The wait is over! The highly anticipated 2024 MGMA DataDive, a federally recognized gold standard for physician compensation data, has finally arrived. This comprehensive analysis offers unparalleled insights into physician and advanced practice provider (APP) compensation, making it a crucial resource for staying informed in today’s health care landscape. While some may consider it the current “gold standard,” it is essential to remember that even the best data sets can be surpassed, so keeping an eye out for future developments is wise.
Beyond the numbers: a deep dive
The MGMA DataDive isn’t just a collection of numbers. It delves deep, providing a detailed picture of physician, dental, and APP compensation across specialties, locations, and practice types. This in-depth analysis ensures the data’s reliability, offering a solid foundation for informed decision-making. Armed with the latest and most accurate information, you can confidently navigate your practice’s future.
A caveat: It’s not the whole picture
It’s important to remember that while the MGMA DataDive is comprehensive, it only represents a fraction (less than 15%) of the physician population. Other, more robust datasets have emerged. This blog post serves as the first chapter in a series, highlighting key findings and trends to help us understand the broader picture of how health care providers contribute to the economy.
Inflation’s grip: Looser, but not gone
The latest job reports paint a picture of a cooling labor market—a decrease in job openings and a shrinking pool of available workers. While skilled workers, particularly physicians, remain in high demand, the days of rapid inflation seem to be behind us. However, reports like the MGMA DataDive suggesting “inflation has cooled” might be an oversimplification. The reality is that inflation is easing, but its impact lingers with high prices persisting for a while longer.
Physician and APP compensation has increased more than 16% overall in the past five years. However, with the current consumer price index (CPI) hovering around 20.60%, it’s clear health care providers are still playing catch-up.
Compensation trends: winners and laggards
APPs saw the most significant compensation increase (6.47%) in the past year. Among physicians, primary care and surgical specialists took home the biggest gains at 4.44% and 4.42%, respectively. Nonsurgical specialists lagged behind with a modest 1.81% increase last year, bringing their five-year growth to 6.08%.
The overall trend points towards improved compensation for providers, but there’s a concerning shift: a decreasing focus on nonsurgical specialists and a rise in the use of more revenue-generating surgical specialists and lower-salaried APPs to replace them in specific areas.
Headwinds for hospitals
Hospitals are facing a perfect storm: rising interest rates, increasing labor costs, persistent staffing shortages, and fierce competition for patients. Overall expenses are skyrocketing, with energy costs being a major culprit. Administrators are looking towards cost-saving measures, health care IT solutions, and pharmaceutical services to bridge the gap between what they pay physicians in various specialties and locations.
Productivity paradox: Working harder, not smarter?
Despite most physicians being employed by hospitals, physician-owned practices consistently demonstrate higher productivity levels. This includes metrics like collections, total encounters, and work relative value units (wRVUs) across most specialties. Nonsurgical specialists are working the hardest, as evidenced by the significant difference in their collections compared to other specialties.
The American College of Surgeons paints a picture of current and future surgeon shortages. This trend stems from dynamic changes in the surgical workforce, technological advancements, shifting lifestyle preferences, and international talent migration. As a result, while surgical specialists saw an increase in collections, their total patient encounters decreased—a trend not observed in other physician or APP groups.
A mismatch of compensation and workload
While median total compensation for physicians saw a modest increase in 2023, some specialties experienced a “mismatch” between their compensation changes and work relative value units (wRVUs)—a measure of the relative value of a physician’s work. Here’s a breakdown:
Specialties with significant pay increases despite minimal or unfavorable wRVU changes:
- Cardiology: Noninvasive
- Dermatology
- OB/Gynecology
- Pathology: Anatomic and Clinical
- Psychiatry
- Pulmonary
These specialties reaped the benefits of more pay for less work.
Specialties with nominal pay increases or decreases despite increased wRVU changes:
These specialties saw the opposite: less pay for more work. The most alarming statistic on this list is emergency medicine. Our emergency physicians are likely being overworked and underpaid in many locations.
Location, location, Llocation
Geography continues to play a significant role in physician compensation. For the third year running, primary care physicians earned the most in Mississippi despite it being one of the poorest states in the US. Surgical specialists generally fared best in South Carolina and Alabama. Nonsurgical specialists saw the highest pay in Mississippi and New Mexico. Interestingly, APPs enjoyed the highest compensation in Nevada and California.
As expected, newly hired physicians who had just completed residency or fellowship commanded higher salaries than established primary care physicians. Notably, nonsurgical specialists in the Midwest saw a decrease in their pay.
Quality measures on the rise
The trend of using quality measures—standardized metrics to assess health care quality—to determine physician compensation continues to gain traction. The MGMA DataDive reports that some health care organizations incorporate quality measures as high as 50% within their compensation methodologies, although many physicians haven’t yet experienced this in their local practices.
Quality metrics likely play a vital role in the future of health care organizations. Key focus areas will be improving quality of care, expanding provider reach, enhancing patient experience, reducing costs, and streamlining workflow efficiency. However, the question remains: how can these quality metrics be accurately measured?
Summary: challenges and opportunities
The health care landscape is constantly evolving, presenting new challenges for physicians. The 2024 MGMA DataDive offers valuable insights for all physicians, but navigating this information and using it effectively during contract negotiations remains complex.
Both physicians and their employers need support. Employers need assistance with improving efficiency, optimizing resource utilization, controlling costs, and mitigating risks. Physicians, on the other hand, require help negotiating the best compensation packages and making strategic career moves. This clear need for support underscores the complexity of the health care industry and the importance of having the right guidance.
Jon Appino has been the driving force behind Contract Diagnostics since 2011, where he leads a dedicated team on a mission to empower physicians with the knowledge, tools, and confidence to negotiate robust employment contracts and secure the best compensation packages. With over a century of collective experience, the CDx team is a paragon of field expertise. With over 25 years of diverse health care experience, Jon leads this seasoned team of professionals. From Pete’s 20+ years to Anu’s 25+ years, complemented by Jillian and Laura’s 10+ years each, our team boasts a wealth of knowledge. This remarkable tenure is further fortified by the skills and backgrounds of our other team members, including Kathryn Sarnoski, MD, and Jan Schmitz, director of operations. Their combined experience ensures that Contract Diagnostics offers the most seasoned and insightful guidance in physician compensation.
Discover more of Jon’s perspectives on physician compensation by exploring the Contract Diagnostics blog or connecting on social media platforms like LinkedIn, Facebook, YouTube, and Instagram.
The Contract Diagnostics team offers comprehensive consulting services tailored to physicians and their families, addressing employment contracts and compensation structures. Our expertise spans contract physician compensation, schedules, benefits, and more.
Our mission is to establish a central resource where physicians can access information, consulting, and coaching to navigate the intricacies of employment contracts and compensation structures, ensuring equitable remuneration.
Questions? Feel free to reach out to us via our website or at 888-574-5526.
