Pediatrician compensation: Are you earning enough?

Dr SchumanReaders of Contemporary Pediatrics will be pleased to know that according to Merritt-Hawkins, one of the nation’s leading physician search firms, the average starting salary offered to recruit pediatricians rose from $195,000 in 2015 to $224,000 in 2016, a 15% increase.¹

You may be curious how your current compensation as well as your compensation model compares with that of your colleagues. More importantly, there may be ways for you to earn more-or avoid a painful pay cut if your patient visits are dwindling.

The basics

Providers generate revenue through 2 means. You provide patient services via office visits and/or procedures that generate revenue for practice. You also generate revenue, usually for hospitals and other providers, by ordering labs and imaging studies, making referrals to specialists, and ordering ancillary services such as counseling, physical therapy, and more. Thus, primary care providers are the “pillars” of the healthcare system-at least in terms of revenue.

Recommended: Should patient satisfaction help determine compensation?

Many specialties generate more procedure-based revenue than does primary care and, in general, procedure-based care is reimbursed at a higher rate than cognitive-based care. Hence, surgeons, dermatologists, anesthesiologists, and gastroenterologists earn more than primary care physicians.

For employed physicians, productivity is traditionally dependent on the number of patients seen per day, as well as the complexity of the problem addressed at visits, and/or by the duration of visits. Visit complexity or duration is quantified via the work relative value unit or work RVU. If you see a patient for a cough attributed to an upper respiratory infection, this is charged as CPT code 99213 and merits 0.97 work RVUs. If a patient is diagnosed with streptococcal pharyngitis and prescribed an antibiotic, many physicians would charge a 99214 visit that merits 1.5 work RVUs. A well visit for a 5-year-old established patient is coded as a 99393 visit and merits 1.5 work RVUs. By the way, in 2015 the American Group Management Association (AGMA) reported the median productivity of pediatricians was 5299 work RVUs and the median pediatrician salary was $235,257 (Figure 1). This means that each work RVU translates into $44.40 in revenue. If you were to generate 100 more work RVUs each year, your compensation would increase by $4440. (See “Level 4 office-visit coding,” Contemporary Pediatrics, February 2013, to learn the nuances of coding if you need a refresher.)

Different organizations report physician salaries based on surveys (Figure 2). These surveys may be skewed based on the number of physicians surveyed and other factors such as whether they concentrate on surveying small or large practices, or employ physicians versus those in private practice. For example, Sullivan Cotter listed the median pediatrician salary in 2015 as $248,490, while the AGMA reported $235,257, and Compdata reported $210,900.²

In general, pediatricians in private practice earn more than those who are employed. The reason is complicated, but simply put, private practices don’t rely on the work RVU benchmark for determining compensation. In a full partnership situation, compensation in based on revenue brought in by a physician minus overhead (including benefits), with little or no regard given to work RVU-based productivity. In private practice, salaried pediatricians and associate practitioners who are working at capacity generate revenue for the partners in the practice.

Procedures such as vision tests, hearing and strep tests, nebulizer treatments, and developmental screening tests generate revenue for the practice, but these are not usually associated with work RVUs. With rare exceptions, the employed physician will never see a benefit from this revenue stream, unlike those in private practice. In some multispecialty clinics, primary care physicians receive bonuses because the clinic captures much of this indirect revenue generated by the physician. According to a recent survey conducted by Merritt-Hawkins, this indirect revenue generated by pediatricians averages about $666,000 per year.³ This is half that generated by your colleagues in family and internal medicine, but it is still considerable.

NEXT: The nuances

The nuances

Supply and demand always plays a role in physician compensation. If you want a job in a very desirable area, employers can get away with offering less. Likewise, to attract pediatricians to some less desirable areas, employers often need to offer higher compensation. In addition, a substantial primary care physician shortage is predicted to develop over the next decade, as the physician population ages and more medical school graduates go into the specialties to repay college and medical school debts. The consequence of this shortage will be rising salaries for primary care physicians.

There are other important factors as well that affect pediatrician compensation (see “4 factors that affect pedictrician compensation”).^4-6

Increasing compensation

It comes down to knowing what numbers you are generating. Often employers will not volunteer salary increases, but it is imperative that you have your work RVU numbers before you approach your employer for a pay raise as well as an estimate of how much gross revenue you are generating for your institution. It is helpful, if possible, to have some familiarity with the salaries of your peers, if you believe you are being undercompensated.

Next: Your peets on morale, money, and meddling

In this consumer-driven age, practices need to be creative in making pediatric practices thrive. This means having extended availability to see patients on weekends, because parents can take their children to retail-based clinics for “minor” problems. Consider accommodating walk-in patients if you have the capacity to do so. Also, as discussed in the March 2017 edition of Contemporary Pediatrics (see “Mental health services in primary care”), consider hiring a mental health professional to serve patients needing counseling or cognitive behavioral therapy.

The best way to increase productivity is simple: See more patients. This can be accomplished by improving efficiency, staffing appropriately, and mastering your electronic health record so you leave your office on time with charts completed. If you have a 47-week work year and generate 2 work RVUs more per day each week (figuring a 5-day work week), an employed physician will generate 470 more work RVUs per year-a raise of $20,868 per year!

Direct primary care discussed in a previous article (see “Improve your practice: Facilitate patient access,” Contemporary Pediatrics, January 2017) is a very popular alternative to the traditional practice model because it bypasses insurance companies and eliminates copays. When you reach capacity, direct primary care practice can prove to be very lucrative for pediatricians. If parents pay $60 per month per child, a provider panel of 1000 patients will generate $720,000. Even if your overhead is high, pediatricians can realize salary and benefits of about $300,000.

Money isn’t everything, but . . .

It is always good to get paid fairly for what you do. Efforts on the part of pediatricians to get paid for responding to patient phone calls and care coordination services have not been successful. To ensure that you get compensated fairly, you need to monitor your performance and, when necessary, implement efficiencies to make your practices more productive and profitable.

REFERENCES

1. Merritt Hawkins. 2016 Review of Physician and Advanced Practitioner Recruiting Incentives. Available at: https://www.merritthawkins.com/uploadedFiles/MerrittHawkins/Surveys/MH_Recruiting_Incentives_2016.pdf. Published 2016. Accessed May 18, 2017.

2. Staff Care. 2015 Compilation of Physician Compensation Surveys. Modern Healthcare. Available at: https://www.staffcare.com/uploadedFiles/2015-compilation-of-physician-compensation-surveys.pdf. Published July 2015. Accessed May 18, 2017.

3. Merritt Hawkins. 2016 Physician Inpatient/Outpatient Revenue Survey. Available at: https://www.merritthawkins.com/merritt-hawkins-2016-physician-inpatient-outpatient-revenue-survey/. Published 2016. Accessed May 18, 2017.

4. Physicians Foundation. 2016 Survey of America’s Physicians: Practice Patterns and Perspectives. Available at: http://www.physiciansfoundation.org/uploads/default/Biennial_Physician_Survey_2016. pdf. Published 2016. Accessed May 18, 2017.

5. Peckham C. Physician Compensation Report 2016. Medscape website. Available at: http://www.medscape.com/features/slideshow/compensation/2016/public/overview. Published April 1, 2016. Accessed May 18, 2017.

6. Zimmerman B. 207 statistics on physician compensation. Becker’s Hospital Review website. Available at: http://www.beckershospitalreview.com/compensation-issues/207-statistics-on-physician-compensation-2017.html. Published January 26, 2017. Accessed May 18, 2017.