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Physician compensation at Midwest rural hospitals is higher than the national average

Rural facilities tend to pay physicians more due to the difficulty in recruiting new talent to rural communities.

Jeff Lagasse, Associate Editor

In the upper Midwest, physicians see median compensation that's 10%-15% higher than the national average.In the upper Midwest, physicians see median compensation that's 10%-15% higher than the national average.

Rural hospitals, as many healthcare organizations, are struggling financially through the pandemic. But it's a different story when it comes to physician compensation, particularly in the upper Midwest, where physicians see median compensation that's 10%-15% higher than the national average.

This discovery comes courtesy of a survey conducted by Faegre Drinker healthcare attorney Aaron Dobosenski, which revealed compensation and productivity metrics for 11 physician specialties and eight advanced provider types, as well as statistics on provider benefits and recruitment and retention in Midwest rural hospitals, with comparisons to national survey data throughout.

With the assistance of the Minnesota Hospital Association and the Iowa Hospital Association, the Midwest Rural Hospital Provider Compensation Survey was sent to about 250 rural hospitals in the upper Midwest. Roughly half of the 44 rural hospital respondents are independent hospitals, and half are rural hospitals affiliated with systems. Thirty-nine of the respondents are certified critical access hospitals.

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There were significant disparities in compensation-related metrics in Midwest rural hospitals as compared to national physician compensation surveys. The survey reports that, on average in 2019, median compensation was 10%–15% higher, work relative value unit (wRVU) productivity was 20%–25% lower, and median total compensation per wRVU was 40%–50% higher in Midwest rural hospitals than was reported in the most recent surveys.

The likely reason for the discrepancies is that rural facilities tend to pay physicians more due to the difficulty in recruiting new talent to rural communities. The upper Midwest in this survey encompassed Minnesota, Wisconsin, North Dakota, South Dakota and Iowa.

WHAT'S THE IMPACT?

Some of the results were surprising. In emergency medicine, for example, the typical ER physician is paid about 5% more in a rural hospital than in a large health system. But that same physician typically produces about 50% less in professional services volume in terms of wRVU than those in urban settings. It's an important consideration for hospitals concerned about whether they're paying their physicians fair market value.

Family medicine physicians account for roughly 30% of all physicians employed by the survey respondents, by far the most prevalent physician specialty. Median compensation for these physicians is 5%-10% higher than reported in national surveys. But median wRVU production is about 10% lower, and median compensation per wRVU is 15-20% higher.

While general surgeons represent fewer overall physicians than other specialties, more respondents reported employing at least one general surgeon than any other physician specialty except family medicine. Median compensation for respondents' general surgeons is 10%-15% higher than in national surveys. Median wRVU production is 35%-40% lower, and median compensation per wRVU is about 70% higher than national survey medians for general surgery. 

Only about 25% of respondents reported employing hospitalists. For those that do, median compensation was 5%-10% higher than the national average. Median wRVU production is about 20% lower, and median compensation per wRVU is about 40% higher.

Like hospitalists, only about 25% of respondents reported employing internal medicine physicians, likely engaging them as hospitalists to some degree. But the numbers were similar. Median compensation is 10%-15% higher than the average, median wRVU production is 25%-30% lower and median compensation per wRVU is 55%-60% higher.

The report found similar numbers among obstetrics and gynecology physicians, ophthalmologists, orthopedic surgeons and pediatricians.

THE LARGER TREND

The COVID-19 pandemic has significantly altered the job market for physicians, leading to the temporary reduction of both starting salaries and practice options for doctors, according to a July Merritt Hawkins report.

While there was an increase in physician-search engagements over the 12-month period ending March 31, demand for physicians since March 31, as gauged by the number of new search engagements, has declined by over 30%. At the same time, the number of physicians inquiring about job opportunities has increased, which has created an opportune market for those healthcare facilities seeking physicians.

The Medical Group Management Association indicates that physician-practice revenue has declined by an average of 55%, since patients have been either unable or unwilling to seek medical treatment. As a result, fewer physician practices and hospitals are seeking physicians as they struggle with lower revenues and a focus on treating coronavirus patients.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com