Physician Compensation in the FQHC Environment May Yet Be Competitive
One of the most widely held beliefs in the FQHC community is that provider compensation, particularly physician compensation, lags the general market, making it extremely difficult to attract and retain competent staff. There are also occasional rumblings that productivity expectations, often at the typical “standard” of about 4,200 encounters per year, may be unrealistic. These feelings come from anecdotal evidence of those attempting to hire new providers, and the occasional published survey – notably comparisons to the Medical Group Management Association (MGMA) Physician Compensation and Production Survey – which often appear to support this contention. A recently published survey suggests that these beliefs may be misplaced, and that FQHCs are better positioned than they may believe.
I have not hesitated in the past to advise our Federally Qualified Health Center clients that comparisons to some published surveys are fraught with the possibility of misinterpretation. This is nowhere more the case than with the MGMA survey. This survey is widely used and highly credible, but simply is not an appropriate standard of comparison for the typical FQHC. It does tell you the type of opportunities that some of your candidates may have, but not necessarily what you should, or have to, pay. The vast majority of MGMA survey participants are hospitals and physician-owned practices, which have completely different business models than the typical FQHC. While this survey will tell you how much physicians working in other business models may earn, and what you need to be aware of when hiring, it will not tell you what is appropriate for your organization.
Merces has carefully monitored the growth in physician compensation in the FQHC environment over the last 20 years, typically as reported in the National Association of Community Health Centers (NACHC) surveys and those provided by State and Regional Primary Care Associations (PCA). These surveys are remarkably consistent, reflecting the similar business models and financial limitations of the industry.
A composite of our research covering three typical specialties found in the FQHC environment (Family Practice w/o OB, Internal Medicine and Pediatrics) indicates that median FQHC physicians’ base compensation has been rising at an annual rate of about 3.2% the last several years, from roughly $120,000 in 2005 to about $145,000 in 2011. Because larger organizations typically pay more than the overall average rate, or have additional challenges, many of our clients find us recommending ranges as much as ten percent higher, with a midpoint between $150,000 and $155,000 for most primary care physician positions.
A recent survey published online by Medscape (a division of WebMD) (http://www.medscape.com/features/slideshow/compensation/2012/public), suggests that FQHC provider compensation is in line with the profession, particularly when compared to the appropriate segment of the industry (outpatient clinics). The survey indicates that physician annual income (including base salary, bonus and profit sharing) in primary care is about $163,400; income in the outpatient clinic environment averages about $156,000. Given that many FQHCs have other compensation arrangements beyond base salary (bonuses, productivity incentives, etc.) it is clear that FQHC compensation, at least at the median, is competitive. The proverbial “elephant in the room,” of course, is that while in most situations, FQHC physicians’ malpractice liability is covered under the Federal Tort Claims Act (FTCA), it is not always apparent from other industry surveys whether the reported incomes are free of malpractice insurance costs, or whether physicians are maintaining their own insurance from after-tax income.
We suggest that you look at the Medscape survey data and see for yourself. The summaries appear in a public part of the site, while detailed information on the various specialties is available with a simple registration (warning — you will get regular email from them if you don’t opt out after looking at the data). While it is clear that physician compensation in hospital settings and private group practices exceeds outpatient environments, income in both academic settings and outpatient clinics are very close to being “in line” with our current FQHC research. The survey also shows both clinic hours worked and patient visits to be in line with FQHC expectations.
It isn’t our practice to directly republish the work of others, which is why we suggest you go straight to the source. The survey was conducted online and represents the individual responses of more than 24,000 physicians, gathered earlier this year. While we can’t vouch for the methodology, this survey provides a counterpoint for those who advocate MGMA as the only “true” source for competitive compensation data for providers.
