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Finance: What’s in Your Wallet?


Find out whether your income - and career satisfaction level - stacks up against that of your peers in family practice, pediatrics, and internal medicine.

Michael Rodriguez could’ve had it easy as an engineer enjoying a successful career. But he quit, entered medical school to become a surgeon, and ended up falling in love with family practice.

While not exactly rhapsodic about his new job in Virginia, Rodriguez says he made the right decision.

“I like this career,” he says, “but it’s a heck of a lot to go through. I’m working twice as hard as I was as an engineer. I work lots of hours, and I’m working at a much faster pace.”

He adds that his compensation “is at the bottom of the pile” compared with that of other specialists. “But if you are meant to blow glass in life, that’s your art; that’s your craft. What are you going to do?”

That seems to be the mindset of many primary-care docs, according to our first annual Merritt Hawkins/Physicians Practice Physician Compensation Survey. They’re not thrilled with their jobs, and they feel underpaid, but most are willing to stay in the game. They say it’s a calling more than a profession.

Some of the frustration Rodriguez and his colleagues currently feel can be chalked up to the vacillating demand for primary-care services. A decade ago, primary-care physicians held center stage as the nation’s healthcare “gatekeepers.” But in these days of PPOs and HSAs, the primary-care provider’s role is rather diminished. This may only be a short-term fall from grace. A graying population needs generalists who can manage multiple disease states, rising medical costs are a mounting national concern, and most signs indicate a shortage of primary-care physicians that experts say will only get worse before it gets better.

But for now, with low reimbursement rates and high overhead, today’s internists, family physicians, and pediatricians have little opportunity to enhance their income. They are the canaries in healthcare’s coal mines. Long before specialists are meaningfully affected by the pinch of low payments and regulatory burdens, primary-care physicians will be flat broke.

Physicians Practice figured it was time to check in with the nation’s primary-care practices to get the real scoop on the future of primary care as a whole, physician compensation levels, and individual career satisfaction. So we asked Merritt, Hawkins & Associates in Irving, Texas - one of the country’s largest physician recruitment companies - to examine these issues by gathering some facts. (view data on compensation for specialists)

Merritt Hawkins mailed surveys to 10,000 primary-care physicians selected at random from a national physician database. In the first quarter of 2006, 4,000 surveys were sent to family practitioners, 4,000 to general internal medicine practitioners, and 2,000 to pediatricians. The survey was sent out in February 2006, and 508 completed surveys were received in March 2006.

Forty-six percent of responses came from family practices, 28 percent from internal medicine practices, and 24 percent from pediatric practices.

All physicians selected for the survey have been in practice for at least two years - 89 percent of those who responded have been practicing for six years or more. The majority of those surveyed (roughly 68 percent) practice in groups of three or more physicians, while 10 percent practice in two-physician offices, and 29 percent maintain solo practices.

You call that a paycheck?

What did we find? Primary-care physicians are worried about falling compensation and rising overhead costs, and they are only moderately satisfied with their careers.

When asked to describe their net income relative to the effort they expend, only 10.5 percent of physicians surveyed characterize their income as “excellent.” A full 53 percent report their income as “disappointing.”

Internists appear to be the most discouraged group. More than 61 percent of the internists surveyed say they are disappointed with their incomes, compared with 53 percent of pediatricians and 49 percent of family physicians. “Primary-care physicians feel they work just as hard as specialists but get paid less,” says Kurt Mosley, vice president of Merritt, Hawkins & Associates.

The median net income per physician across all the primary-care specialties surveyed is roughly $150,000.

Just over 15.4 percent of the physicians surveyed report earning $100,000 or less in 2005, while 9.5 percent earn $300,000 or more. When compared with internal medicine and family physicians, pediatricians report the lowest income overall. However, nearly 15 percent of the pediatricians surveyed also report earning more than $300,000 a year, presumably because they are subspecialists within their field.

How high is your overhead?

Of course, these are far from low salaries when compared with salaries for workers in other fields. Try being a waitress or, ahem, a journalist - but part of the pain physicians report feeling in their wallets results from the amount of their income they must invest in overhead, largely in the form of staff to manage their offices’ billing and regulatory operations. Physicians feel they work long and hard only to lose an inordinate amount of their earnings to overhead costs. (view data on overhead as a percentage of physicians' revenue)

Sixty percent of respondents report shelling out for overhead that totals between 40 percent and 70 percent of their revenue. A small majority (51 percent) of the physicians surveyed maintain overhead costs of 51 percent or more of what they bring in. More than one-quarter (26 percent) of the docs surveyed report practice overhead costs that equal 61 percent or more of their revenue. A very small minority (1.4 percent) of doctors say their overhead costs actually exceed their income; they are losing money each year.

And most physicians say they expect their overhead costs to continue to rise over the next five years. Roughly one-quarter of respondents (26.4 percent) say they “will be able” to support the overhead costs their practices incur five years from now; 32 percent say they “are hopeful” they will be able to do so. But 22.5 percent report they “are doubtful” of their ability to sustain their overhead costs within this time. Seven percent say they “will not be able” to do so.

This trend is forcing physicians to pay strict attention to the amount they are bringing in to counterbalance the weight of their overhead costs. This causes them to focus on enhancing productivity - seeing more patients each day - and strengthening their patient collections operations. The result? Steeply declining career satisfaction levels.

Who’s happy?

But it’s not as bad as you might think. Given primary care’s bleak financial picture, it’s surprising that career satisfaction among physicians is as high as it is. Sixty-eight percent of the physicians surveyed indicate that they are either “very satisfied” or “somewhat satisfied” with their careers. (view detailed data on physician career satisfaction levels)

“Having two-thirds of respondents liking their jobs is a great outcome,” says Mosley of Merritt Hawkins. “Here in our office, we have about 700 employees. I’d guess about half of them are unhappy.”

At Physicians Practice, we reviewed the career satisfaction feedback provided by Merritt Hawkins with a joyous heart; it’s so much more positive than any other numbers we’ve previously seen. This generally positive vibe most likely reflects individual motivations for going into primary care in the first place. No one selects this career path to get rich, so lower income relative to specialists and higher overhead isn’t an overwhelming concern for these docs.

“Most family docs go into the specialty because they really want to help people, and the income part is farther down the list,” says Timothy Komoto, a family physician at the Bloomington Lake Clinic in Minneapolis and a member of the American Academy of Family Physicians’ board of directors.

Still, it’s easy to overstate the case. It’s not as if everyone is just thrilled to be broke while continuing to help people. Consider the one-third (32 percent) of the surveyed physicians who declare themselves either “somewhat dissatisfied” or “very dissatisfied” with their careers.

And when asked what career choices they would make if they could start over, only 37.6 percent say they would again choose primary care. More than one-third (33.8 percent) indicate they would choose a surgical or diagnostic specialty, while 28.6 percent say they would not choose to go into medicine at all.

Of the specialties we surveyed, pediatricians claim the highest levels of career satisfaction. More than 28 percent of them say they are “very satisfied” with their careers, compared with 18.7 percent of internists and 24.9 percent of family practitioners. And pediatricians feel this way even though they earn the lowest pay and are in the least demand.

But relative to other professionals, physicians report abysmally low career satisfaction. It’s not that most doctors don’t like their jobs. It’s primary-care physicians who are specifically unhappy.

Some examples: A 2005 survey of electronic engineers conducted by Evaluation Engineering found that 89 percent of professionals in that field are either “satisfied” or “very satisfied” with their careers. And the National Association for Law Placement recently reported that 80 percent of lawyers are either “moderately” or “extremely” satisfied with their career choice.

Suddenly that 68 percent satisfaction rate doesn’t look so great.

Supply and demand

But there is good news, too. Like gasoline, primary-care physicians are getting harder to find, and thus - one can hope - more dear. Recruiting for internists and primary-care physicians is up, and while shortages are bad for patients, they can also mean better negotiating clout for physicians. Absence makes the heart grow fonder, so to speak.

But will docs want more patients? When asked to describe their current practices, 29 percent of physicians say they are “too busy,” and 57 percent indicate they are “as busy as they want to be.” Only 13 percent indicate that they are “not busy enough.”

Broken down into groups, roughly 32 percent of internal medicine practitioners say they are “too busy.” Thirty percent of family physicians report the same.

The picture is different for pediatricians. Only 24 percent of pediatricians consider themselves “too busy.” Roughly 15 percent of pediatricians say they are “not busy enough,” compared with 12 percent of family physicians and 14 percent of internists.

Merritt Hawkins says its search assignments for internists and family physicians are up over the past two years. This follows a spike in recruiting specialists. Mosley describes the market’s demand for primary care versus specialists as cyclical. “It’s like a football team,” he explains. “You get too much offense, you need more defense. Too much defense, you need more offense.” Newly placed specialists, he says, are demanding more primary-care support. The survey indicates that demand is growing.

Roughly half of all physicians receive at least 48 job solicitations a year. About 23 percent of the docs in this survey say they receive seven or more job solicitations a month, or 84 a year. Internists are getting the most calls; pediatricians are the exception to the rule. Primary-care associations have been warning of a looming manpower shortage for several years; with pediatrics the notable exception, our recruitment data suggest it’s here.

The generalist shortage: Who suffers?

The American College of Physicians (ACP), an association representing internists, annually surveys third-year internal medicine residents upon graduation, asking about their career plans. In 1998, 54 percent said they planned to practice general internal medicine. By 2003, only 23 percent expected to remain generalists, and in 2005, that percentage dropped to 20. Today, most residents intend to subspecialize.

Similar patterns show up in family practice. Between 1998 and 2001, there was a 35 percent decline in the number of graduating seniors choosing family practice (826 fewer students), according to data released by the American Academy of Family Physicians. In 2002, graduating medical students filled only 47.2 percent of the family medicine residency positions open nationwide.

Steve Weinberger, MD, senior vice president for medical education and publishing at the ACP, says the key reasons students are shying away from general practice are “reimbursement and perceived lifestyles.” Reimbursement is weighted to give priority to procedures, says Weinberger, and students coming out of school with heavy debt feel pressured to earn money fast. Plus, today’s students want a balance between work and family; they think that entering a subspecialty will protect them from being on nonstop call.

Weinberger says he’s not sure such perceptions are accurate. “There are ways … to have a good lifestyle [in primary care], but the perceived sense is that you have no control.”

A substantial shortage among general practitioners can lead to dire results. The ACP points out that the portion of the U.S. population aged 85 and over - which is the most likely to need chronic care services for multiple conditions (i.e., the services of physicians with skills in multiple fields) - will increase 50 percent from 2000 to 2010.

Such demographic changes could translate into increased demand and reimbursement for primary-care physicians.

One counterforce? A growing number of allied healthcare professionals, says Komoto. According to the Bureau of Labor Statistics, job growth for physician assistants is expected to rise 50 percent through 2014. While physician assistants may not be equipped to deal with the sickest patients, a surge in their numbers could at least partially alleviate the demand for some primary-care physicians.

Pediatricians pessimistic

Of course, trends in aging don’t affect pediatricians, who, of our surveyed group, express the most pessimism about their future. Six percent of the pediatricians we surveyed think their job market will grow more robust over the next five years, compared with 23 percent of the internists and family physicians we asked.

Pediatrician Evan Landis knows firsthand how his profession is changing. When the Atlanta physician meets his peers around town, some - those in growing, young communities - are doing well, but others are letting staff go and closing offices, he says.

Certainly, his own practice has changed. “There are more hospitalists handling the newborns, so that makes us less busy and can reduce satisfaction,” says Landis. High copays have also taken a toll. Landis is seeing fewer patients. With parents facing $50 copays or a $3,000 deductible, they are thinking twice about coming in, making visits both less frequent and more acute.

“We used to have parents who would come in saying, ‘We’re going out of town for the weekend, and I just want to make sure he’s OK,’” recalls Landis. That has all but stopped. While it means less busywork, it also means more interesting work, Landis says. “Nobody likes sick kids, but you do get tired of runny noses, and [the higher severity] keeps you sharper.”

Pediatricians, internists, and family physicians will all face significant changes of one sort or another over the next five years as medical education struggles to balance the production of specialists and primary-care providers, the national population continues to age, and reimbursement levels respond to market forces.

Pamela L. Moore, PhD, CPC is senior editor for Physicians Practice. She can be reached via pmoore@physicianspractice.com.

Editor’s Note: Special thanks to Phil Miller of Merritt Hawkins, who coordinated the research for this article.

This article originally appeared in the July/August 2006 issue of Physicians Practice.

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