Better Healthcare System Starts with a Better Compensation Model

[Today’s guest post was submitted by Dr. Stephen J. Thomas, Director of the Institute for Global Health and Translation Sciences and Interim Chair for Microbiology and Immunology at SUNY Upstate Medical University. He is also the Co-founder and Director of Strategy for Phairify, a web-based, physician value and compensation data analytics platform. We have no financial relationship.]

I am convinced that a better healthcare system starts with a better physician compensation model.

You’re sitting across from your Department Chair, preparing to negotiate your contract. She pulls out a thick book, opens it up, slides it over to you, and points to a number. The number represents your proposed compensation, in other words, your professional value and worth. She tells you the number reflects that you practice at an academic center, the region your hospital is located in, and that she is choosing the higher end of the scale due to your two decades of experience as a subspecialist. You are perplexed.

As you look at the number you begin to wonder: does it reflect that your hospital (you) cares for the sickest and most complex patients, or does it account for the incredibly high volume of patients you see? You wonder how the compensation accounts for the fact you are a clinician, but are also expected to manage and lead other clinicians. What about your responsibility to teach medical students, residents, and fellows? How does the number account for the relative rurality of where you practice compared to some of the major cities also located in your region of the country?

When you ask your Chair where these data came from, she responds that the data are compiled from market surveys and collected from hospital and hospital system administrators. Your Chair explains the data are not perfect, but they are the best she has and this is the standard for how many employers benchmark their physicians’ salaries. You think to yourself, “Am I being treated fairly?”

 

Physicians Are Uninformed and Unprepared for Compensation Negotiations

There are a number of reasons why people become physicians, and the prospect for a healthy salary is among them, but it usually does not top the list. In fact, many of us have experienced the insinuation that a doctor who cares about their compensation is somehow less caring, compassionate, or invested in their patient. If you are altruistic, the system will take care of you and ensure you are fairly compensated. It would be nice if this were true.

With the average graduating resident having more than $250,000 in debt, fair compensation is more than a value statement; it is a necessity. In addition to carrying debt, physicians tend to work incredibly long work hours, often work weekends, and have numerous interrupted nights when they are on call. We signed up for this, eyes wide open, in exchange for the privilege of being able to use our knowledge and skills to diagnose and cure our patients. Unfortunately, physicians spend less time actually seeing patients these days, and spend more time completing documentation and other administrative tasks, which do little for patient care but are somehow tied to ‘quality’ and ‘value’ and, of course, reimbursement.

These stressors and realities are a few of the reasons physicians have higher rates than the general population for depression and suicide. They also contribute to the exceptionally high rates of burnout and moral injury among physicians. These trends were on the rise even before COVID, but the pandemic certainly has not helped. In 2021, our nation’s physicians are in a very precarious position.

Physicians are required to renegotiate their contracts, on average, every 18 to 24 months. When they do this, they are put into a position of recurring financial jeopardy. “What will be the determination of my worth this time?”

Physicians are not trained how to negotiate, most do not know how to benchmark their relative value, and very few have access to data or other information which could help inform them of how their value translates into compensation. There are numerous sources of physician compensation information, but the fine print often reveals the data are based on biased sampling, low sample sizes, are not specialty-specific, and are accompanied by the caveat the data are not generalizable to those who did not complete the survey. When it comes to negotiating their financial well-being, physicians are largely on their own, at a significant disadvantage, and at great risk of being inappropriately valued.

 

What Are the Effects of Undervaluing Physicians on Health?

When a person is considering a career in medicine, they may be undeterred by the requirements to become a physician, including being a top performer in college, scoring well on your MCAT exam, excelling during four years of medical school, working extremely hard during training, and taking numerous certification and licensing exams. What actually does deter them from medicine, however, is the debt they will incur during this education process and the delay they will experience—compared to their non-physician peers—in earning a salary reflective of their education and training. This is one contributing factor to why the U.S. is facing a physician shortage predicted to reach 133,000 doctors by 2033.

The U.S. spends more than 15% of its Gross Domestic Product (GDP) on health care, almost twice the average of more than 30 other high-income countries. Despite this spend, the U.S. population has a lower life expectancy, higher infant mortality rates, higher suicide rate, greater burden of chronic diseases (heart disease, lung disease, diabetes), higher rates of obesity, more preventable hospitalizations, and more avoidable deaths. Something is wrong.

One contributor to our poor national health is the insufficient focus on, and resources directed towards, primary care. We all understand that prevention is superior to cure, and our primary care physicians specialize in prevention. Unfortunately, as our national health scores have plummeted, so has the percentage of physicians who decide to train in family medicine, general internal medicine, and general pediatrics. Medical students are choosing to not train in primary care and, as a result, the U.S. is facing a shortage of more than 50,000 primary care providers by 2033.

The decline in the number of primary care physicians will not impact everyone equally. Fewer primary care physicians equates to less access to preventive care services, but the decline in access will not be experienced by our population uniformly. Minority, low socio-economic, and rural populations will experience the greatest burden and suffer the most. How the U.S. will address the crisis of disparities in health care without a robust primary care infrastructure is unclear.

There are numerous reasons for these trends, and the economics of being a primary care physician is one of them. A primary care physician graduates with the same debt as their peers, completes three or more years of training, cares for dozens of patients a day, experiences some of the most aggressive documentation requirements, and is expected to be the foundation of clinical education for the more than 80,000 U.S. medical students. Despite delivering great value, however, primary care activities receive some of the lowest reimbursement rates, and primary care physicians are among the lowest paid in medicine. For years it has been my personal experience that when I ask students and residents why they are not going into primary care the answer has been uniform, “I cannot afford it”.

 

Additional Casualties from Undervaluation – Medical Education and Research

Academic medical institutions typically claim a tripartite mission—clinical care, education, and research. Ideally, there would be equipoise in the importance and resourcing of these missions, but financial realities and institutional costs direct our collective attentions to the need for revenue generation. As a result, the clinical care and revenue generation mission takes precedence, oftentimes at the expense of the education and research missions.

There is no doubt our primary focus needs to be on caring for our patients, but in many institutions it comes with a near-complete eclipse of the mission to teach the next generation of medical professionals and/or explore research questions which may lead to advances in the care and treatment of our patients. The physician-educator and physician-scientist are becoming endangered species. The chasm between physicians’ expectations of their academic career and where they ultimately land is vast and widening. One main reason for this gap is the lack of value placed on these non-clinical activities and how this translates into ‘one-flavor’ compensation models.

Physicians need protected time to teach and/or conduct research. Protected time means a physician can devote his or her effort to activities which may or may not be revenue-generating, such as lecturing medical students or writing a grant, without incurring financial risk. Stated differently, if you are compensated through a strict productivity model or are a salaried physician with revenue requirements, every minute you spend not generating revenue through clinical care activities could lower your compensation. As a result of this paradigm, many physicians abandon their hopes of being a master educator or making a real go at being a physician-scientist.

Undervaluing the education and research missions and ‘eat what you kill’ physician compensation models are contributing to looming crises and mass defections of physicians from these disciplines without any plan to replace them.

 

What Is the Solution to Our Physician Valuation Problem?

The challenge of detangling drivers of physician value and compensation is multi-faceted and highly complex. I share one perspective, but there are others which are equally important and deserve attention. For example, how do academic institutions stay afloat as they care for more and more people who are uninsured or unable to pay, while budgets to offset these costs are shrinking? The reimbursement from the government and third-party payers for services and fees also intersects with the physician value and compensation discussion. So how do we continue and focus the conversation and move towards solutions?

In my opinion, it starts with data. We all need more complete, timely, specialty-specific, unbiased, and accurate sources of physician compensation and productivity data. We need to democratize this data for physicians and remove financial and other barriers which may prevent them, on a wide scale, from obtaining it. Having physicians and their employers share the same reality on the state of physician compensation and productivity is essential to achieving a shared understanding of physician value.

In addition, if we fail to open the optic on what constitutes drivers of physician value and abandon the view that revenue generation is the only value driver, our educational and research missions will continue to suffer and it will take years to repair at an incalculable cost. Most concerning, our patients’ quality of care will suffer in parallel. Look no further than the therapeutics and vaccines which have been brought to the fight against COVID—without academic medical institutions these advancements would either not have been possible or would have been delayed. Do we want to risk losing these institutions and expertise?

If we want to improve our nation’s health care system, significant changes are required in how we value our physicians. We need a common view of the current state of compensation and productivity, we need to rethink the drivers of value in patient care, education, and research, and we need a rational alignment of compensation with these drivers. The U.S. health care system can no longer afford inaction.

What solutions do you have to improve the current state of physician compensation and valuation? Comment below!