EARNINGS SURVEY

More hours, more patients, no raise?

Income growth for most primary care physicians still lags behind inflation.

By Robert Lowes
Senior Editor

What do you have to show financially for those extra hours you're logging, those extra patients you're seeing?

Not much, according to the latest survey of physician compensation by the Medical Group Management Association. Internists, FPs who don't deliver babies, and pediatricians boosted gross charges (before insurance discounts and other adjustments) by 11 percent in 2001, but took home only 1.2 percent more in compensation. Blame it mostly on declining reimbursement from insurers.

Paltry gains for primary care trailed a 1.6 percent hike in the Consumer Price Index for 2001. For primary care doctors, it's the second year in a row that earnings have lost ground to inflation, according to the MGMA survey, which Medical Economics is introducing as its new X-ray of physician finances (see "Memo from the Managing Editor").

Not every doctor has experienced an erosion in buying power, though. Specialists earned 2.6 percent more based on a 5.2 percent increase in charges. Among the leaders were invasive cardiologists, who enjoyed an 11 percent gain in income in 2001. And noninvasive cardiologists couldn't complain about their 6.7 percent improvement. The graying of America is one reason why income for invasive cardiologists is rising sharply, says H. Christopher Zaenger, a consultant in Barrington, IL, and president of the National Association of Healthcare Consultants.

Invasive cardiologists are making the most of this bumper crop in patients. "More and more, they're establishing their own catheterization and nuclear testing labs, so they don't have to send patients elsewhere for these services," says Dale Rothenberg, a consultant with Doctors Management in Knoxville, TN. "That translates into higher income."

Physicians in the South led the compensation derby in 2001, and Dan Stech, MGMA director of survey operations, chalks that up to the managed care factor—there's less of it below the Mason-Dixon line. According to InterStudy, a managed care research organization in St. Paul, MN, HMO enrollment in the South as a percentage of population stood at 19.8 percent in 2001, trailing all other regions (as defined by the MGMA).

Capitation is truly a threat to physician income. For instance, internists who depended on capitation for more than half of their income made $17,000 less than those who were capitation-free, according to the MGMA. For pediatricians, the gulf widened to $42,000.

As has been the case for years, male physicians generally received bigger paychecks than their female counterparts. Male general surgeons, for example, earned 30 percent more then female general surgeons. The gender gap narrows, however, in family practice, internal medicine, pediatrics, and ob/gyn, where women are on track to outnumber men.

Doctors in single-specialty groups typically outearned those in multispecialty groups (the MGMA survey doesn't look at soloists). Orthopedic surgeons who practiced with other orthopedic surgeons pocketed $43,000 more than their colleagues in mixed groups. "Specialists make less in multispecialty groups because they subsidize primary care doctors," notes Stech.

Among multispecialty groups, the size of a group influenced the size of a paycheck. More often than not, compensation for doctors in our selected specialties was highest in groups with 51 to 75 doctors.

If most doctors were disappointed by income growth in 2001, they should brace themselves for worse numbers in 2002, due mostly to a 5.4 percent reduction in Medicare reimbursements that kicked in last January. "It's abysmal," says Zaenger. "Lots of commercial insurers link their rates to Medicare, so the reduction is having a huge impact." Rising malpractice insurance premiums also hurt the bottom line.

While there are no miracle cures for the recent income malaise, consultants such as Zaenger recommend several techniques to boost earnings. Negotiate with insurers for a more-lucrative fee profile. Add ancillary services such as diagnostic imaging, bone density scans, and physical therapy. Streamline your office procedures so you can see two extra patients a day.

And ruthlessly trim operating costs. That appears to be a key to success for a number of the specialties in the MGMA survey—especially invasive cardiologists and orthopedic surgeons—that posted compensation gains despite flat or reduced collections. You can get a better handle on cost-cutting by reading our report on practice expenses in our next issue.

How much did you make in 2001?

The five-year picture

Income is highest down South

How multispecialty group size¹ affects income

Doctors in single-specialty practices earn more

The gender gap won't go away

Another view of physician income

Any number of organizations track physicians' compensation and publicize the results. Most efforts focus narrowly, on starting salaries, for example, or on large or hospital-owned groups. Not surprisingly, figures can be all over the map. So we decided to supplement our accompanying report, which uses data exclusively from the Medical Group Management Association, with another set of numbers for reference.

We turned to the National Association of Healthcare Consultants, a group of approximately 350 practice management consultants nationwide. Its survey represents data from 5,000 physicians, who are also clients of the Association's members.

Keep in mind that the Association's survey draws heavily from smaller practices, mostly in the South and Midwest, and isn't scientifically adjusted to account for how the survey's sample varies from the universe of all doctors. This skewing could help explain some of the more-surprising income figures, such as those for FPs (on the low side) and invasive cardiologists (on the high side).

See where you stand

Robert Lowes. Earnings Survey: More hours, more patients, no raise?.

Medical Economics

2002;22:76.