Physician compensation trends shift to quality, patient experience

Pay equity continues to be an issue for clinicians. In 2022, women physicians earned 79% of what male physicians did in median weekly earnings, according to data released by the Bureau of Labor Statistics in January. That’s compared with 86% in 2021 and 82% in 2020.

Doctors of color face similar pay gaps. Medscape’s 2022 physician compensation report showed white physicians earning 10.5% more annually than their Black counterparts, 5.2% more than Asian Americans and 5.5% more than Latinx physicians.

However, it’s not just a matter of simply giving raises across the board. Physician pay can be a complicated balancing act, shaped by specialty, geography and demand.

Health systems often rely on regional and national market wage data broken down by medical specialty from groups such as the Medical Group Management Association. The information helps organizations offer salaries comparable with other systems, even if they serve communities in multiple states.

“Almost all health systems … have some kind of consistent, objective compensation,” said Dave Hesselink, a principal at consulting firm SullivanCotter. “They’re maybe ahead of other workforces with positions in that regard because the regulatory scrutiny around physician compensation has been in place since the ’80s.”

Location is a key factor, including where a physician is hired and the availability of medical professionals in certain regions. For example, clinicians in rural areas can earn more than those in urban ones if a health system wants to attract expertise to an underserved community.

High-intensity roles, such as surgeons and specialized physicians, typically earn more than office-based primary care providers. Dr. Joseph Kerschner, executive vice president and dean of the medical school at the Medical College of Wisconsin, which employs physicians for Milwaukee-based Froedtert Health, noted the increasingly competitive market for radiologists as one example. Unlike many other doctors, radiologists can work remotely. The flexibility makes it easier for them to change health systems, so organizations need to pay more to retain them.

“Geography is one thing, population density is another thing, but each of these [specialties] has its own economics that you have to think about,” Kerschner said.

These considerations are intertwined with pay parity. Women-dominated specialties, such as pediatrics or obstetrics, tend to be among the lowest-paid. And women may shy away from higher-paying jobs like surgery because of the long hours and lack of time left for family, said Janette Dill, an associate professor in the School of Public Health at the University of Minnesota who focuses on the healthcare workforce.

Lower reimbursement rates from payers for women-dominated specialties also contribute to an overall reduction in the work’s value and subsequent wage erosion, Dill added.

In some cases, social structures like a lack of educational or professional opportunities may push women providers or providers of color into lower-paying settings, such as public hospitals. Dill said an industry shift toward preventive, value-based care focusing more on population health could help mitigate some of the overarching challenges.

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