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Self-Employed Physician Compensation Models Vary

By Dr. David Edward Marcinko; MBA, CMP™

By Hope Rachel Hetico; RN, MHA, CMP™ 

According to medical benefits consultant Eric Galtress, physicians can still select from traditional self-employment compensation models [personal communications] as outlined below.  

But, the trend does seem to be against self-employment.  

Independent Physicians 

A self-employed physician has great freedom but less security, because relationships with an employer are defined in return for a set compensation. Typically, this option is ideal for those who desire control, don’t work well in structured environments, and are committed to maximizing personal compensation.

Same-Specialty Group Partnerships

A same-specialty partnership is more restrictive than independent practice, and must balance control with the security that comes from working with colleagues along a continuum-of-care. Internal competition may be fierce, but partners maintain some autonomy while reaping rewards from economies of scale. More personal time is available too, but compensation is based on individual and group performance.

Multi-Specialty Group Partnerships

The partners of a multi-specialty group have even more restrictions, but harvest power from an expanded group of physicians and the presence of a vertically integrated referral chain. Because more disciplines are within the group, a partner might be well-positioned to capture additional prospective payment contracts.

The Compensation versus Value Paradox 

Regardless of the model, physician compensation is inversely related to practice value.

In other words, the more a doctor takes home in compensation, the less the practice is worth and vice versa. This is the difference between a short-term and long-term compensation strategy.

In-Sourced Entrepreneurs 

The classic example is an inpatient specialist or hospitalist. The National Association of Inpatient Physicians (NAIP) estimated the model encompassed 40,000 hospitalists in 2005, with an average salary of $171,001. Both figures are growing.

Out-Sourced Entrepreneurs

Some physicians are risk-tolerant and utility-neutral when seeking other compensation opportunities.

For example, Vanderbilt University-trained neurologist Michel Burry, MD is a hedge fund manager at Scion Capital, LLC; Dimitri Sokoloff, MD, MBA is a venture capitalist on Wall Street; and Harvard-trained emergency room physician Gigi Hirsch, MD, is the founder of a pharmaceutical industry physician executive search firm.

Conclusion

Regardless of the independent business or physician compensation model, degree or medical specialty, its review and understanding is vital for long-term success.

Now, going forward, will the independent medical business model survive; or is it domed?

More info: http://www.springerpub.com/prod.aspx?prod_id=23759

Speaker: If you need a moderator or a speaker for an upcoming event, Dr. David Edward Marcinko; MBA is available for speaking engagements. Contact him at: MarcinkoAdvisors@msn.com

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