Physician compensation is evolving. The way healthcare employers are paying physicians has vastly changed after the COVID-19 pandemic. Traditional productivity-based compensation models have been upended, and there is slow migration to quality-based compensation. Additionally, in 2020, the federal government announced changes to the physician fee schedule which raised reimbursement for those providing office visits and decreased reimbursement for others.
As demand for physicians increased following the pandemic, countless employer payment structures are transitioning. Some have opted for value-based models, while others have implemented structural changes to their productivity-based models, such as extra incentives and salary floors. Further, the demand for physicians has increased wages by 3.8% in 2022, according to Doximity’s 2021 report; however, wages haven’t kept pace with inflation. The 12-month inflation rate is 6.2%, as determined by the CPI.
- Clearly, clinicians are needed now more than ever — searches for new physicians hit a staggering 34-year-old record high in Q4, 2021.
- The US is aging rapidly, and patients who delayed care during the pandemic now require more doctors and care, leading to further demand.
- The Association of American Medical Colleges predicts a physician shortage of anywhere from 37,800 to 124,000 by 2034.
- Productivity-based models remain most ubiquitous for 80% of primary care physicians and 90% of specialists, according to a 2022 RAND Corp. study.
- Straight salaries are most common in high-demand specialties where the goal is to remain competitive among other organizations.
- Opportunities like part-time and flexible scheduling.
- Primary-care physicians are seeing more complex patients requiring more time, therefore a salary-based model focused more on value, and less on productivity makes more sense.
As more employers deemphasize productivity-based metrics in compensation plans, they will look to value-based payments like tying fee-to-service to quality. In turn, in-demand specialties will remain highly competitive, whereas specialties with a higher supply of physicians will likely shift toward value-based compensation and added incentives.
However, incentives like schedule flexibility and telehealth opportunities remain top of the list for physicians across all specialties. As a result, all employers must be conscious of differentiating factors and bonuses beyond salary when looking for new physicians. Although many employers are focused on recruiting, retaining physicians will likely be more prevalent.