Physian's Pay may increase, Maybe!

Doctors to see slight salary increases in 2012

October 18, 2011 | Stephanie Bouchard, Associate Editor

PHILADELPHIA – Doctors can expect to see salary increases in 2012 but they’ll be smaller than those in 2011 says a physician compensation survey released this week by global consulting firm, the Hay Group. In 2011, physician salaries increased by 2.7 percent but expectations are that in 2012 they'll increase only by 2.5 percent.

The size of the salary increases is impacted by organization-specific things such as the salary increases provided to other employees, and, more importantly, reimbursements, said Jim Otto, senior principal in Hay Group’s healthcare practice. “The primary influences on these increases are likely to be flat or minimal increase in reimbursement for services rendered and flat or minimal increase in actual services rendered that result in reimbursement,” he said.

Doctors working in group-based practices are expected to see pay increases of 3.2 percent in 2012 but hospital-based doctors are only expected to see increases of 2.5 percent. More specifically, physician specialists working in hospitals may expect an increase of 2.4 percent and those in group practices may expect a 4.5 percent increase. Primary care doctors in hospitals may expect a 2.9 percent salary increase in 2012 while their peers working in group practices may expect a 3.3 percent increase.

The differences in salary increases between hospital-based and group-based doctors are likely the result of three things, Otto said: group income from ancillary services that are part of a practice’s business lines and which are not part of a hospital-employed physician’s compensation; sharing in profit after expenses for physician owners, which is also not part of a hospital-employed physician’s compensation; and employed physician increases being influenced by budget and salary increases for the other employees of the hospital.

With the demand for primary care physicians up, it’s not as surprising that they are expected to have larger salary increases than specialists in 2012. “The expected increases to primary care physicians is a reflection of the importance of their role in the healthcare reform environment – for example, accountable for integrated patient care models – the increase in reimbursement that is being paid by insurance companies and the government for primary care services, and the decreasing reimbursement for other specialists,” Otto said. “This does not mean that the pay differences that you see in the market between primary care physicians and specialists will evaporate quickly, but over time these differences are expected to shrink.”

Other findings from the physician compensation survey include:

• When determining base pay structure, 50 percent of organizations set physician pay on an individual basis, 28 percent establish formal salary ranges, 18 percent use market rates and 1 percent use step-rate progression.
• The prevalence of annual incentive plans decreased slightly among all physician participants in 2011.
• Measures for determining incentive payouts continue to be dominated by quality and patient satisfaction.

Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.