THE BUSINESS OF MEDICINE FOR RESIDENTS AND FELLOWS: Salaries Offers, How They Are Derived, And How To Analyze These Sources
By Tom Ellis/FirstMEDPractice.com blog
In late 2019 Modern Healthcare published its annual Physician Compensation report, a comparison of average compensation ranges as reported by a variety of different groups for 23 select medical specialties. Included were Cardiology, Dermatology, Pediatrics, Internal Medicine and a host of specialties that see patients under a wide range of business models. The salary ranges presented were gleaned from ten different source--a mix of recruitment agencies and healthcare organizations that track this data for their memberships.
For residents and fellows these salary surveys are important, whether you are dealing with hospital attached employers or private group practices. Upon examination you’ll find there can be significant swings in the salaries reported for each given specialty. Analyzing pertinent results for your specialty and understanding the way the information presented has been gathered is important as you consider and counter salary offers as part of your negotiations.
Most employers utilize salary data like this as they compile offers, usually as a requirement of regulations and/or justification for salary offers. It’s important that you understand why there are significant swings in the salary amounts reported by the sources, how to read changes as reflected from the prior year, and how sample size impacts the value of reported data.
For example, let’s look at information reported for OB/Gyns. The top salary was reported by Sullivan Cotter, an organization, and reflects the salary within a group practice of $376,000. That reflected a 2.4% increase from the prior reporting year. Sullivan also reported a salary of $357,000 for private practice, a jump of .34%. The lowest salary was $297,000, reported by recruiting agency Pinnacle Health Group, a 7% increase for the prior year (no mention of whether this was group or private practice).
Let’s break that down. First, let’s look at the change from year to year. The 2.4% change reflected in the group practice salary is significantly more than the .34% change in private practice salaries; the latter might reflect stagnant growth in the private sector. However, the 7% increase reported by Pinnacle is a big jump but means that in the prior year the reported salary was $276,000, far less than what Sullivan-Cotter reported for group and private practice this year or the year prior.
And then there’s the total difference between Sullivan and Pinnacle—Sullivan is almost $80,000 higher than Pinnacle. That’s a difference of well over 20%. Which salary would you prefer?
And it’s also important to know the sample size of those contributing to each listing. You’ll usually find that organizations like Sullivan and the MGMA have a sample size that is significant (in fact, they can usually provide region specific data as well); they pride themselves on giving accurate “national” data. Conversely, the recruiting firms rely on a much smaller in sample size, and report primarily from the placement activity they have had. Which isn’t necessarily a bad thing. Sometimes they have a number that’s higher.
Urology might point this out. Sullivan shows a salary of $497,000, a .72% change upward. But Pinnacle Health group, a recruiter, shows a salary of $210,000, a 51% drop from the prior year. Obviously, there is an issue with their sample size as compared to Sullivan. If your potential employer told you they relied on Pinnacle to set your salary as a urologist, you might want to take a few steps to examine other reporting data!
My read is that, in general, the organizations will report a larger sample size and that usually their data reflects higher salaries. But you have to look at all. Knowing the sample size, and especially where the majority of respondents are located geographically, is important to your analytics. You’ll probably find that certain areas of the US pay more or less, depending on the specialty.
You can also use this data as an example of salary potential. If you’re being offered a starting salary as a urologist of $350,000, current reporting numbers of a $497,000 average imply some significant upside when your practice matures (remember that the salary numbers shown are averages, not maximums).
Finally, if you’re trying to decide on what specialty to pursue, these income numbers may be of help.
There are other ways to slice and dice this information, but you must ask lots of questions about how salary offers are determined when looking at job offers.
Tom is the Founder of www.FirstMEDPractice.com, a platform for residents and fellows entering the job market, that addresses key business of medicine issues related to vetting job offers and structuring a first practice.
I welcome your comments and thought. Please send to me at firstname.lastname@example.org