Physician cash compensation increasing and projected to rise

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Cash compensation for medical and surgical specialists climbed higher in 2023 and will only increase over the next several years, finds a new physician compensation report from SullivanCotter.

The report reveals the most significant median total cash compensation (TCC) increases for primary care (9.5%) and hospital-based (8.7%) specialties, and finds increases across most specialty areas in 2023. 

With the anticipated shortage of primary care physicians projected to increase, healthcare organization leaders will confront sustained upward pressure on compensation for these roles moving forward, the report found.

WHAT'S THE IMPACT?

Numerous market forces continue to influence health systems' strategic and operational focus for 2023, many of which are directly impacting the provider workforce, according to the report. 

Clinical workforce demand continues to outpace supply, which has been exacerbated by increased turnover and physician burnout, and has created upward pressure on compensation. Regulatory changes, including a proposed reduction in the Medicare conversion factor for 2024 and changes to split/shared billing for 2025, continue to create challenges to financial sustainability and compensation plans.

Plus, due partly to physician supply and demand imbalances, more healthcare organizations are working to better align physician and advanced practice provider (APP) care delivery models and eliminate potential compensation barriers to team-based care delivery.

The survey also reported that primary care had the largest increase (7.4%) in reported median work relative value units (wRVU) productivity from 2022 to 2023. A wRVU is a standard unit of measurement used to establish value for common healthcare procedures.

As primary care patient volumes have rebounded post-pandemic and wRVU values have shifted due to the Physician Fee Schedule changes, this jump in reported wRVU productivity is expected, authors said. Across all specialty categories, total cash compensation per wRVU rates saw moderate increases over 2022 survey levels, with a spike in pediatric surgical rates (8.8%).

Base salary and wRVU components continue to be prevalent in primary care, medical and surgical specialty compensation plans. About 70% of survey participants reported using those plan components in their compensation plans, which is consistent with the 2022 survey results. Value-based or quality incentives are used by about 50% of organizations and payments range from 6-8% of TCC for specialists, and 8-9% for primary care, reflecting a slight increase over the 2022 survey results, which reported ranges of 5-6% and 6-8%, respectively.

Also, the prevalence of team-based incentive compensation continued to increase. Similar to the 2022 survey results, about 23% of organizations indicated they used team-based incentives in their compensation plans. Of those with team-based incentive compensation, the incentive accounted for 11% of physician TCC, which has been trending upward since 2020 when it was reported at approximately 8%. 

Just over half of organizations (52%) defined a "team" as including both physicians and advanced practice providers.

THE LARGER TREND

The average pay for doctors declined 2.4% in 2022, coming at a time when U.S. healthcare workers are facing significant challenges, including economic strains, a growing physician shortage and high rates of work-related burnout, a Doximity report found this year.

The report – which includes self-reported compensation data from over 190,000 U.S. doctors over six years and more than 31,000 full-time physicians in 2022 – also highlights the substantial gender pay gap among physicians, with men earning nearly $110,000 more than their women counterparts in 2022.

This represents a 26% gender pay gap, even when salaries were controlled for specialty, location and years of experience. This disparity may be contributing to an even higher burnout rate among women physicians, with nearly 92% of women physicians surveyed reporting overwork, compared to 83% of men.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com