Pay Growing Faster for Nurse Practitioners Than Physicians

August 25, 2010

August 25, 2010 — In a sign of their value in a shorthanded clinical workforce, nurse practitioners (NPs) in group practices saw their compensation increase 4.9% last year, outpacing physicians as a whole, according to the Medical Group Management Association (MGMA).

Compensation for primary care physicians rose 2.9% in 2009, the MGMA reports in its latest Physician Compensation and Production Survey: 2010 Report Based on 2009 Data. Specialists took a 4.1% pay cut, although some individual specialties such as dermatology (12.3%) and ophthalmology (7.7%) posted sizable gains.

At $85,706, the median compensation for NPs in 2009 was far less than what primary care and specialist physicians earned — $191,401 and $325,916, respectively — in group practices. Still, NPs are slowly gaining ground. Since 2005, their compensation has risen 21.9% compared with 13.9% for primary care physicians and 2.9% for their specialty counterparts, according to the MGMA.

"We're in demand," said NP Jan Towers, PhD, director of health policy for the American Academy of Nurse Practitioners, about the compensation trend. "NPs don't have any problems getting work."

The job market is so good that it has been able to absorb a tidal wave of new NPs. The ranks of the profession have grown from 82,000 NPs in 2000 to 140,000 today, according to Dr. Towers.

At the same time, Dr. Towers told Medscape Medical News, a 4.9% pay raise in 2009 is not spectacular. "We should be getting more of an increase," she said.

Physician assistants (PAs) are not far behind NPs in their earnings trajectory. Compensation has risen 17.8% for PAs in primary care and 19.8% for those in surgical specialties since 2005. PA pay hikes in 2009 were less impressive, however, at 1.8% and 0.3%, respectively.

NPs Generate More Revenue Relative to Compensation Than Physicians

The current shortage of primary care physicians is creating higher demand for NPs, which in turn increases their compensation, said Justin Chamblee, a consultant with the Coker Group, a practice management consulting firm in Atlanta, Georgia.

By all accounts, this demand promises to grow stronger under healthcare reform, which will extend insurance coverage to 32 million additional individuals through 2019. Healthcare reformers view both NPs and PAs as an economical way to help tend to these newly insured individuals. Licensed to diagnose illness and prescribe medications, NPs, along with PAs, can perform about 80% of the services provided by primary care physicians, with comparable quality, according to a number of published studies.

Dave Duncan, a senior search consultant with the healthcare recruitment firm Cejka Search in St. Louis, Missouri, said medical practices hire NPs to relieve overworked physicians, share call duty, and staff rural clinics. "But it's getting tougher to find these folks," Duncan told Medscape Medical News. One reason is the growing number of retail clinics operated by drug stores, big-box retailers, and health systems, which also hire NPs to treat patients.

NPs can boost the bottom line of a medical practice in several ways, experts say. By assigning simpler medical cases to NPs, physicians can concentrate on the more complex ones, which insurers reimburse at higher rates.

At the same time, a primary care medical practice that traditionally would hire extra physicians to help carry a burgeoning patient workload can get more bang for its buck hiring NPs instead, based on the ratio of compensation to collections — that is, revenue — for the 2 professions. General internists, for example, received a median $197,080 in compensation last year while generating $366,622 in collections, according to the MGMA. In contrast, the ratio of compensation to collections is better for an NP in primary care, at $84,488 to $228,668. Put another way, 2 such NPs would generate more revenue than a single internist, but their combined compensation would be less than the internist's. The same math also works in favor of PAs.