More on Reimbursement

Physician compensation a top concern for healthcare organizations, but also an opportunity

Performance gains are linked to physician compensation based on clinical quality rather than volume.

Jeff Lagasse, Associate Editor

Amid political and regulatory uncertainty, the fundamental needs of the healthcare system remain unchanged: Providers have to deliver high-quality care to more patients in a more cost-effective manner.

There's been downward pressure on reimbursement, and as providers look for performance gains across the enterprise, compensation leaps out. It's the biggest line-item expense for providers, representing 50 to 70 percent of operating costs.

A new survey from ECG Management Consultants shows a potential opportunity, as median primary care physician compensation was flat this year compared to 2017, while specialists experienced a 2 percent increase.


If physician compensation were to increase, it would be an indication that an organization is focused more on clinical quality than on volume, which is what will ultimately be beneficial for providers, given that the move to value-based care emphasizes quality over quantity.

The survey found that median work relative value unit, or WRVU, production -- a major component in production-based compensation plans -- decreased by 2 percent for PCPs and 2.1 percent for specialists.

Steady, or increased compensation, coupled with lower WRVU production suggests that organizations are encouraging providers to focus more on the quality of care than on the number of tests or procedures performed.

About 80 percent of physicians are paid under some form of variable compensation plan, indicating that the market is generally not moving toward straight-salary plans, the findings showed.

On average, benefit expenses account for 16 percent of compensation per physician full-time equivalent, which is roughly in line with historical trends.

Quality metrics and patient satisfaction scores are the principal nonproduction incentive metrics used in physician compensation plans, with 65 percent of organizations using quality metrics and 40 percent using patient satisfaction scores.


Compensation for all advanced practice provider types, or APPs, increased by 6.6 percent over 2017. Notable increases include surgical physician assistants' compensation, which increased by 6.3 percent.

Of the organizations surveyed, 68 percent pay established APPs using a flat salary plan. Average benefit expenses per APP for full-time employees rose 0.7 percent, to 23.3 percent of compensation, continuing the upward trend from previous years.

The physician recruitment landscape continues to be challenging, with 64 to 100 percent of open positions in four of the five most highly recruited specialties taking six months or longer to fill. The notable exception is urgent care, with only 20 percent of open positions taking over six months to fill.


The internal pressures of physician burnout and changing professional expectations of both early-career physicians and those exiting the workforce add further complexity to the challenge of developing fiscally sustainable compensation approaches that can accommodate physicians' professional and lifestyle objectives.

Twitter: @JELagasse

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