10 Reasons Why Some Doctors Earn More (Even in the Same Specialty)

Leigh Page

Disclosures

August 12, 2019

In the Minneapolis area, where most physicians work for large health systems and groups, "individual initiative doesn't get you much money," says Greenwald, the wealth management advisor. Initiative is recognized in bonus payments for employed doctors, but "it's just one of several factors that go into calculating the bonus."

Singleton says entrepreneurialism is also blunted by tighter government regulations on physician-owned ventures, such as testing facilities, hospitals, and ASCs. For example, tightened certificate-of-need laws have slowed down the growth of ASCs, he says.

5. You Have Joined a Large Practice

Physicians in large practices tend to earn more money than those in small practices, mainly owing to economies of scale.

However, hospitals and health systems, where there are opportunities for even greater economies of scale, pay physicians less than they could earn at large practices. Employed physicians have less incentive to work harder.

Being in a larger practice was the third strongest predictor of income, according to the aforementioned study of family physicians.[7] Researchers in that study also linked larger practice size to the next strongest predictors: taking negotiations with payers seriously, participating in improvement initiatives, and performing billing and collections in house.

Physicians in single-specialty groups have a particular advantage, according to the 2014 Medscape physician compensation survey, the last time Medscape reported this information.[16]

These physicians had a higher average income ($273,000) than those in healthcare organizations ($267,000), hospitals ($262,000), and multispecialty groups ($260,000). And all of these venues provide higher income than solo practices ($222,000).

Why do single-specialty practices pay better? A 2016 study looking at primary care group practices found that they "are better positioned than hospital-employed and multispecialty groups to reduce costs because they do not have conflicting incentives to fill hospital beds and keep specialist incomes high."[17]

Singleton adds that hospitals are less competitive because they often provide more money-losing Medicaid services and free care.

But Drummond says not all hospital salaries are the same. They reflect wide variations in organizational efficiency, with overheads ranging from 65% to 80% of total income, he says.

"When you're looking for a job opportunity, you should ask about the percentage of income going to overhead, because it could affect your salary," he says.

6. You Steer Clear of Lower-Paying Venues

The lowest-earning work venues for physicians are academic institutions and community health centers (CHCs), which include Federally Qualified Health Centers and rural health centers serving low-income populations.

Whereas physicians in academic, research, military, and government organizations earned $198,000, those in outpatient clinics, including CHCs, earned $189,000, according to the 2014 Medscape compensation survey,[16] the last year that Medscape reported that information.

Both sets of earnings are tens of thousands of dollars less than those already mentioned for single-specialty group practices and even solo practices.

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