Physician Manager Salaries

November 1, 2007

I work as an administrator for a two-physician practice. The physicians take a management salary for managing the practice. Do you have any information on similar practices that also pay their physicians a management salary and approximately the average dollar figure of that salary?

Question: I work as an administrator for a two-physician practice. The physicians take a management salary for managing the practice. Do you have any information on similar practices that also pay their physicians a management salary and approximately the average dollar figure of that salary?

Answer: In my experience, it’s somewhat unusual to see management salaries in a two-physician practice in which both physicians handle management tasks and there is an administrator to boot. I find it more common in practices with a compensation structure built on productivity in which a physician’s clinical productivity is hampered because of the time that physician devotes to management tasks and to serving as the only real go-to physician contact in this regard. In such a case, that physician needs to catch up and be paid reasonably.

Management salaries can be paid based on actual time spent at an hourly fee, a set fee, or a percentage of the practice’s profits per year.

Your decision should take into account the value the physician brings to the group in the management role. That is, how is this position affecting your group’s profitability? Do you get more revenue from your managed-care contracts? Does the position involve managing operations only? Your answers to questions like these can help you determine the value of the position and, subsequently, its fair compensation.

Some groups feel that a physician administrator basically saves them from having to hire another administrator. In that case, compensation is based on an administrator’s going salary - in other words, the group pays the physician the amount the group is saving by not having to hire another staff person.

There’s really no industry standard for this, so your small group should principally look at its overall budget and work out with its physicians fair compensation for their contributions. It’s a matter of negotiation.