Physician compensation strategies for the latest employment trends

AdobeStock_399241598 [Converted]

A recent AMA report shows that the shift to physician employment has escalated since 2018. Today, 49% of physicians are in private practice compared to 54% in 2018. This is the greatest decrease in private practicing physicians AMA has reported since they started their survey in 2012. Many physicians have left private practice for hospitals, but the number of physicians working in larger practices has also increased since 2018, jumping from 14.7% to 17.2%.


Compensation and benefits are a top deciding factor for physicians as they seek employment at larger practices and hospitals, so having attractive rewards has become more important for the healthcare organizations competing for them.


It’s important to keep in mind that an effective compensation strategy isn’t just about recruitment. It’s also about keeping physicians so you’re able to offer continuity of care and avoid the high cost of turnover. It’s estimated that the cost of replacing a single physician can reach $500,000. Given this high cost, it’s surprising that 83% of physicians report that their employer does not have a physician retention program.


Building an effective compensation program


When attempting to attract employees to their organization, employers in most industries typically think in terms of salary and qualified retirement plans. These are essential components of any compensation package, and they’re adequate for the majority of employees. But physicians are unique. For one thing, they’re highly sought after due to the physician shortage. And they also have unique financial goals, including paying back hefty student loans and having the ability to save for retirement on a percentage-of-income basis, which can be more difficult for them due to qualified plan regulations for highly compensated employees.


Due to these circumstances, when we’re designing compensation strategies to attract an in-demand physician, practice group, or service line, a more creative approach is often required. 


Blending short-term and long-term rewards


We believe in offering physicians a combination of short-term and long-term rewards. Short-term rewards are attractive, especially for younger physicians who are more concerned about cash in hand than saving for the future. The long-term rewards are there to encourage loyalty and help physicians better prepare for retirement. 


Organizational advantages of blended models


One of the biggest advantages to using a blended model is that these two elements, short-term and long-term rewards, are highly customizable and can be aligned with organizational goals. For instance, if more emphasis needs to be placed on recruitment, more short-term rewards can be offered, but if an organization is concerned about turnover, they might focus more heavily on long-term rewards that can improve retention.


A blended model also creates market distinction for an organization when it comes to physician recruitment and retention because it demonstrates an understanding of physicians’ unique financial goals as well as a commitment to their life-long financial health. 


How MaxWorth can help


Whether you want to improve your recruitment and retention or are looking for ways to make your compensation more cost-efficient, we can help you align your rewards with your objectives. 


If you’re interested in learning more about our Physician Employment Strategies, schedule a conference call with one of our plan consultants today. 


Complete the form below and receive a copy of our physician employment case study.
Something went wrong. Please check your entries and try again.

Want to Learn More?

Physician recruitment in rural America: Is paying more a sustainable solution?

Physician recruitment in rural America: Is paying more a sustainable solution? According to the 2021 Medscape Physician Compensation Report, states where physicians are paid most tend to be more rural. The top three, for example, are Alabama, Kentucky, and Oklahoma. This is most likely a result of these states having…

The Anonymous Administrator: Identifying misconceptions that lead to distrust

The Anonymous Administrator :  Identifying misconceptions that lead to distrust In our “Anonymous Physician” column, we ask physicians for their take on the most pressing issues in healthcare and share their insights anonymously, giving them the freedom to be frank and uninhibited.    To truly understand the industry’s top issues,…

The enduring rise of call pay doesn’t have to be a liability

The enduring rise of call pay doesn’t have to be a liability When MaxWorth first created the Call Pay Solution, on-call compensation was one of the most contentious topics in healthcare. At a time when more and more physicians were demanding to be paid for call, most administrators were reluctant…

The Anonymous Physician on Retention

The Anonymous Physician:  Physician Retention The Anonymous Physician column provides physicians with a platform to discuss pressing issues in healthcare. From time to time, we pose a question to a doctor, or a group of doctors, and post their answers anonymously, giving them the freedom to be frank and uninhibited.…