Congratulations! After years of training and months of job searching, you finally have it — a physician employment offer. You are understandably relieved, and if the price is right, you’re likely eager to sign. After all, according to new research from MGMA and Jackson Physician Search, 76% of physicians say compensation is/was the primary factor driving their first job decisions. Of course, your base salary and signing bonuses matter, but as Vice President of Recruitment, I always advise new physicians to look beyond compensation if they hope to find a good long-term fit — something fewer and fewer newly trained physicians are successfully doing.
In the aforementioned survey from MGMA and Jackson Physician Search, physicians who completed training in the last six years reported staying in their first jobs for an average of just two years. When the question was asked of all physicians (regardless of how long ago they completed training), the average first job tenure was six years. The trend of shrinking tenure understandably concerns employers who may struggle to find a replacement, but it is also less than ideal for physicians who may have to uproot their lives and families to relocate for a new position.
Why do physicians leave so quickly? Interestingly, among the top reasons given for leaving was compensation. This may be due to the fact that physician income isn’t always as straightforward as the offer letter may seem. In an effort to help physicians determine if the offered compensation meets their long-term needs, I advise them to consider the following:
1. Look Beyond the Physician Salary Guarantee
While physician compensation models vary, most employers provide a base salary guarantee for a one- or two-year period during which new physicians are expected to establish a patient base and ramp up their productivity. Ideally, once the guarantee expires and the physician is paid on productivity, he or she is treating more than enough patients to earn the same or greater income. Certainly, this is the scenario everyone is striving for, but physicians should ask for confirmation on the proven earning potential of physicians in the practice. How much are the top-, middle-, and lower-performing physicians earning? If asked, the employer should provide anonymous data on how much physicians are making.
Candidates should also ask questions about why the physician job is open. If the position was created to accommodate growth rather than replacing a departing physician, on what basis did they decide there was enough demand for an additional physician? One good indicator is how far out the office is booking new appointments. Ask plenty of questions to understand better what you can expect to earn once you have exceeded the term of the initial salary guarantee.
2. Understand Recruitment Incentives
Healthcare organizations in small- and mid-sized communities increasingly leverage recruitment incentives to attract physicians, and at times, those incentives can reach an impressive six figures. If you’ve been looking for a physician job for any length of time, you’ve seen job ad headlines offering $200,000 signing bonuses and/or 100% student loan repayment. These offers certainly get attention, but they, of course, have strings attached.
When evaluating a physician employment offer, make sure you are aware of the commitment required to receive the recruitment incentives. In the case of a $200,000 signing bonus, the expectation might be ten years of service. That is, the cash is paid upfront, but it is “earned” at $20,000 per year for ten years. Should you, for whatever reason, need to leave the job after five years, you would owe $100,000 to the organization. These terms may be acceptable to you, but it is critical that you know and understand the commitments associated with all incentives.
3. Long-Term Earning Potential
Every physician has access to physician compensation reports and physician salary calculators that provide average compensation by specialty and location. While these figures are composites of a limited data set, they can be useful in setting expectations for physicians about what they may be capable of earning. That said, it’s important to remember that every scenario is unique, and it is not always an “apples-to-apples” comparison when evaluating offers.
For example, a candidate weighing two offers may be inclined to accept the one with a significantly higher salary guarantee. However, some digging could reveal that the other organization’s physicians are earning substantially more due to a productivity bonus structure that allows for greater income potential. Other factors, such as the path to partnership and ownership options, also impact long-term earnings. New physicians are often quick to decide based on the hard number in front of them, but I can’t stress enough how important it is to consider the long-term earning potential.
4. Location and Cost of Living
It’s worth noting that physician salaries can vary significantly by location. In recent years, the Midwest has tended to pay physicians more than any other region, and small and mid-sized communities often pay more than larger cities and towns. This is because physician compensation is often directly related to the demand for a physician’s services in that area.
Though it varies by specialty, most larger cities have enough physicians to adequately serve the population, whereas many smaller communities don’t have enough physicians to provide care. So, unlike some jobs, where the cost of living may impact compensation, physicians in rural areas with lower costs of living may earn as much or more, on average, as physicians living in urban areas with higher costs of living.
I encourage new physicians to keep this in mind when considering offers. A guaranteed annual salary of $220,000 in Chicago won’t go nearly as far as the same guarantee in a smaller community in southern Illinois. Not to mention, the long-term earning potential with the latter could be significantly higher due to less market saturation.
Evaluating Physician Compensation
Physicians coming out of training are understandably eager to earn the big paychecks they’ve trained so hard for. Saddled with student loan debt and often supporting young families, these physicians want to maximize their earnings in their first physician jobs. However, it’s not always easy to determine what the numbers in an offer mean for your long-term goals. Be sure to find out what you can expect to earn once the salary guarantee expires, understand the expectations tied to any recruitment bonuses, and ask about the path to partnership and other opportunities that could impact your long-term earning potential. Arm yourself with as much information as possible to better evaluate your offer and make a decision that will increase your chances of long-term job satisfaction.
If you are embarking on a physician job search, the team at Jackson Physician Search is eager to guide you on your journey and help you evaluate the offers you receive. Search physician jobs now or contact us today.
About Neal Waters
Neal’s career in retained physician search began more than 15 years ago. Early on, he recognized the strain an entire community feels when there is a shortage of physicians to meet patient demand. Since his first successful placement, Neal’s passion for identifying the best providers for each healthcare organization with which he recruits has grown.
Neal serves as Regional Vice President of Recruiting. In his role, he serves as a mentor to a growing team of Jackson Physician Search recruiters. He also enjoys collaborating with in-house recruiters dedicated to optimizing their physician recruitment and candidate acquisition strategies. Likewise, Neal specializes in helping physicians, especially residents and those early in their careers, advance their professional careers by finding the right fit.