Consolidation of medical systems and increased Medicare Advantage enrollment will impact physician compensation in the United States, according to new research. This decline in physician compensation in major metropolitan areas may have an effect on the growing number of workers in other medical occupations.

Physicians in the United States number approximately 834,500, according to the U.S. Bureau of Labor Statistics.¹ With physician growth per year at approximately 4% nationwide, workforce compensation is needed to encourage continued growth. According to Medscape’s medical compensation report,² Average total compensation increased about 3% from 2022 to 2023, slightly behind the 4% increase in compensation for non-union employees in 2023.

According to Scott Manaker, MD, PhD, professor of medicine at the Hospital of the University of Pennsylvania, part of this could be due to the 2% cut in Medicare reimbursement implemented in 2022 that could have hurt doctors’ income. “Other adverse economic trends are the reduction of fee-for-service Medicare beneficiaries, where more Medicare beneficiaries are now enrolled in Medicare Advantage plans instead of the fee-for-service program that ends up being largely negotiated contracts with a variety of payers,” he said.

Physician compensation could shape US medical employment landscape | Image credit: Iryna – stock.adobe.com

According to Manaker, payers can activate Medicare’s fee-for-service program and pay a percentage of the program. However, the enrolled patient population is changing and the program may be different than what the population needs. The cuts could also be extended through 2025 with another 2.8% cut, Manaker said.

Although physician compensation is generally increasing, Medicare cuts could lead to cuts in physician compensation across different payment models. Manaker said some of the early consequences of this are already being seen, with the decline of doctors’ private practices, doctors’ unionization and doctors having a variety of employment models.

In this case, doctors will need to figure out how to get adequate compensation for their work. This may include negotiating vacation or benefits when in private practice, as well as outlining job expectations in advance. This may include doctors accessing the different employment models now available to them.

Manaker noted that 40 years ago the only two options were to go into private practice or join an academic medical center, but this has expanded since then. “What has evolved over the last 30 or 40 years is a variety of other employment models, not just working part-time but venture capital and private equity firms have bought a variety of practices in a number of specialties. “, said.

According to a study published in Health Affairs FellowPrivate equity firms purchased a total of 807 medical practices, primarily in dermatology, ophthalmology, and gastroenterology, between 2016 and 2020.³ Urgent care clinics may also employ emergency or intensive care unit physicians in their businesses as another location of employment for physicians. This can influence not only the price for the patient but also the compensation the doctor could obtain. Manakar said that with all of those options, doctors should specify what activities they would like to do to get their compensation.

However, given these declines in Medicare compensation, other methods of providing care are beginning to emerge. Specifically, nurse practitioners are increasing in the United States, with the U.S. Bureau of Labor Statistics estimating a 40% increase in nurse practitioners from 2023 to 2033, making it a job that is growing the fastest than the average.⁴ With an average six-figure salary and a lower cost of education, nurse practitioners can begin caring for patients with a master’s degree program. This, Manaker said, could pose a threat to the medical workforce and its compensation.

“Many entities would prefer to hire perhaps two advanced professionals with a much shorter contract term compared to a single doctor with a much longer contract,” he said. Nurse practitioners earn a median salary of $129,480, compared to a median salary of $239,200 for physicians.^1.4 which can make nurse practitioners more attractive for offices and companies to hire if they want to save costs.

According to a study published by the National Bureau of Economic Research,⁵ Nurse practitioners often received healthier patients to supervise, had lower productivity compared to physicians, and had patients who had longer stays in emergency departments. However, the probability that a randomly selected nurse will be less expensive than a randomly selected doctor was as high as 38% and was about 28% when the average treatment effect is assumed to be as large as in the patients. in the highest complexity quartile.

“How do clinicians work collaboratively and sometimes supervise or support advanced practitioners when they might be responsible for supervising 2, 5, or maybe 10?” Manaker wondered.

Medical compensation can have a significant effect on a variety of areas of healthcare. Although the overall compensation of doctors in the country continues to rise, Medicare cuts may affect how they are compensated and whether they can pursue other means of care. With the number of nurse practitioners expected to grow over the next 10 years, keeping an eye on physician compensation may be key to evaluating the overall healthcare landscape.

References

1. Doctors and surgeons. U.S. Bureau of Labor Statistics. Updated August 29, 2024. Accessed November 6, 2024. https://www.bls.gov/ooh/healthcare/physicians-and-surgeons.htm
2. Physician compensation report. Medscape. April 12, 2024. Accessed November 6, 2024. https://www.medscape.com/slideshow/2024-compensation-overview-6017073
3. Singh Y, Reddy M, Zhu JM. Lifecycle of private equity investments in medical offices: An overview of private equity exits. Health Aff Sch. 2024;2(4):qxae047. doi:10.1093/haschl/qxae047
4. Nurse anesthetists, nurse midwives and nurse practitioners. U.S. Bureau of Labor Statistics. Updated August 29, 2024. Accessed November 6, 2024. https://www.bls.gov/ooh/healthcare/nurse-anesthetists-nurse-midwives-and-nurse -practitioners.htm
5. Chan Jr DC, Chen Y. The productivity of professions: evidence from the emergency department. October 2022. Reviewed July 2024. doi:10.3386/w30608