In the demanding world of health care, physicians often dedicate their lives to patient care and burdensome administrative work, leaving little time to navigate the intricacies of their compensation and how it has stayed the same over the years. Many physicians unknowingly leave significant sums of money on the table, uncertain about how to maximize their earnings.
A goal for all physicians should be to understand their true market value. You can achieve this by comprehensively assessing your current compensation structure and comparing it with data from professionals in your field and geographical region. The insights will guide you through compensation discussions and ensure you receive the compensation plan you deserve.
Ensuring that your compensation aligns with industry standards and your true worth as a physician is paramount for a fulfilling and financially secure career. Here are key reasons to sit down every few years and analyze your compensation against the market, taking into account how your story has changed.
Long period without modification. If you have not reviewed your compensation structure in over two years, it’s time for a Total Cash Compensation (TCC) evaluation. This entails thoroughly analyzing your previous year’s earnings, factoring in your work output, including shifts, wRVUs, collections, and more. Yet, it goes further. To gauge your value, you must consider your local market dynamics, career trajectory, and industry trends. This approach transcends generic data from sources like MGMA or Medscape, which often need more context and timeliness and fail to capture your unique circumstances.
Job change or renegotiation. Understanding where you stand in the market against your peers and new physicians coming in is essential to securing a favorable deal when contemplating a job change or renegotiating an existing contract.
Starting a new job or agreement. For a smooth transition, whether entering a new position or signing an updated agreement or addendum, know your compensation terms and how that compares to the market value.
Practice or hospital changes. Significant shifts in your practice or hospital, such as mergers, acquisitions, relocations, or substantial job offers, warrant a compensation assessment to ensure you are fairly compensated.
Benchmarking against industry standards. Regularly benchmarking your compensation against industry standards, preferably yearly or biennially, helps you stay competitive.
Transition to 1099 status. If you’re transitioning from a W-2 employee to a 1099 contractor.
Workload changes. Any substantial changes in your workload that affect your pay should prompt a compensation review.
Joining a new group or partnership. When considering joining a new medical group or partnership, understanding the compensation terms is essential for an uneventful integration.
Geographic transition. If you’re moving to a new geographic region for a fellowship or attending position, researching local compensation norms is vital to negotiating effectively.
Non-compete or restrictive covenant. When dealing with non-compete clauses or restrictive covenants, assessing how they impact your compensation options is essential.
Comparing against new hires. Finding out what new hires in your field earn can help gauge if your compensation remains competitive.
Transitioning military personnel. Understanding civilian compensation standards is crucial for physicians transitioning from the military to civilian practice.
Lifestyle changes. Changes in your lifestyle, such as transitioning from full-time to part-time or engaging in locum tenens work, can necessitate a compensation review.
Offer letter or employment agreement. When you receive an offer letter or an employment agreement, a compensation review can ensure that the terms align with your expectations and industry standards.
Understanding the power of data-driven compensation analysis
Let’s dive into a recent case study that vividly illustrates the transformative power of data-driven approaches. In this story, a highly qualified pediatrician took a proactive step toward understanding the data behind his compensation. This decision led to a remarkable journey that significantly boosted his average income by $70,000, guaranteed for three years plus an additional week of vacation with no other production needed.
Driven by a deep commitment to his profession, this seasoned pediatrician has been integral to his current practice for several years. He consistently went above and beyond his required duties throughout his tenure, building a reputation as a dedicated and passionate medical practitioner. His commitment extended beyond the clinic’s walls, as he actively participated in community initiatives, attended sports events, and even engaged in committees to further health care causes.
Despite his unwavering dedication, he couldn’t help but notice that his compensation had remained stagnant for six long years. Starting at $170,000 annually, his base salary had stayed the same. While he suspected that newer graduates joining the field were potentially earning more, he lacked concrete evidence to substantiate this. This uncertainty prompted him to take action, evaluate his current compensation package, and initiate discussions with his employer for fair and well-deserved adjustments.
The value of data
The power of data cannot be underestimated, and this case study clearly illustrates its significance. The pediatrician didn’t embark on this journey blindfolded; instead, he harnessed the strength of robust data analysis to make informed decisions about his compensation. Whether you ignore concerns with your compensation structure or know you are being paid flat-out less than your peers, you will need the data and skills to negotiate better pay successfully.
This physician had a crucial ace up his sleeve – access to the most up-to-date and comprehensive data on regional and local compensation rates. Armed with this information, they built a sturdy foundation, reframed his story, and built a ‘sales pitch’ for compensation discussions and negotiations with his employer.
This data wasn’t just a reference point but his guiding light. It gave him insights into how his earnings stacked up against his peers in similar regions and specialties. It shed light on trends in physician compensation, helping them pinpoint areas where they might be undervalued.
In essence, this data was the cornerstone of his strategy. It gave them the confidence to approach his CEO with a well-founded argument rooted in the reality of his market value. It transformed what might have been a daunting conversation into a constructive dialogue that ultimately led to a substantial increase in compensation.
Looking beyond base pay
In medicine, your earnings extend far beyond your foundational salary. Various factors play a significant role in shaping your financial landscape. This is where comprehensive data analysis can make a difference. The data will provide information about base pay and reveal opportunities such as increased time off. Our case study is a prime illustration of how physicians can use this knowledge.
Beyond base pay, physicians should consider several key factors when evaluating their compensation packages:
Bonuses and incentives. Assess the structure of bonuses and incentives in your contract. Understand how these are calculated and whether they align with your performance goals.
RVUs (relative value units). RVUs measure physicians’ productivity. Make sure you are compensated fairly based on the RVUs you generate.
Benefits. Review the entire benefits package, including health insurance, retirement contributions, malpractice coverage, and other perks, such as continuing education allowances or wellness programs.
Time off. Evaluate the amount of paid time off (PTO) you receive, including vacation, sick leave, and holidays. Consider whether there is room for negotiation here.
Workload and hours. Understand the expectations for your workload and hours. Are you expected to be on-call, and if so, how often? How are overtime hours compensated?
Contract terms. Review the contract terms, including the duration, renewal options, and non-compete clauses. Ensure the contract aligns with your career goals.
Quality metrics. Some contracts include quality metrics that can affect your compensation. Understand these metrics and how they may impact your earnings.
Student loan repayment. If you have student loans, inquire about any loan repayment assistance or forgiveness programs offered by your employer.
Relocation assistance. If you’re moving to a new location for a job, consider whether the employer provides relocation assistance or reimbursement.
Partnership track. If you’re interested in partnership or ownership in the practice, discuss the terms and timeline for achieving this goal.
CME (continuing medical education). Find out if the contract includes funding or time off for CME activities to keep your skills up to date.
Research opportunities. If you are interested in research or teaching, inquire about opportunities for involvement and any associated compensation.
Professional development. Explore opportunities for career advancement, mentorship, and professional development within the organization.
Performance reviews. Understand how performance reviews are conducted and whether they are tied to compensation adjustments.
Exit clauses. Review the contract’s exit clauses, including notice periods and any financial obligations upon termination.
Following the research, the pediatrician secured a substantial increase in his compensation over the next three years—adding an impressive $70,000 to his annual income. What’s more, he also negotiated an extra week of vacation each year, the opportunity to renew his contract every three years instead of five, and these gains came without additional patient duties or work hours.
These remarkable improvements represent substantial financial growth and offer precious additional personal time. What’s noteworthy is that these transformations were catalyzed by the presentation of a real-time, comprehensive, year-long data report. However, it’s not just the data alone that made the difference. It’s how the story was woven around it, coupled with our coaching, guidance, and skillful framing of the discussion. It’s akin to having high cholesterol and seeing the numbers on a report, but the doctor provides crucial advice, whether it’s medication, dietary changes, or other actions.
Advocacy pays off. Our pediatrician could have continued business as usual, simply renewing his contract. However, he chose to take action, reaching out to experts in compensation and contract reviews, ultimately leading to substantial financial growth.
Embrace compensation conversations. Rather than shying away from discussing your worth and compensation, embrace these conversations. They’re the catalysts for positive change and essential for a healthy work relationship.
Invest in expertise and data. Certain research and data companies exist for a reason. They specialize in physician contract data, offering a deep understanding of contract structures, compensation norms, and nationwide trends. Seeking professional data is an intelligent choice when negotiations hold such significance.
Demand fairness. If you’re an employee and haven’t seen at least a 5 percent pay increase annually, you’re essentially experiencing a pay cut. Don’t settle for less; stand up for what you deserve.
If you are inclined to take the DIY approach, delving into the world of compensation data analysis can be intense and time-consuming. Fortunately, there are valuable sources available to assist you in this endeavor. These resources can provide the latest insights on regional and local compensation rates, enabling you to build a solid foundation for meaningful compensation discussions and negotiations. While it’s undoubtedly a rewarding journey, it’s essential to recognize that this path demands significant time and effort. However, as demonstrated in our case study, the outcomes can be worthwhile, leading to substantial financial gains and enhanced career satisfaction. The following are some of the resources that we use when doing compensation analysis for physicians:
Medical industry surveys. Several organizations and associations conduct annual or periodic surveys to gather compensation data for health care professionals. For instance, the Medical Group Management Association (MGMA) and the American Medical Group Association (AMGA) conduct extensive surveys to collect physician compensation and productivity data.
Government data. Government agencies like the Bureau of Labor Statistics (BLS) often provide data on health care industry compensation, including physician salaries. While this data may not be as granular as other sources, it can offer valuable insights into regional compensation trends.
Professional associations. Organizations like the American Medical Association (AMA) and specialty-specific medical associations often publish reports and surveys on physician compensation. These reports can provide specialty-specific and regional compensation data.
Health care recruitment and staffing firms. Firms specializing in health care recruitment often gather data on physician compensation as part of their market research. They may publish reports or offer access to their data for a fee.
Online compensation databases. Various online platforms and databases, such as Doximity and Medscape, provide physician compensation data. These platforms often allow physicians to input compensation information, providing an additional data source.
Hospitals and health care systems. Some health care institutions and systems may share compensation data with physicians, especially during contract negotiations. Physicians can use this information to benchmark their compensation packages.
Academic research. Academic studies and research papers may include data on physician compensation. These studies can provide in-depth analysis and insights into compensation trends.
Peer networks. Physicians can also tap into their professional networks to gather compensation information. Colleagues in the same specialty or region may be willing to share their compensation experiences confidentially.
Consulting firms. Firms specializing in physician contracts and compensation reviews often maintain extensive databases of compensation data. These firms can provide personalized compensation analyses based on their data.
Jon Appino has been the driving force behind Contract Diagnostics since 2011, where he leads a dedicated team on a mission to empower physicians with the knowledge, tools, and confidence to negotiate robust employment contracts and secure the best compensation packages. With over a century of collective experience, the CDx team is a paragon of field expertise. With over 25 years of diverse health care experience, Jon leads this seasoned team of professionals. From Pete’s 20+ years to Anu’s 25+ years, complemented by Jillian and Laura’s 10+ years each, our team boasts a wealth of knowledge. This remarkable tenure is further fortified by the skills and backgrounds of our other team members, including Kathryn Sarnoski, MD, and Jan Schmitz, director of operations. Their combined experience ensures that Contract Diagnostics offers the most seasoned and insightful guidance in physician compensation.
Discover more of Jon’s perspectives on physician compensation by exploring the Contract Diagnostics blog or connecting on social media platforms like LinkedIn, Facebook, YouTube, and Instagram.
The Contract Diagnostics team offers comprehensive consulting services tailored to physicians and their families, addressing employment contracts and compensation structures. Our expertise spans contract physician compensation, schedules, benefits, and more.
Our mission is to establish a central resource where physicians can access information, consulting, and coaching to navigate the intricacies of employment contracts and compensation structures, ensuring equitable remuneration.
Questions? Feel free to reach out to us via our website or at 888-574-5526.