While public perception is often that physicians begin earning high salaries right after medical school, the processes through which independent and employed physicians are compensated are increasingly complex.
Two physician leaders told Becker’s some of the biggest misconceptions stem from what gets left out of that picture — from uncompensated time spent coordinating care to benefits that can represent a significant portion of a physician’s total compensation.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: What is the biggest misconception about how physicians get paid?
Robert Highland, MD. Physician Owner at Catawba Women’s Center (Hickory, N.C.): The biggest misconception is that physicians decide what to charge and then get paid that amount. In reality, what we are paid is determined by billing codes, RVUs, payer contracts, government rules and, increasingly, employer compensation formulas.
The system also does a much better job of paying for things that are easy to count — visits and procedures — than the time physicians spend thinking, communicating, coordinating care and preventing problems. That work is real and valuable to patients, but much of it is poorly compensated or not compensated at all.
There is also a perception that physicians become wealthy as soon as they graduate from medical school. Most spend their 20s and part of their 30s in training, earning modest salaries while carrying significant educational debt. Physicians can eventually earn a very good living, but the financial return is much more delayed than people realize.
Narasimhan Jagannathan, MD. Professor and Division Chief of Anesthesiology at the University of Arizona College of Medicine (Phoenix): One of the biggest misconceptions is that physician compensation is simply a salary. In reality, compensation structures can include base salary, productivity, call or after-hours work, quality incentives, administrative responsibilities, retirement contributions, malpractice coverage, CME support, and other benefits. Yet physicians understandably tend to focus on the most visible number: their direct compensation, and compare that number with colleagues or competing organizations.
This is where transparency becomes extremely important. Health systems should be able to explain how compensation is determined, what market data are being used, how frequently adjustments are made, and what constitutes the full total rewards package. Benefits such as retirement contributions, malpractice coverage, health benefits, and professional support have substantial monetary value, but physicians may not perceive that value if it is not clearly communicated.
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