Physician Compensation Surveys: Which One Should You Use?

by Wendy Abdo, Staff Writer & Michael P. Broxterman, COO, Pinnacle Health Group

How much should you offer? This is a common question that many medical groups ask themselves when they need to hire a physician. Usually, the first thing they do is peruse the popular physician compensation surveys published by major trade associations and consulting companies. While this is a good first step in formulating a compensation plan, it is important to understand that not all surveys are the same.

Before you buy an expensive survey, you would do well first to determine which surveys are best for your particular situation. To help you with this process, we have listed some background information on five popular surveys that explains where they get their data, whether from large or small groups, single or multi-specialty practices, or first year or multiple year incomes. This will enable you to make more informed decisions on how much to offer your physician candidates.

American Medical Group Association

The AMGA is a trade union that puts out an annual survey on medical group physician compensations. Survey respondents are members of the AMGA and AMA. According to Tom Flatt of AMGA, survey participants consist of large multi-specialty groups of 100+ physicians. The average AMGA member group has 260 physicians. Last year’s survey was mailed to 2,600 medical groups across the country of which 10 percent responded. Respondents are evenly dispersed between physician-owned and nonprofit-owned groups.

Medical Group Management Association

The MGMA also has an annual survey on physician compensation. However, unlike the AMGA, they get their data primarily from mid-sized groups comprised of around 6 to 30 physicians. This report includes both single and multi-specialty practices. A majority of the MGMA’s survey participants are members of the association. However, some respondents are from affiliated single specialty associations. Their last survey was sent to 12,614 groups of which 1,242 surveys were completed and returned as usable data.

Sullivan, Cotter, and Associates

SCA is a consulting firm that reports total cash compensation in their yearly physician compensation survey. This includes all W-2 earnings and other money that contributes to deferred compensation. According to Kim Mobley, about two-thirds of the respondents are hospital employed physicians and half of the survey participants are academic institutions such as community-based teaching hospitals. The remaining survey respondents are from HMO’s, and group practices comprised of 20+ physicians. SCA obtains its sample population by purchasing a list of 15,000 names of which about 200 completed surveys are returned. Eighty-eight percent of survey respondents are non-profit organizations and 12 percent are for-profit organizations. One unique characteristic of their survey is that they don’t simply list compensation for each specialty, but break each specialty down by position levels such as director, chief, chair, and resident director.

Pinnacle Health Group

Pinnacle Health Group is a physician search firm that reports actual first year salaries and bonuses for physicians of all experience levels and practice environments. About 90 percent of the data comes from hospitals who are locating physicians specifically for affiliated group practices and the remaining 10 percent of the data are from hospitals directly employing physicians.

Other Physician Compensation Surveys

The Hay Group, Hospital and Healthcare Compensation Services, and Merritt Hawkins are other firms that report physician compensation. The Hay Group uses data from large multi-specialty groups, some from hospitals and some from HMO’s. Hospital and Healthcare Compensation Services also gets its data from large multi-specialty groups. However, 85 percent of its data is from hospitals. Merritt Hawkins is a physician recruitment firm that uses compensation data offered by medical institutions who are looking to fill open positions.

Comparing and Contrasting Surveys

The compensation data shown below indicates that among the five surveys of 20 specialties highlighted, MGMA lists the highest overall compensation followed by the AMGA and PHG. In contrast, SCA and the Hay Group show the lowest overall compensations.

PHYSICIAN COMPENSATION: COMPARING MEDIANS BY SPECIALTY

Source: Physician Compensation Report, July 2004 (2002/2003 data)

Lower or higher compensation results, however, depend on what set of data you are examining, and each survey pulls its data from different sources.

If you are a big multi-specialty organization, you may gravitate toward using the AMGA’s survey. Since they are from large multi-specialty groups, AMGA survey participants are likely to have lower reimbursements, and these low reimbursements can drive down physician compensation levels. These larger organizations tend to have lower compensation because groups who share earnings may not have individuals who contribute equally. For example, profitable specialists within the group could contribute more revenue than primary care specialties.

In contrast, physicians with smaller, single specialty groups have a propensity to do better economically. Small to medium-sized organizations may prefer to use MGMA’s figures in benchmarking compensation. Likewise, some surveys use university institutions as its primary source. If you are an academic organization, SCA can offer compensation ranges that are more comparable to what is offered in your sector. Another point to consider is whether the survey cites first year or multiple year compensations. For example, Pinnacle Health Group uses first year physician compensation data; whereas, MGMA includes compensation that covers many years.

Physicians looking to relocate will find Pinnacle Health Group’s surveys one of the best sources to use in determining fair compensation. Pinnacle lists actual compensation salaries rather than what clients are initially willing to pay. This is helpful in determining real world compensation expectations since a medical group may offer a physician $300,000 but actually agree to pay them more than that at the end of the negotiation process.