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Primary Care Compensation on the Rise; Family Physicians Up 17%

News  |  By John Commins  
   June 05, 2017

A Merritt Hawkins salary survey suggest that family physicians and other primary care specialists are finally cashing in on more than a decade of high demand.

The law of supply and demand is starting to acknowledge family physicians.

For the 11th straight year, family docs top the list of the most highly recruited physicians in the United States, but they also continue to find themselves on the bottom rung for compensation, according to the Dallas-based search firm Merritt Hawkins.

The recruiter's 2017 Review of Physician and Advanced Practitioner Recruiting Incentives report also shows, however, that demand for family physicians is exerting upward pressure on starting salaries.

The average starting salary for family physicians is $231,000, according to the 2017 report, up from $198,000 in 2015, an increase of 17%, while the average starting salary for general internists is $257,000, up from $207,000 two years ago.

"Emerging delivery models that reward quality and population health are driving demand for family doctors," Travis Singleton, senior vice president of Merritt Hawkins, said in remarks accompanying the report.

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"Consumer preference for urgent care centers, retail clinics, community health centers, telehealth and other modes of convenient care is another key factor accelerating the recruitment of family doctors."

Jay Fetter, operations manager for the division of medical education at American Academy of Family Physicians, says health systems and hospitals are moving away from fee-for-service to a value-based model.

"They recognize that primary care is a central component of that, so demand has increased," he says. "We hear that a lot from our residency directors and faculty who say 'Gosh, my graduates are getting these enormous offers and heck they're making more than me now!'"

The Review tracks the 3,287 physician and advanced practitioner recruiting assignments that Merritt Hawkins conducted from April 2016 through March 2017. Five of the top six searchers were for primary care clinicians, including:

  1. Family medicine – 607
  2. Psychiatry – 256
  3. Internal medicine – 193
  4. Nurse practitioner – 137
  5. OB/GYN – 109
  6. Hospitalists – 94

Salary Increases and Decreases

The average starting salary for psychiatrists is $263,000, up from $226,000 two years ago, an increase of 16.3%, while the average starting salary for internists is $257,000, up from $207,000 two years ago, an increase of 24%.

Despite the dramatic rise over the past two years, average compensation for primary care physicians remains well below the average compensation for most specialists. Orthopedic surgeons, for example, continue to be the top earners among clinicians, with an average annual salary of $579,000. Invasive cardiology is second on the compensation list, with an annual average of $563,000.

Fetter says it's not surprising that specialists make more money than non-specialists, because they generate more immediate revenue. "Hospitals actually know where the revenue stream is coming from, so they are compensating the physicians who support those revenue streams as they still exist today," he says.

Salaries for some specialties are falling, however. Average compensation for radiology ($436,000), non-invasive cardiology ($428,000), dermatology ($421,000), and anesthesiology ($376,000) declined over the past two years, according to Merritt Hawkins.

Value-Based Incentives

The report also shows that value-based physician incentives are gaining momentum. Of the recruiter's clients offering physicians a production bonus last year, 39% based the bonus in whole or in part on value-based metrics such as patient satisfaction and outcome measures, compared to 32% the previous year and 23% the year before that.

However, the 2017 report indicates that less than 5% of total physician compensation is tied to quality or value-based metrics, suggesting that volume remains the primary method for measuring and rewarding physician productivity.

Merritt Hawkins conducted more searches for psychiatrists in the past year than it has in any previous 12 months in the firm's 30-year history, a finding that coincides with a study in the May, 2016 issue of Health Affairs indicating that for the first time more money is spent treating mental health disorders in the U.S. than any other malady, including heart disease, trauma, and cancer. 

A March report from the National Council of Behavioral Health (NCBH) found that a national shortage of psychiatrists is about to spiral out of control, with 77% of U.S. counties reporting a severe psychiatrist shortage.

"Psychiatrists, particularly those willing to work in inpatient settings, are becoming next to impossible to find, and mental health is increasingly handled by other types of clinicians," Singleton said.

More than half (55%) of Merritt Hawkins' recruiting assignments took place in cities of 100,000 or more people last year, the highest percent of searches taking place in large cities since Merritt Hawkins began tracking this number.

Singleton says physician shortages are no longer confined to rural areas, but have spread to large metro centers with a comparatively high ratio of physicians-per-population.

That analysis jibes with a LinkedIn Work Force Report for June, which found that healthcare skills in the areas of clinical data analysis, pharmaceutics, and urgent care are needed in most major cities.


John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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