There are many articles on overall physician earnings, but few address what salaries really look like for those that end up seeking employment. With less than a quarter of physicians running their own practice, many new physicians should be focusing instead on what market rates look like, and how to negotiate better terms.
“Everyone assumes doctors make a ton of money,” explains Daniel Lambert, chief executive officer of BoardVitals.com. “But with most not having their own practice they will need to know how to negotiate a better rate for themselves.”
Before making a decision, new physicians should look at the salary trajectories under both scenarios:
Merritt Hawkins publishes an annual report on salaries that recruiters are offering. The report provides insights into salaries for employed physicians only by removing the physicians that are self-employed. This provides a more accurate assessment of competitive rates.
For Internal Medicine, the base salary numbers vary widely based on experience.
- Low/Starting Base Salary: $150,000
- Average Mid-Career Base Salary: $203,000
- Top Base Salaries (Usually indicates top tier, or additional specialization): $345,000
On top of the base, though, there are additional benefits that are typically offered. An analysis of the benefits indicates that 73 percent of physicians also received some type of bonus. If you are not being offered a performance bonus structure, you are likely being undercompensated. The bonus structure usually comes in the form of RVU performance measures, net collections and gross billings.
According to the Physician Training Company Board Vitals, other bonuses/reimbursements to ask for during negotiation include: relocation costs, signing bonuses, income guarantees, loan forgiveness, and paying for CMEs. So if you find yourself liking an offer, but the compensation is just not quite high enough, start asking for some of the other available incentives.
Tip for those looking for employment: if you can, push for bonuses to be tied to gross billings instead of net collection amounts. Net collection amounts can have many clauses and take-outs. Ultimately the net bonus is at the mercy of a billing department who may or may not be effective.
The total value of all of the benefits, plus base should look something like this for Internal Medicine Specialists.
- Low/Starting Total Comp: 180,000
- Mid-Career Total Comp: 254,000
- Top Comp (Usually indicates top tier, or additional specialization): $449,000
(using weighted percentage benefits for each tier)
“Not everything is wonderful being employed as a physician,” added Lambert. “It’s always good to be prepared and know the options so that you can make the best choice for your goals and needs.”
Downsides to Being Employed as a Physician
At the end of the day, physicians are giving up a good portion of the earnout that they would make from building a successful practice. Based on an analysis of IRS data on Medical practice purchases, medical practices typically sell for 3-8 times revenue. So, there is significant upside of that final earnout that physicians will sacrifice. When negotiating your offer, mentioning the upside of self-employment and other offers that you have can significantly improve your negotiating position.
BoardVitals.com offers board reviews for practicing physicians, residents, and medical students. It serves those working in the fields of psychiatry, pathology, emergency medical, neurology, pediatrics, cardiology, and family medicine, surgery, among others.