You may be focused on salary when you’re job hunting, but salary alone isn’t an accurate portrayal of compensation. Other elements of a benefits package have significant monetary implications, and even benefits without dollar signs attached can make a major difference when it comes to work/life balance. If you don’t take these into account as you negotiate and consider offers, you could be leaving something on the table.
“Upwards of 25 to 35 percent of a comp package is the benefits,” says Richard Roberts, M.D., JD, professor emeritus of family medicine at the University of Wisconsin School of Medicine and Public Health. “Newer doctors don’t often think about benefits. It’s their first time evaluating this. As a resident, you just got what you got. But now, you can negotiate.”
Here’s some inside information on holistically evaluating your compensation package.
Part 1: Understanding salary
In many other professions, employees earn a set annual salary, but that’s not always the case for physicians. “Forms of compensation vary greatly between specialties and practice types,” explains Roberts. “The most common salary model for a new doctor is often straight salary, which may include some productivity-related bonuses.”
You may be offered a traditional fixed salary or one that depends on other factors. Understanding the different models can help you decide which suits your financial and personal preferences.
COMMON SALARY MODELS
A straight or fixed salary is most familiar: comply with the terms of employment and receive a pre-determined sum, delivered incrementally over the year. This model is attractive for planning and budgeting, but it may leave ambitious physicians hungry for more motivation.
Some things to consider with a fixed salary: Is the salary adequate to meet your financial needs? Do you believe it’s a fair amount in terms of your specialty—and on par with what your peers are receiving, regardless of gender or race? When will you be eligible for a raise? How frequently will you get paid: weekly, bi-monthly or monthly?
A variation on the salary model is salary plus incentives or bonuses, which provides a fixed yearly sum plus the opportunity to earn additional financial rewards. These rewards are contingent on certain pre-defined measures, such as productivity, quality, performance, adherence to non-clinical obligations and other factors. This model’s appeal is that it offers the security of a steady paycheck along with the opportunity to earn more.
“Lots of institutions have bonus structures, [which] are highly variable,” says Jennifer Hunt, M.D., chair of the department of pathology and laboratory services in the College of Medicine at the University of Arkansas for Medical Sciences. “More and more, I think, are relying on RVU-productivity-type bonuses, where if an M.D. has a productivity at a certain benchmark level then they will get a bonus after that level.”
Some things to consider with salary plus bonuses: What is the breakdown of salary versus bonuses and incentives? Is the salary alone enough to meet your financial needs? Are the incentives clearly defined, or are they subjective? Can you satisfy the incentive criteria by yourself, or will you have to rely on other individuals or departments to reach your goals? Are the requirements fixed or subject to change?
Other salary models are productivity-based, meaning your salary is calculated using your contributions to the practice. This model may appeal to physicians highly focused on improving the practice or bringing in new business, yet it is sometimes criticized for fostering a competitive work environment. A variation on this model is a conversion plan, which allows you to earn a fixed salary for the first few years then change to a productivity-based model.
Some things to consider with a productivity-based arrangement: Are earnings based on RVUs, total amount billed or total amount collected? If earnings are based on collections, what percent of billings does the group typically collect? What is the breakdown of patient insurance types (commercially insured, Medicaid or uninsured)?
A different type of model is the equal shares arrangement, which is common in group practices. After deducting expenses from yearly earnings, the remaining funds are divided among the physicians. This incentivizes everyone to work toward a productive year, but some downfalls include a lack of tangible recognition for high performance, skill level or experience.
Some things to consider with equal shares: Does the physician group have a wide range of skills within the physicians employed? Are there any additional incentives to compensate high producers?
The capitation model has dropped in popularity since its peak in the late 1980s and early 1990s, but some regions of the United States still use it today. With this model, your salary is based on the number of patients enrolled with a health plan for a certain amount of time. This model is often praised for delivering efficient care, as there are no incentives for tests or additional procedures. However, some physicians criticize capitation for a lack of control over salary because it’s dependent upon enrollment rather than care provided.
Some things to consider with capitation: Are there any modifications in place to adjust for patients who require extensive services? Are there any bonuses in place?
WHAT SALARY MODEL IS BEST FOR YOU?
When interviewing, you should research what compensation methods are common in your region and your specialty, but choosing the best one for you is a personal decision. Consider the following questions:
- What hours are you able to work? What hours do you prefer?
- What are your fixed financial obligations?
- What are your long-term financial goals?
- Are you comfortable with a variable income?
- Do you enjoy marketing your services and promoting your business?
- Do you want the potential to earn more?
- Do you work better when presented with incentives?
- What is your work style? Are you more comfortable with a defined workload, or do you like to control your own productivity?
FIXED OR VARIABLE?
Variable physician salaries allow you to earn more by increasing productivity or meeting other goals. This model has obvious upsides, especially if you’re highly motivated by financial incentives. However, you should take time to consider all the aspects involved.
“If the M.D. relies on hospital systems, ancillary staff whom they don’t manage, or advertising and market share for the institution (not the practice), productivity could suffer as a result of executive decisions,” explains Hunt. “For example, if a surgeon cannot book cases because the hospital is always full and there are ER diversions, then they might not meet productivity targets, through no fault of their own.”
She adds that compensation models based heavily on productivity can present some challenges, explaining, “Although incentives and bonuses based on added productivity can be great, I think it is also strategic to get as much in guaranteed base compensation as possible, especially if the M.D. is going to rely on the hospital or system for the functioning of their practice.”
BE AWARE OF WHAT’S FAIR
In a perfect world, salaries would be consistent across the board, and any differences would be based upon measurable factors, such as experience or performance. But in reality, inequities exist. The best way to protect yourself is with knowledge.
“Do your research ahead of time,” says Rose Berkun, M.D., clinical assistant professor of anesthesiology at the University of Buffalo Jacobs School of Medicine and Biomedical Sciences. “Medscape’s [annual physician compensation report] is a good place to turn.” You can also ask your alma mater or specialty associations for any studies or data they have on current physician salaries.
Once you’ve determined what’s typical for your personal situation, specialty and geographic area, reflect on your past accomplishments, education and training. “Consider what you bring to the position,” Berkun encourages. “Assess your own self-worth. Have you done research, been published or volunteered somewhere, such as at Doctors Without Borders?”
“Be aware of the gender pay gap,” recommends Berkun. “Women should be offered the same salary as their male counterparts.” However, this isn’t always the case. Medscape reports that male physicians earned 18 percent more than female ones in 2018, compared with 16 percent more in 2017.
Don’t be afraid to speak up, whether that means making a case for your own worth, questioning inequality, or simply requesting a higher starting figure. “If you start at a disadvantage, the gap only increases,” Berkun says.
Part 2: What else do you need?
Salary is only a starting point. Dig deeper into the details of your package to tally up the impact of benefits. For example, a relocation allowance can help during a move, while an attractive family health plan can ease your finances throughout the year.
“The total compensation package is more involved than you’d imagine,” says Roberts. “Classically, the focus of a package is the two Cs: cash and call. Physicians look for a lot of cash and less of call. However, the importance of those issues fades after the first few years as other parts become more important: disability, life insurance, time off, continuing education, as well as the people you’re treating and the community you’re working with.”
Here’s a rundown on some of the benefits most important to a physicians.
For most physicians, being available to respond to patients during off hours is just part of the job. This is especially true for newer physicians. Your comp package should outline the frequency, compensation and logistics of call.
“Usually with larger groups, you’ll have less frequent call,” says Berkun, adding that call requirements also vary by specialty. “For example, I’m in anesthesia and have to be physically present for calls. With other specialties, such as pediatrics, you may be able to take some calls from home.”
Understand your employer’s expectations upfront and be realistic about the impact call will have on your personal life. Be mindful of your family and others important to you. If you aren’t at home often—or are frequently interrupted during your free time—everyone’s happiness is affected.
Compensation for call is also important. According to Becker’s Hospital Review, the four most common methods are: a daily stipend (36% of respondents), an hourly rate (27%), a per-shift stipend (14%), and an annual stipend (12%). Each of these has its pros and cons, and you need to keep in mind that additional earnings from call may be offset by the need to hire household support or childcare.
Everyone needs insurance . Typical benefit packages include medical, vision, dental, life and disability policies. But for physicians, there’s one more potentially career-saving benefit to consider: malpractice insurance. Before signing a contract, you need to understand what kind of malpractice insurance your employer offers and how much it will cost you.
The cost to you varies greatly from employer to employer. A hospital, academic institution or large practice group may contribute to your premiums, while a smaller group or practice may expect you to pay it all yourself. Some employers take regular contributions from your salary, while others require a lump sum upon termination of employment. Additionally, premiums for some policies vary over time or are based on years of service, so it’s important to understand how they are calculated.
As for the type of policy, malpractice insurance falls into two categories: occurrence-based and claims-made. Occurrence-based policies cover you for any claim made against you while you were working on behalf of the employer, regardless of when the claim is raised. If a patient files a claim 10 years after you changed employers, you are still covered. Claims-made policies only cover you while you are an active employee. If a claim is raised post-termination, the policy will not cover you—even though you were an active employee when the event in question took place.
If your contract offers a claims-made policy, you’ll want to add an extended reporting endorsement, also known as tail insurance. This critical yet costly addition extends claims-made malpractice coverage after termination. And no matter what else is in your contract, make sure that a lawyer reviews the malpractice terms and that you understand any limits or maximums.
PAID TIME OFF
You may be expecting to work long hours, but even so, everyone needs time away from the office. Your compensation package should detail an amount of paid time off. According to SullivanCotter, physicians’ annual PTO benefits typically range from 25 to 35 days. This may be presented as a bundle, or the days may be designated for specific types of leave, such as:
PAID VACATION TIME
Vacation supports a healthy family life and a good work/life balance. Having more of it may help prevent burnout, while having too little may leave you stressed. According to the 2017 Medical Group Management Association Provider Compensation Survey, physicians typically receive three to seven weeks of vacation time.
PAID SICK LEAVE
Some employers require you to accrue sick days by working a certain length of time, while others offer an allotted number per year or even unlimited sick days. It’s helpful to know what you can and can’t use these sick days for and if you’re allotted any personal days. These allow you to take paid days off without dipping into your vacation days.
You should also discuss plans regarding family leave and understand what your employer offers. “Maternity and family leave is important to negotiate ahead of time,” says Berkun. “Some states have a mandate for time off, [which means] you won’t lose your job but no mandate for it to be paid. Negotiate for both the number of weeks off and if it’s paid.”
Similarly, the Family and Medical Leave Act of 1993 requires that any employers with more than 50 employees maintain a job for any employee who must take time off due to a family obligation. However, there is no requirement that this time be paid.
EDUCATION AND PROFESSIONAL ENRICHMENT
To keep your knowledge current and renew your medical license, you’ll need to continue learning by taking courses, attending conferences and maintaining professional organization memberships.
“Continuing education benefits have shrunk greatly over the years,” says Roberts, adding that an allowance for this can mean sizable savings for a physician. “Things like a membership to a specialty society can run anywhere from $750 to $1,500.”
In addition to coverage for courses or events, you’ll want to make sure you’ll receive your salary while you’re away from work, as well as a stipend to cover expenses related to travel, educational supplies and food.
According to SullivanCotter, annual allowances for CME typically range between $3,500 and $5,000 with paid time off between five and 10 days.
While it’s possible to save money by meeting educational requirements online, Roberts points out that there are benefits to gathering in person with colleagues.
“Attending a conference or class is a useful form of networking and helps to avoid becoming disconnected from other physicians,” he says. “I’ve always come away feeling energized and with new ideas.”
Advanced practice providers (APPs) are skilled medical professionals qualified to extend or provide patient care, such as nurse practitioners, physician assistants, behavioral health specialists and more. The use of APPs is widespread; however, most states require some level of physician supervision or direction.
Your package should explain how much time you’ll spend overseeing APPs, and your compensation may depend partially on how much time you spend with APPs. This might be measured by hourly rate or patient encounter, or your employer might apply a revenue-less-expenses model.
According to the 2017 SullivanCotter Physician Compensation and Productivity Survey, approximately 71% of hospitals surveyed have physicians who supervise APPs. Of these, 48% provide compensation for APP supervision in addition to a physician’s base salary.
RECRUITMENT INCENTIVES AND BONUSES
The United States is headed toward a significant physician shortage, which is good news for physicians on the job hunt. According to a 2017 study commissioned by the Association of American Medical Colleges, the deficit is estimated to reach a shortage of 8,700–43,100 for primary care physicians, 19,800–29,000 for surgeons and 18,600–31,800 for specialty physicians by 2030.
With employers eager to recruit talent, incentives are a common part of the compensation package. Look for relocation reimbursement, student loan payments, a signing bonus or other pre-determined bonuses. Don’t be afraid to consider these issues when negotiating.
As with any part of your package, read the terms carefully and ask questions. For example, with any bonus money delivered at the start of your employment, find out if you incur a penalty if you do not remain employed for a set period of time. Similarly, make sure a bonus is truly additional money, not a front-loaded portion of your salary.
It’s never too early to think about retirement, even if you’re fresh out of residency. Retirement contributions equate to money in your pocket, as well as peace of mind, and they’re a key piece of any compensation package. SullivanCotter reports that the average employer retirement contributions range from 3 to 7% of salary. This may be paid through an employer contribution, a matching program or a salary deferral.
Part 3: Pulling it all together
You’ve thought about salary, considered benefits and arrived at a fair approximation of the financial worth of your package. But you’re not finished yet. There are a few other factors that may not be spelled out on paper but will influence your financial situation and personal satisfaction nonetheless.
Housing, groceries, transportation, taxes and other expenses vary depending on where you live. In an area with a high cost of living, even a large paycheck may quickly disappear. Conversely, you may live quite comfortably on a mediocre salary in an affordable area. Before making decisions, research a region’s cost of living and run your salary through a cost of living calculator.
Malpractice insurance premiums also vary by region, since there are different laws and coverage requirements in different states. A lawyer in the area is usually the best source of information on what’s required and how much you should expect to pay for it.
Finally, physician supply and demand can be wildly different from city to city and state to state, and your specialty makes a difference. “It’s a market economy,” says Roberts. “Be aware of the market rates in your area. For example, central and southeastern United States is the highest salary for a family M.D.”
SUPPORTING A HEALTHY LIFESTYLE
Financial security is important, but so is your happiness and that of your family. Keep potential burnout in mind as you evaluate your compensation package, especially since 44% of responding physicians reported feeling burned out in Medscape’s 2019 report.
Job factors that can add to or prevent burnout include call hours, paid time off and insurance benefits, but sources of stress or comfort are different for every individual. For example, if student debt is a major area of personal worry, a loan repayment benefit may add to your peace of mind and reduce your risk of burnout.
Scheduling also has a huge impact on personal contentment. You may be full of focus and dedication as you head into your new job, but even so, you need to be realistic about your need for rest and relaxation.
An all-work-and-no-play approach is never successful.
“Things I often see people forget to account for are commuting time, excessive call requirements, mandatory extra duty (particularly for short-staffed services), and whether a group or department is family-friendly,” says Hunt.
Measure your commute time carefully. A good schedule may not be as great as it seems if you have to spend a long time in transit.
“Your commute never comes out of your work time,” says Hunt. “It comes out of your home life time. Carefully factor how much time you will be at home, versus not at home.”
Other benefits that support a healthy lifestyle include wellness programs, onsite gyms or membership reimbursement, opportunities for sabbatical leave, flexible work schedules, physician lounges, family and/or spouse support groups and mentorship programs.
Understanding and selecting a compensation package is a major endeavor, particularly early in your career when the terminology and expectations may be fairly new to you.
For the best outcome, seek the expertise of seasoned physicians as well as a health care attorney. Remember that your happiness is closely tied to that of your loved ones, so you should listen to their needs and concerns.
Finally, be flexible and don’t stray too far from your established priorities with your final decision.