The demand for docs, especially in primary care and internal medicine, is at an all-time high, in part thanks to the Affordable Care Act's push to get people out of the ER and into medical practice waiting rooms.
Yet as the industry shifts toward value-based care models, physician compensation for primary care isn't budging much. And what’s more, it won't be budging anytime soon.
According to Physicians Practice's 2014 Physician Compensation Survey, 42% of the 1,338 physicians who responded said their personal income has not changed over last year. About one out of three respondents—32%—said they are slightly disappointed with their compensation.
The 2013 Medical Group Management Association's 2013 Physician Compensation and Production Survey Report also showed physician pay increases have barely budged, rising about 3% for primary care doctors, like family doctors, internists and pediatricians, to $220,942 in 2012 compared with $212,840.
It's not as bad as all that
Considering the growth in overhead costs and health IT expenditures, this news is a bit troubling—especially for anyone entering medicine. After all, medical school loans haven't gotten less expensive.
But Tommy Bohannon, a divisional vice president for Merritt Hawkins, says physician compensation's slow growth isn't something as concerning for the long term because the numbers on their own don't tell the whole story.
"The numbers look flat at first glance but they're actually really not," says Bohannon. "If you look back at the trends for the last few years, the compensation for unit of work has gone up nearly 10%, but the number of units of work has gone down 5%."
In other words, the compensation for work has gone up, but the volume of work has gone down.
"As we're moving toward different payment models and there are greater rewards for wellness and preventive medicine, we see a lot of organizations adding to their staff in order to reduce their volume per provider in order to spend more time with the patient," says Bohannon, adding that it may take time for physicians to see compensation that's directly linked with better-quality care.
"The net effect is that income is likely to stay relatively flat," says Bohannon. "But eventually, the new model will reap greater financial rewards."
Value-based incentives stalled last year
Another thing to consider is that employers may be struggling to create physician compensation formulas that incorporate both volume- and value-based metrics, which Merritt Hawkins suggested in its 2014 Review of Physician and Advanced Practitioner Recruiting Incentives.
According to the data, the use of value‐based physician incentives stalled in the last year. In 2013, 39% of Merritt Hawkins' search assignments offering a production bonus featured at least one value‐based metric such as high patient satisfaction scores or low hospital readmission rates. In 2014, that number dropped to 24%.
It's worth noting that those embracing the new models seem to be figuring it out, as they've reported a larger overall percentage of their compensation being based on quality, adds Bohannon.
One positive trend that Bohannon sees is a younger generation of physicians becoming more lifestyle-focused than those physicians who came before them—and they want to be able to have set schedules that aren't so demanding.
"They're more concerned about lifestyle and flexibility," says Bohannon. "They're working less to make the same amount of money as their predecessors."