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Medical Group Management Association

Most practices raising starting physician salaries rather than boosting bonuses, loan assistance

MGMA Stat - August 18, 2021

Recruitment & Hiring

Provider Compensation

MGMA Staff Members


Physician recruiting isn’t just about money, but it matters to the candidates making decisions — especially starting physicians looking for a first job after residency or fellowship and facing a hefty load of student loan debt.

While it’s always important to assess physician candidates for cultural fit in the organization and the offerings available to them in the community they practice, various tactics have been used over the years to sweeten the deal to land starting physicians following residency or fellowship, whether that’s a signing bonus, relocation packages, loan assistance or other add-ons in an employment contract.

An Aug. 17, 2021, MGMA Stat poll asked healthcare leaders what their biggest change in starting physician compensation has been in 2021:
  • A majority (51%) said salary
  • 26% said bonuses
  • 8% said loan assistance
  • 15% reported “other,” which included combinations of the three answers listed above.

The poll had 379 applicable results.

Among those responding “other,” a range of responses pointed to other perks outside of the traditional, monetary methods:
  • More paid time off to improve work/life balance
  • Changes to the structure for partner track
  • Reinstatement of CME funds that were cut in 2020.

The restoration of bonuses and CME funding for physicians comes after a turbulent 2020, in which 82% of healthcare leaders reported that some or all their providers’ compensation was impacted amid COVID-19. The 2021 MGMA DataDive Provider Compensation survey report — reflecting data from more than 185,000 providers across more than 6,700 organizations — found that compensation for most physician specialties was either flat or increased slightly during 2020 versus pre-pandemic levels in 2019. (The MGMA data report, Provider Pay and the Pandemic, offers a broader view of key benchmarks in provider compensation from 2020.)

Earlier this year, a June 8 MGMA Stat poll found that about one in four medical practices have added or increased benefits for employees in the past year.

These changes reflect a new reality for healthcare leaders in which the gap between physician supply and demand has shifted once again:
  • The Association of American Medical Colleges (AAMC) reported in 2020 that the projected physician shortage could be as high as 139,000 physicians by 2033, and the healthcare industry sees a turnover rate of about 6% to 7% annually — about 50,000 or more physicians each year.
  • A June 1 MGMA Stat poll found that almost half (49%) of practice leaders reported their doctors were working more hours on average in 2021 than they did in 2020. Among the top reasons cited was having fewer physicians to provide care after retirements and departures in 2020.
  • More than one in four practice leaders said a physician retired unexpectedly during the pandemic, according to a March 2 MGMA Stat poll.
  • A March 9 MGMA Stat poll found that more than seven in 10 practice leaders planned to add new physician positions this year.

Understanding the market and compensation methodologies

As noted in the recent How to Use MGMA Compensation Data report (exclusive to MGMA DataDive subscribers), there are probably as many different compensation methodologies as there are medical group practices that use them.

This diversity is the result of efforts to tailor compensation systems to be competitive with local markets, allocate common expenses and reward providers who support the practice’s mission. Compensation can be as simple as a fixed salary system or it can involve cost allocation systems, multiple productivity measures and additional incentives for community service, quality metrics and patient satisfaction. In a sense, the practice’s compensation method reflects its culture. What works well in one practice might not be a good fit for another.

Regardless of the system, practice managers have four main concerns:
  1. Is the compensation level adequate to allow the practice to recruit and retain providers?
  2. Is the practice paying an appropriate or fair amount for the work performed?
  3. Is the compensation model economically robust and sustainable?
  4. What behaviors are driven by the compensation model’s incentives or disincentives?

Practice managers who focus on these questions generally use multiple comparative metrics and communicate regularly with providers regarding their successes and struggles to maximize the potential and longevity of their organization. Understanding which metrics are appropriate for certain situations can greatly improve a manager’s ability to communicate effectively with the providers who are the economic engine and principal leaders of their business.

Did you know?

MGMA’s Provider Placement Starting Salary data set, part of MGMA DataDive Provider Compensation, includes benchmarks for:
  • Guaranteed compensation
  • Amount of CME paid
  • Amount of signing bonus
  • Amount paid to relocate
  • CME weeks paid time off.

Do you have any best practices or success stories to share on this topic? Please let us know by emailing us at connection@mgma.com.

JOIN MGMA STAT

Our ability at MGMA to provide great resources, education and advocacy depends on a strong feedback loop with healthcare leaders. To be part of this effort, sign up for MGMA Stat and make your voice heard in our weekly polls. Sign up by texting “STAT” to 33550 or visit mgma.com/stat. Polls will be sent to your phone via text message.

Additional resources

  • MGMA Benchmarking Data — Understand the past and present to propel your practice into the future with industry-leading data analysis, reports and surveys.
  • MGMA Consulting — Get an organizational tune-up and overcome new challenges with the help of experts in medical practice management.
  • Ask an Advisor — Turn to this MGMA member-benefit service to get subject-matter expert guidance on a range of topics.
  • Medical Practice Excellence: Leaders Conference — Connect with industry-leading experts and peers to learn and grow. In-person Oct. 24-27 in San Diego, or Digital Experience (DX) Nov. 16-18.
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