Smaller Physician Salary Increases on Tap For 2012

Smaller salary increases will be the norm for physicians in 2012, according to the 2011 Physician Compensation Survey released Monday by the Hay Group, a Philadelphia-based consulting firm. The survey pegs salary increase budgets set by primary care practice groups, specialty practice groups, and hospitals alike at 2.5% higher next year than in 2011, compared with actual increases of 2.7% for 2011 versus 2010. Physician specialists employed by hospitals can expect salary hikes of 2.4% in 2012, the survey indicates—significantly lower than the 4.5% salary increases projected for group-based physician specialists in the coming year. Moreover, 50% of responding organizations set physician pay on an individual basis, while 28% employ established, formal salary ranges. Market rates are the benchmark for determining base pay structure for 18% of organizations participating in the survey, with the remaining 1% using step-rate progression. In other survey findings, the prevalence of annual incentive plans decreased slightly among all physician participants in 2011, from their highest reported usage of 69% in 2010 to 64% this year. Nearly one- quarter of respondents (23%) reported that they currently offer no annual incentive plans for their physicians and have no intention of implementing them anytime in the near future. “At-risk pay can be a critical factor in driving performance at healthcare organizations,” Jim Otto, a senior principal in Hay Group’s health care practice, said in a statement announcing the release of the survey. “While nearly one in four providers are not yet implementing annual incentive plans, the remaining three see the benefit or potential benefit of linking pay to performance measures. If designed correctly, annual incentive plans will have profound positive effects on culture, behaviors, and the success of the organization.” Finally, survey results confirm that measures for determining incentive payouts continue to be dominated by quality of care and patient satisfaction. This is true of both in individual performance measurements, with 66% of respondents citing the former as a component and 62%, citing the latter. Quality of care and patient satisfaction are used as group performance measurements by 52% and 47% of survey respondents, respectively.