Readers of Contemporary Pediatrics will be pleased to know that according to Merritt-Hawkins, one of the nation’s leading physician search firms, the average starting salary offered to recruit pediatricians rose from $195,000 in 2015 to $224,000 in 2016, a 15% increase.1
You may be curious how your current compensation as well as your compensation model compares with that of your colleagues. More importantly, there may be ways for you to earn more—or avoid a painful pay cut if your patient visits are dwindling.
Providers generate revenue through 2 means. You provide patient services via office visits and/or procedures that generate revenue for practice. You also generate revenue, usually for hospitals and other providers, by ordering labs and imaging studies, making referrals to specialists, and ordering ancillary services such as counseling, physical therapy, and more. Thus, primary care providers are the “pillars” of the healthcare system—at least in terms of revenue.
Many specialties generate more procedure-based revenue than does primary care and, in general, procedure-based care is reimbursed at a higher rate than cognitive-based care. Hence, surgeons, dermatologists, anesthesiologists, and gastroenterologists earn more than primary care physicians.
For employed physicians, productivity is traditionally dependent on the number of patients seen per day, as well as the complexity of the problem addressed at visits, and/or by the duration of visits. Visit complexity or duration is quantified via the work relative value unit or work RVU. If you see a patient for a cough attributed to an upper respiratory infection, this is charged as CPT code 99213 and merits 0.97 work RVUs. If a patient is diagnosed with streptococcal pharyngitis and prescribed an antibiotic, many physicians would charge a 99214 visit that merits 1.5 work RVUs. A well visit for a 5-year-old established patient is coded as a 99393 visit and merits 1.5 work RVUs. By the way, in 2015 the American Group Management Association (AGMA) reported the median productivity of pediatricians was 5299 work RVUs and the median pediatrician salary was $235,257 (Figure 1). This means that each work RVU translates into $44.40 in revenue. If you were to generate 100 more work RVUs each year, your compensation would increase by $4440. (See “Level 4 office-visit coding,” Contemporary Pediatrics, February 2013, to learn the nuances of coding if you need a refresher.)
Different organizations report physician salaries based on surveys (Figure 2). These surveys may be skewed based on the number of physicians surveyed and other factors such as whether they concentrate on surveying small or large practices, or employ physicians versus those in private practice. For example, Sullivan Cotter listed the median pediatrician salary in 2015 as $248,490, while the AGMA reported $235,257, and Compdata reported $210,900.2
In general, pediatricians in private practice earn more than those who are employed. The reason is complicated, but simply put, private practices don’t rely on the work RVU benchmark for determining compensation. In a full partnership situation, compensation in based on revenue brought in by a physician minus overhead (including benefits), with little or no regard given to work RVU-based productivity. In private practice, salaried pediatricians and associate practitioners who are working at capacity generate revenue for the partners in the practice.
Procedures such as vision tests, hearing and strep tests, nebulizer treatments, and developmental screening tests generate revenue for the practice, but these are not usually associated with work RVUs. With rare exceptions, the employed physician will never see a benefit from this revenue stream, unlike those in private practice. In some multispecialty clinics, primary care physicians receive bonuses because the clinic captures much of this indirect revenue generated by the physician. According to a recent survey conducted by Merritt-Hawkins, this indirect revenue generated by pediatricians averages about $666,000 per year.3 This is half that generated by your colleagues in family and internal medicine, but it is still considerable.