Has hospitalist pay finally peaked?
Data show salaries are flat this year, but growth may be around the corner
Keywords: Hospital physicians find that their compensation remains flat
by Deborah Gesensway
Published in the November 2012 Compensation & Career Guide
IS IT AN UNREMARKABLE BLIP, a logical pause or an ominous sign of things to come? According to the 2012 Today's Hospitalist Compensation & Career Survey, mean hospitalist compensation across all respondents dropped slightly last year to $220,552.
Check our latest (2014) article on hospitalist career satisfaction. See how you compare with other hospitalists nationwide.
Mean compensation for the largest subset of hospitalists—full-timers who treat only adults—stayed relatively even, posting a gain of only 0.56% from 2011, to $234,930. And while full-time pediatric hospitalists in 2011 enjoyed
a double-digit jump in income, this year they reported a 7% drop in compensation.
|"There is increasing pressure to put a little bit of risk on the doctors as the hospitals assume|
–Jasen W. Gundersen, MD, MBA
TeamHealth Hospital Medicine
Only in retrospect will we know whether this year's figures are just part of the up-one-year-then-flat-the-next pattern that has typified hospitalist earnings over the last five years. An alternative explanation holds that sluggish compensation growth may reflect a cautious response to the current economic and political climate. Or flat compensation figures may represent a leveling-off after 15 years of dramatic increases.
Hospital medicine experts are unsure. But there is one thing most hospital medicine watchers do agree on: Hospitalist compensation has not yet peaked.
"I have not talked to a single hospital administrator who has said, 'I have to figure out how to reduce the individual compensation of my hospitalists,' " says Leslie Flores, a consultant with Nelson Flores Hospital Medicine Consultants in La Quinta, Calif. "But I have talked to plenty of them who say, 'I need to figure out how to get more from my hospitalists for the money I am paying.' "
This is the fifth year in a row that Today's Hospitalist has surveyed hospitalists. This year's results are based on the responses of 944 hospitalists nationwide. In 2008, the first year we gathered survey data, hospitalists reported a mean total compensation (including bonuses and incentives, but excluding benefits) of $190,923.
Mean figures, however, never tell the whole story, and hospitalists this year—as in years past—report a broad range of income. About 30% of full-time adult hospitalists say they earn more than $250,000, with 13% saying their compensation tops $300,000. Another 25% reported making less than $200,000.
"There is a big divergence between what the top and bottom hospitalists are paid," says O'Neil J. Pyke, MD, chief medical officer for Medicus Consulting Services, a Salem, N.H.-based national transitional staffing program and consulting company. "There are hospitalists now earning salaries that formerly were reserved for only surgeons."
Dr. Pyke personally knows a couple of hospitalists who make more than $500,000. But they do so, he adds, by "working a ridiculous amount more than everyone else. They are seeing 25-plus patients every day, and they are paid based on their performance."
As Ms. Flores points out, there are also striking geographic differences. This year's survey found a $25,000 difference on average between the lowest paid regions of the country—the Northeast and the Midwest—and the highest, which are the South and Southwest.
In smaller, more remote markets— such as the Southeast—where hospitals have a hard time recruiting, Ms. Flores says that some doctors see 5% or 6% salary increases every six months.
"I wouldn't be surprised to run into hospitalists in New York City or Washington, D.C., who are making under $200,000. But in Texas, you'll easily talk to hospitalists who won't even consider a job for under $300,000."
Martin Buser, MPH, a founding partner of Hospitalist Management Resources LLC, a national hospitalist consulting firm in Del Mar, Calif., and Colorado Springs, Colo., points out that hospitalist compensation overall "has doubled in 15 years." He does predict, however, that "the curve, which was straight up for awhile, is starting to bend back to what we are seeing with other specialties. I think expectations for the future are that times are going to get a little tougher as payers look to squeeze whomever they can squeeze. It all comes down to supply and demand."
Pressures holding down compensation
The consensus among analysts and experts is that pressures to increase wages continue to trump downward forces. The difference this year, they say, may be that there are more negative influences than ever before in the young specialty's history.
In addition to a less dramatic supply-demand imbalance, factors like uncertain reimbursement—due to health care and payment reform—and low inflation may be acting as a brake on compensation hikes. (According to the U.S. Department of Labor, the current inflation rate is 2.0%.)
Another phenomenon that could be exerting downward pressure on hospitalist income is the fact that there is more competition for compensation.
Ms. Flores points out that hospitals now have many more employed physicians than in the immediate past. "A lot more physicians of different specialties are vying for that same pool of money," she says. Hospitals are realizing that they can either "subsidize cardiologists, who are going to bring in revenue, or hospitalists who don't bring in any revenue at all and are kind of a drain. Which are they going to choose?"
In such an environment, says Mr. Buser, hospitalists may have a hard time arguing "that they deserve a lot more than the others." They also "may get homogenized within the group because hospitalists tend to be good team players."
Mr. Buser, who's a former hospital CEO for Scripps Health in San Diego, also thinks that "hospitalists will be a prime target" for hospital administrators who need to cut spending if they start to see reduced earnings. "Now there are groups of 20 doctors, costing $2.5 million"—a big line item. "Hospital administrators are going to say, 'I need to see a 5% cut this year, and there is this big number sitting out there.' Continuing to prove value is the key."
Parity with ED physicians?
Other analysts, however, don't expect hospitalists to be targeted. Not only have hospitalists become indispensable at most hospitals, they argue, but hospitalists also seem well-situated for health reform. In addition, their pay continues to lag behind all other hospital-based physicians, particularly emergency physicians, whose clinical work and schedules are similar.
"If you look at the rates that emergency medicine doctors make, hospital medicine rates look paltry by comparison," says Jasen W. Gundersen,MD, MBA, president and chief medical officer for the Tennessee-based TeamHealth Hospital Medicine. Both are "shift-based, 24-hour-a-day medical models with fairly high-acuity patients. I would think hospitalist compensation would continue to go up until it comes to some point where it approximates emergency medicine."
According to Becker's Hospital Review, emergency physicians' median salary is $285,910. (Experts point out, however, that ED doctors don't typically ask for financial support, as hospitalists do.) By comparison, the only physician specialties reporting the same or lower annual compensation as hospitalists are primary care internists, family physicians and pediatricians, along with neurologists and endocrinologists. All other specialties report median annual incomes of at least $100,000 more.
The trade-off, Dr. Gundersen says, is that hospitalists will need to become as productive as emergency physicians. He notes that hospitals just can't afford to have hospitalists see only 14 or 15 patients a shift.
"Financially, it's not sustainable," he points out. "And even if you had the money, you can't find the doctors. Consequently, you are going to have to make hospitalists more productive so they can see more patients."
Straight salary: still going strong
What's surprising, however, is that the number of hospitalists who are paid based on productivity hasn't changed. Five years ago, 6.3% of hospitalists said their earnings were based entirely on productivity; today, that's true for 5.9%. About 35% say they are paid a set salary, similar to the 34% reported five years ago. And 56% say their payment model is a combination or hybrid of the two, a number that hasn't changed much in the last five years.
For years, consultants have been predicting the demise of straight salary compensation arrangements. The fact that the numbers haven't changed much may reflect economic factors outside of health care such as the housing market.
"We want to, but we cannot recruit people into non-salary contracts," says Troy W. Ahlstrom, MD, chief financial officer of Hospitalists of Northern Michigan, which provides hospitalist services at four small to midsized hospitals in rural Michigan. "It's much more difficult to buy a house now, and banks don't want to lend you money if you are on a productivity model. If you want a home loan, they will significantly discount your salary if you don't have a salary guarantee."
That's particularly the case, adds Dr. Ahlstrom, who is clinical director of Alpena Regional Medical Center, in more remote regions of the country where it is harder to recruit doctors.
The role of incentives
The fact that so many hospitalists are paid a salary may be another factor keeping hospitalist compensation flat. According to our survey, hospitalists paid on productivity continue to make significantly more on average than their salaried colleagues. Fulltime adult hospitalists who are paid based solely on productivity report a mean compensation of $287,500, compared to $217,700 for hospitalists paid a straight salary and $240,100 for a hybrid compensation arrangement.
But more groups moving to hybrid compensation models may be a sign of the times. In Omaha, Neb., Thomas Frederickson, MD, MBA, medical director for hospital medicine at Alegent Creighton Clinic, says that the hospitalists in his group—along with all the clinic's physicians—have recently begun working under a new compensation plan. For the first time, 15% of a doctor's potential compensation is being tied to meeting specific goals on quality and service excellence, and to supporting the health system's strategic initiatives, particularly around value-based purchasing and creating an accountable care organization (ACO).
Dr. Frederickson suspects that future surveys will show that his group isn't alone in finally making the switch to combination payment arrangements. "We haven't seen it that much yet because people are trying to figure out what the Affordable Care Act means in terms of how they are going to have to shift their compensation models," he explains.
More or less specialty income?
In hospitalist programs that are helping set up ACOs, Dr. Frederickson adds, "I suspect you will start to see compensation models based around efficiency metrics that have to do with resource utilization and partnering with outpatient physicians on how to efficiently use resources." Future incentives may include not only scoring well on quality measures, but reducing readmissions or improving patient satisfaction.
That's one school of thought. But at HealthCare Partners, a Torrance, Calif.-based physician-owned multispecialty group already involved in ACOs and medical homes, "big jumps in salary are going to primary care physicians and not going to specialists," explains Tyler Jung, MD, the medical director in charge of hospitalist programs. "Hospitalists are a kind of specialty."
That said, Dr. Jung points out that compensation in southern California, where HealthCare Partners is based, is affected by several fairly unique factors. On one hand, it's one of the few places in the country that "physician supply is much higher than demand. We are seeing a lot more applicants than positions available, so we're not under the kinds of demand pressures that we saw in the past."
At the same time, he notes, the area has some very strong competitors who set the bar on compensation. "You either match them," says Dr. Jung, "or you're unable to compete." Still, "I think we're not going to see a big jump in salaries," he adds. "I think salaries are going to flatten out unless somebody uncovers a bundle full of money in the health care system."
A carrot for more productivity
Many say that hybrid compensation models will give hospitalists the chance to earn more than ever—but with a catch: They will have to meet quality and productivity targets.
"Hospitals are saying, 'I will guarantee you $200,000 with a potential up-side of $245,000, but you must earn it,' " says Dr. Pyke from Medicus. "Hospitals will pay, but they are asking hospitalists to do more, be more and do it with a smile." Shared accountability with appropriate industry-guided reward is the new mantra of hospital administrators, he notes, "and rightly so."
Likewise, when TeamHealth raises hospitalist compensation these days, Dr. Gundersen says it usually is in the at-risk portion of pay, not in the basic salary. "There is increasing pressure to put a little bit of risk on the doctors as the hospitals assume more risk," he says. "I do a lot of explaining that this isn't a guaranteed gig. We pay you $200,000 a year, and if you want $225,000, you are going to have to work for it."
"That is very disconcerting to people," Dr. Gundersen admits. "Most hospitalists don't want to see more than 20% at risk."
While physicians might not be interested in too much risk, there is a definite financial reward for those adventurous enough to embrace the unknown. According to the survey, fulltime adult hospitalists who had more than 10% of their compensation from bonuses and incentives earned higher than average income: $249,100.
There's another factor experts point out when discussing hospitalist compensation: For most of the specialty's short life, hospitalists have used job-jumping to increase their pay. With demand far outstripping supply in most places, it was relatively easy for hospitalists every few years to walk down the street or fly across the country for a new job with more pay.
But analysts say that phenomenon seems to have slowed dramatically. That may be contributing to the lower rate of compensation growth.
Again, the housing market may be part of the problem. "Not infrequently, people want to come to a different job, but they can't because of their housing situation," Dr. Gundersen says. "They can't sell their house or they are so upside down on it that they can't leave. It definitely has played a role in recruitment."
In Nebraska, Dr. Frederickson likewise says that the tremendous turnover of years past has slowed. He speculates that some of that may be due to the fact that many hospital medicine programs are more mature—and right-sized—than before. People are picking a program to work in because of its reputation, he says, and then they're staying put.
Survey respondents reported being in their current job for an average of five years, with 20% saying they have worked at the same job for between six and 10 years. Five years ago, the mean number of years that hospitalists had been in a current job stood at just short of four. In 2008, 15% reported being at the same job for between six and 10 years.
Anne Marie Kelly, MD, hospitalist program director at Cape Cod Hospital in Hyannis, Mass., can't help but think that a leveling off of compensation increases will help hospital medicine reduce the amount of churn that groups face. For hospitalist programs to be sustainable and viable, she notes, they have to be affordable.
"I personally hope compensation never levels out," Dr. Kelly says, "but you have to think that to have sustainability in programs, compensation has to be market stable. I am hoping that as compensation stabilizes, programs will stabilize and people will stop moving around so much. We do need to stop the jump-ship mentality."
At her hospital, which is located in a somewhat isolated location, Dr. Kelly says hospitalists' compensation is competitive for their market—and that paying more is worth it if it keeps turnover in check. The program is growing, reducing its turnover and responding to the added demand for services.
The moonlighting effect
Another mainstay that hospitalists have used over the years to hike up their compensation may also be on the wane: moonlighting.
There is still plenty of moonlighting going on, according to consultants. But "everywhere I go," Ms. Flores says, "the main complaint I hear from hospitalists is, 'It's killing me working all these extra shifts. I would be perfectly happy making less money if I didn't have to work all these extra shifts.' You can say that when you are making $250,000."
Less moonlighting may be another indication that groups are right-sizing. That means that doctors don't have to keep on picking up extra shifts in a perennially understaffed program.
More practices may also have hired part-timers and midlevels, allowing them to cover shifts without resorting to moonlighters. The survey found that full-time adult hospitalists who work in smaller groups (with between one and four hospitalists) earn on average $8,000 more than hospitalists who work in bigger groups of more than 15. That may, in part, reflect the need of doctors in smaller groups to pick up extra shifts.
"When you have 10 people working days and two people working nights, people tend not to pick up as many extra shifts as they did in the small groups," says Dr. Ahlstrom. "There is more opportunity to have that work-life balance."
Dr. Ahlstrom notes that he is now starting to see hospitalists reach the point in their careers where they are taking a look "at their lifestyle and deciding to cut back and work 80%, and they're taking a pay cut to do that. They are still highly productive on the days they work, but they just work fewer days and earn less money."
So, if most predict more—but slower—growth in hospitalist compensation to come, what should hospitalists be doing to ensure they can maximize what's coming?
"When you look at America, this is not a time to be greedy," Mr. Buser says. "I think most people recognize there is a lot of hardship out there. Many people are going to err on the side of being cautious right now." The key, he notes, is to "keep adding value so when raises are given out, you stand out at the front of the line."
Deborah Gesensway is a freelance writer who covers U.S. health care from Toronto.
Compensation advantage: family physicians
IN THE 2012 TODAY'S HOSPITALIST COMPENSATION & CAREER SURVEY, hospitalists trained in family medicine reported a higher average compensation than their colleagues who trained in general internal medicine, medicine-pediatrics or pediatrics. The mean compensation reported by full-time family medicine hospitalists was $236,480, about $5,000 more than for full-time general internal medicine hospitalists and $15,000 more than those trained in med-peds.
Analysts say that part of the explanation for that higher compensation relates to demographics: Family physician hospitalists are much more likely to be found in small hospitals. In the survey, 65% of them say they work in hospitals with fewer than 250 beds, compared to 48% of internal medicine hospitalists. Full-time hospitalists at smaller hospitals on average reported earning more than their colleagues at larger hospitals ($237,900 vs. $232,100).
Family medicine hospitalists are also more likely to be found in rural hospitals than their internal medicine colleagues: 29% vs. 15%. And hospitalists at rural hospitals reported higher mean compensation ($245,800) than their urban ($230,400) or suburban ($234,000) counterparts.
Another explanation, however, may have to do with income above and beyond regular compensation. Hospitalists who are family physicians can easily pick up moonlighting shifts in emergency departments, which pay significantly more than hospital medicine shifts.
"The family physician hospitalists I know who moonlight tend to moonlight in the emergency room, not in hospital medicine, and ED physicians are paid at a higher hourly rate than hospitalists," explains O'Neil J. Pyke, MD, chief medical officer for Medicus Consulting Services, a transitional staffing company that places hospitalists and other physicians in moonlighting and other temporary posts around the country. "Hospitalists who are internists don't have the same ability to moonlight in the ED because most lack expertise in dealing with pediatrics, obstetrics and trauma."
The sweet spot: how to be a superstar earner
WANT TO EARN MORE? If so, here is a snapshot of full-time adult hospitalists who, according to the 2012 Today's Hospitalist Compensation & Career Survey, reported earning a mean of at least $245,000.
1. They work at a rural hospital.
2. They are employed by a local hospitalist group.
3. They don't do any teaching.
4. They are busier: They see more patients (21 or more) per shift and work more than 20 shifts a month.
5. They are older (age 41 and older) and have more experience. They have worked as a hospitalist for 11 years or longer and have been in their current job for six or more years.
6. They are often paid 100% based on productivity. If they do have a combination payment model (salary plus incentives), more than 10% of their compensation is the result of incentives or bonuses.
7. They work in the South or Southwest.
There is, however, a downside to earning more. According to our survey, 67% of all full-time hospitalists reported that "burnout" was a "significant" or "very significant" issue for them. But it was worse among the highest earners: 73% of hospitalists who reported compensation between $250,000 and $300,000 rated burnout as significant or very significant.