note that orthopedic surgery, dermatology and similar high-paying specialties average a much higher salary.
Merritt Hawkins’ study supports many of the same statistics as Modern Healthcare’s study. Some interesting points form the Merritt Hawkins study include:
- The southwest region of the US averages the highest salaries, while the northwest averages the lowest salaries among physicians. This is regardless of specialty.
- The total economic output of US patient care physicians is $1.6 trillion.
- Organizations looking for new physicians are offering just over $25,000 signing bonuses on average.
- Doctors have been offered health, malpractice and disability insurance as well as retirement plans by 95% of the organizations looking to hire them.
For newly trained physicians, there has seldom been a better time to start practicing in regards to compensation and other benefits. If you are a physician fresh from training, or even a resident starting the job search early, it will serve you well to research what wages are competitive for your region and specialty. The job search and subsequent contract negotiations can be pretty daunting. Resolve can guide you through this process with our customized job search and experienced contract attorney team to ensure you get the job that you want. Click here to find out more about what Resolve can do for you.
Photo Credit: Ted Van Pelt