By Bonnie Darves, a freelance health care writer

Despite the tumultuous nature of health care in recent years and the brisk pace of physician practice acquisitions, mergers, and consolidations, physicians in most medicine and surgery specialties have seen steady, if undramatic, compensation increases. That’s good news, given the environment. Surveys show that the financial strain and market havoc that the pandemic wreaked upon US health care have had a relatively minimal effect on the incomes of physician specialists. That’s because the dynamics of supply and demand — many specialties remain in undersupply mode — persist as the perennial key driver in the compensation packages that physicians receive.

So, what’s the overall picture of specialty compensation? According to Andrew Hadje, director of content and consulting for the Medical Group Management Association (MGMA), the trend is “moderate growth — in 3 percent to 5 percent range — across many specialties. It’s what I’d call a decent increase,” Mr. Hadje said, with a few exceptions.

MGMA’s 2023 Provider Compensation Data Report, one of the national benchmark reports that many employers use as a starting point when configuring compensation packages, found that median total compensation increased 2.54 percent across all surgical specialties between 2021 and 2022, from $517,501 to $530,649. In the nonsurgical specialties, the median increase was 2.36 percent, from $415,465 to $425,265.

The “winners,” in the MGMA’s findings, were invasive cardiology, which saw a 4.62 percent increase between 2021 and 2022, to median earnings of $630,026. Likewise, diagnostic radiology compensation rose 5.39 percent, to a median of $568,327. The only other specialty that eclipsed a four percent increase was hematology/oncology, where median total compensation hit $516,017 in 2022.

Here’s a snapshot of the specialties that experienced the modest increase Mr. Hadje reported, based on MGMA survey data:

• General surgery — up 3.78%, to a median of $471,833
• Otolaryngology (ENT) — increased 3.38%, to a median of $488,668
• Noninvasive cardiology — up 3.01%, to a median of $559,107
• Neurology — up 2.95%, to a median of $347,348
• Emergency medicine — increased 2.72%, to a median of $378,666

Per MGMA’s survey findings, urology compensation was essentially flat, at $529,858, a 1.40 percent increase. The two specialties that experienced actual compensation declines were orthopedic surgery, at −3.31 percent (median $639,741), and pulmonary medicine, at −3.81 percent (median $401,828).

The increases in cardiology and radiology weren’t surprising, Mr. Hadje said, given the aging population. “We were surprised, however, by the compensation drop in orthopedic surgery and pulmonary medicine,” he said. Stagnant Medicare reimbursement rates and fluctuating patient volumes due to the pandemic might have been factors in those declines, he suggested.

AMGA survey reveals mostly modest increases

The American Medical Group Association (AMGA) 2023 Medical Group Compensation and Productivity Survey, which tracks large and mega physician groups, also revealed mostly modest gains across the board for physician specialists in recent years, with an average increase in median compensation of 5.2 percent for medical specialties between 2019 and 2022 and 4.7 percent for surgical specialties over the same period. Year over year, however, the average increase was only 1.8 percent across all medical specialties and 1.4 percent for surgical specialties from 2021 to 2022.

“We haven’t seen a lot of big movement in specialty compensation, but we can say that the surgical specialties have done well relative to their productivity.”

—Liz Siemsen, American Medical Group Association

The latter, as measured by Work RVUs (work relative value units, the relative level of time, skill, training, and intensity required to provide a given service), was flat from 2022 to 2023, at 0.0 percent. This finding might be a factor in the persisting pandemic effect on case volumes, according to AMGA. “One thing that we’re seeing is that across all specialties is that net collections are not keeping pace with compensation in the specialties,” Ms. Siemsen said.

While this economic reality may soon exert a drag on physician compensation as employer organizations struggle to balance their budgets, it hasn’t yet because demand for specialty services remains high and supply low overall, according to Fred Horton, president of AMGA Consulting. “Increasing compensation without a [corresponding] effect on revenues makes it challenging for organizations because there’s simply less money to cover their total costs,” Mr. Horton said. “But because [employers] in this market must pay specialists according to survey data, salaries will have to keep pace.”

Following is a look at how median compensation changed in several of the larger specialties from 2022 to 2023, per AMGA survey findings:

• Anesthesiology — $479,389, up from $470,124 in 2022
• Emergency medicine — $384,262, down from $387,079 in 2022
• General surgery — $470,840, up from $459,149 in 2022
• OB/GYN — $383,393, up from $373,462 in 2022
• Orthopedic surgery — $685,971, up from $655,556 in 2022
• Otolaryngology (ENT) — $487,748, essentially flat from $486,567 in 2022
• Pathology — $410,457, down from $418,365 in 2022
• Radiology (noninterventional) — $527,259, up slightly from $521,326 in 2022
• Urology — $533,095, up from $519,089 in 2022

Starting salaries illustrate market forces in short-supply specialties

Although the surveys’ findings are often used as one of the key determinants in the amount of compensation specialists can expect to receive, it’s also worthwhile to look at how total compensation packages shake out when negotiations conclude and bonuses are factored in. In AMN Healthcare’s 2023 Review of Physician and Advanced Practitioner Recruiting Incentives, which tracks starting salaries along with signing bonuses, production bonuses, and other incentives, market supply and demand factors weigh heavily.

AMN Healthcare’s 2023 review found, for example, that psychiatrists’ total starting compensation increased by 19 percent from 2021 to 2022, to approximately $355,000, a clear indicator of the demand for such services, and that dermatologists saw their starting compensation rise 15 percent, to $427,000. For anesthesiologists, a specialty in which large numbers of specialists are fast approaching retirement age, total compensation rose 12.5 percent, to $450,000. Orthopedic surgeons, per AMN Healthcare data, also saw a significant starting-salary jump of 12 percent, from $565,000 to $633,000, from 2021 to 2022. That finding, at odds with what the AMGA and MGMA surveys found, likely reflects both demand and higher post-Covid volumes, according to Cody Futch, vice president of recruiting for AMN Healthcare.

“During COVID, a lot of hospitals reduced their anesthesiologist numbers and are having to rehire. While they didn’t reduce their orthopedic surgeons, many of those specialists switched jobs during that time because their incomes were down and they couldn’t get the cases [volume] they wanted,” Mr. Futch said. Overall, 63 percent of AMN Healthcare’s searches in 2021–2022 were for specialists, he added, a shift from a few years ago when organizations were struggling to hire primary care physicians.

Payment models undergo “tweaks,” but no big shifts

About a decade ago, health care prognosticators suggested that physician-compensation models would transition away from productivity-based compensation to models in which quality-metric performance became an increasing factor in overall compensation. While there’s been some shift in that direction, it’s been slight in medical and surgical specialties, all sources concurred, because organizations can’t seem to land on a formula that works financially and that physicians deem fair and reflective of their efforts. As such, productivity (particularly encounter and procedure volumes) remains the bigger driver, at least from the standpoint of employers’ expectations of physicians and prevailing associated bonus structures.

For example, the AMGA survey found that 82 percent of participating groups employ a production-based/work RVU measure in their overall compensation models, and 92 percent rely heavily on market salary data. Although non-productivity and discretionary compensation are factored into incentive compensation, especially patient satisfaction (81 percent) and clinical quality/outcomes (79 percent), market data remains the key determinant of physician salaries. About 8 percent of organizations AMGA surveyed pay compensation on some type of quality incentive, Mr. Horton noted.

“Organizations really want a balance between quality and quantity in their compensation models, but rewarding both can be challenging.”

—Cody Futch, AMN Healthcare

“They really struggle to figure out how to [achieve balance] in the compensation package. Some of AMN Healthcare’s data suggests how vexing that struggle is: Per its surveys in recent years, 64 percent of hiring entities paid some portion of compensation on quality metrics in 2019, but by 2023, that figure had dropped to 25 percent. “Employers want to pay specialists on quality, but the fact is that they need volumes,” Mr. Futch said, to bolster their bottom lines.

“Overall, I’d say that we’ve seen relatively low progress in increasing use of quality metrics in compensation,” Mr. Hadje said. “There’s been some increase, but most organizations are still using a predominately fee-for-service model.”

How specialists should approach the compensation discussion

So, if compensation is relatively stable but not increasing substantially in most specialties, and if hiring organizations are still struggling to “right the ship” financially after the COVID impact on revenues, where does this leave specialist physicians in their discussions with prospective employers? All sources who offered their perspectives for this article suggested that specialists should be mindful of and, ideally, somewhat informed about the challenges organizations face as they design compensation packages in a financially trying environment characterized by stagnant reimbursement.

That doesn’t mean physicians can’t ask for competitive compensation — they absolutely should, according to Ms. Siesmen — but they should also take the time to become informed about the economic realities their employers face and the vitality of the health care markets where they’re seeking practice opportunities.

“What this means for specialists is that they should look for organizations that explicitly say they will pay compensation according to survey market data, but they should also ensure that the organization is positioned [financially] to enable salaries to keep pace with the market going forward,” Ms. Siesman said. That entails ensuring that the organization isn’t “overhiring” in their specialty, for one thing, and that the practice model is solid and well functioning.

For example, Ms. Siesman said, specialists should ask how advanced practice providers such as physician assistants and nurse practitioners fit into the scheme, from the standpoint of both physician support and compensation allocation. Specialists might also ask about the organization’s plans for adjusting compensation should the Medicare physician fee schedule change.

Mr. Horton further suggests that job-seeking specialists should also ask about the data the organization will collect and disseminate to physicians regarding their performance and when that will happen, so that physicians can determine how they’re performing over the year. He added that the organization’s use of annual performance reviews is also worth inquiring about. “In our experience, only about 50 percent of groups even conduct annual reviews,” he said, noting that the practice should be a given because of its importance.

On another note, specialists should also be cognizant of the market factors that might later affect the prospective employer’s ability to compensate specialists, such as mergers and acquisitions, Mr. Futch pointed out. “Private equity firms are increasingly buying up practices and becoming the employers, and that activity may soon eclipse hospital ownership of physician groups, so it’s important to know what’s going on in the market,” he said. “We’ve seen a big increase in private equity firms reaching out to us for recruiting services, especially in single specialties such as dermatology, gastroenterology, and ophthalmology, for example.”

Ms. Siesmen urges job-seeking specialists to also delve into the specifics of how the compensation model works, something not enough physicians do. “You want to know if there’s a compensation philosophy at the practice and what that is. It’s also advisable to ask if there’s a compensation playbook that delineates how the compensation is structured or how it changes over time,” she said. Organizations should be willing to share both, she said, if there is an offer forthcoming.

At the same time, specialists should keep their primary focus on what they need and want in a practice environment and how viable the practice is, rather than comparing dollars for dollars in the offers presented to them, Mr. Futch advised. “Try to keep the primary focus on what you need in a practice — what’s a good professional fit, what’s the referral base, what equipment is available, and what the opportunities are for subspecialty practice if that’s important,” he said.

On a final note, AMGA and MGMA sources encouraged specialists to try to get a good sense of the market compensation data from published sources for their specialty before they end up on the other side of the table for an onsite interview. “I think it’s important to get legitimate compensation data from a legitimate source, not just word-of-mouth discussions with others in the field,” Mr. Hadje said. For example, both AMGA and MGMA sell single-specialty reports or targeted data, for fees ranging from about $500 to $1,000.