FQHC Medical Director Compensation — Still Primarily Salary

Years of research continues to support the proposition that regardless of what some may argue is “essential” or “wide-spread,” incentives and bonuses make up a very small part of total compensation for providers in the FQHC environment, including that of the Medical Director/Chief Medical Officer.  Median MD/CMO Base Salary is about $183,200, with Total Cash Compensation at $187,800 and Total Direct Compensation at $201,900.

Merces 2014 study of the IRS Form 990s of more than 1,100 FQHCs reveals that:

• The median salary for a health center Medical Director is $183,200, with the smallest health centers (under $2.5 mm) paying about $143,500, growing to nearly $300,000 in the largest organizations (over $100 mm).  Average salaries are somewhat higher than the median, indicating that more are paid significantly above the median than those paid significantly less.
• Salary makes up an average of 97.7% of the Total Cash Compensation (“TCC” which includes salary and incentives) of Medical Directors, with less than a quarter of Medical Directors receiving incentives/bonuses of more than 0.6% of salary.  The median incentive/bonus is $0, with an average of $5,700 (2.8% of salary).
• Incentive/bonus compensation increases with health center size but even among the largest health centers only reaches an average of 5% of salary; less than half of the Medical Directors of the largest health centers receive incentive compensation.
• Total Direct Compensation, or “TDC” (including base salary, incentives, other reportable compensation, pension/retirement contributions and “non-taxable” benefits) for Medical Directors is just under $202,000.  As expected, the non-salary components of compensation increase with health center size, with “other compensation” ranging from about 5% in the smallest health centers to close to 20% in the largest group.
• Deferred compensation or retirement contributions are not particularly significant — overall, this type of compensation makes up 1.4% of TDC at the median (about 1.6% of base salary); over half of the MD/CMOs receive some type of retirement contribution, which does tend to get larger as health center size increases.
• The title “Medical Director” is used about twice as often as “Chief Medical Officer.”

More than half of the Medical Directors reported do not receive any reportable compensation other than a base salary.  Incentive compensation only becomes statistically noticeable when health center size reaches about $15 million.   Other forms of compensation also begin to appear at that size, although they do not become significant except for the very largest health centers with revenues of more than $100 million. Excluding the large FQHCs, the distribution of the elements of Total Direct Compensation is about:

• Base Salary – 91%
• Bonus/Incentive – 2%
• Other W-2 – 1%
• Deferred/Retirement – 2%
• Non-Taxable – 4%

The Merces 2014 990 Study includes information on more than 500 Medical Directors reported by the filing health centers.  All compensation information represents pay provided during calendar year 2012.  The analysis only includes individuals who were reported as being employed “full-time;” the amount of “clinic” vs. “administrative” time for these individuals is not known.  For more information on the study, or on compensation planning for providers or other staff, contact Ed Ura at ebura@mercesconsulting.com or by phone at 248-507-4670.