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Large pay gap between academic and private practice in radiology

Radiology Administrator's Compliance and Reimbursement Insider, October 6, 2005

Radiologists who work in an academic setting make considerably less money than their private sector counterparts, despite considerable pay increases in the past few years, according to the Medical Group Management Association's (MGMA) 2005 Academic Practice Compensation and Production Survey for Faculty and Management.

From 2000 to 2004, radiologist compensation increased the most of all academic specialties, the survey showed. In 2000, academic radiologists earned $205,313, but by 2004, that number jumped to $286,114, a 39.4% increase.

However, even with the sharp rise in compensation, radiologists in academic settings earn approximately $124,000 less than if they worked in the private sector-a private-sector group practice radiologist currently earns an average of $410,250, according to the MGMA survey. It's not easy to lure physicians into teaching with that pay difference, says MarieAnn North, MBA, FACMPE, director of Navigant Consulting, Inc., who works exclusively with faculty practices and schools of medicine.

"If you're newly graduated and you have huge school loans and a family to support, you're not going to take a teaching position where you're going to lose as much as six figures in your salary," she says.

The MGMA survey tallied responses from 359 clinical science departments to determine trends in physicians' compensation at medical schools.

"In the academic setting, you have to be pretty creative at finding the dollars because there isn't much [money] to begin with. Then you have to figure out how to distribute the money so faculty [doctors] don't leave and go into private practice," says North.

Medical schools determine compensation using a method similar to formulas used in private practice-they generally start with a fixed base (often determined by faculty rank such as associate professor versus division chair), plus a variable component.

The variable in academia is unlike that of private practice, however. Instead of basing compensation on physician productivity, a school may use the number of patient visits, an annual contract, or the amount of grant revenue generated by the physician. Also, medical schools may include incentives as part of the compensation formula if they have enough money to do so.

In the private sector, large patient demand and an ever-increasing specialty physician shortage are often cited as the reason for rising salaries; the same is true for academic medicine.

However, "the larger compensations in the private market drive a lot of specialty physicians out of working at medical schools entirely," says Edward Grab, president and CEO of University Physicians Group, which manages 13 clinics in San Antonio and is affiliated with the University of Texas Health Science Center.

Overall, the median salary for specialists in academic settings rose by a margin of 7.9%. From 2003 to 2004, the average median specialist's salary increased from $180,668 to $195,000. Interestingly, private practice specialists had a similar gain, averaging a 7.95% pay increase. Their median income went from $274,639 in 2003 to $296,464 in 2004, the survey notes.

"We find that the primary care pay disparities don't exist to the degree that they do in specialties," says Grab.

The largest one-year compensation increase occurred for infectious disease providers, going from $125,456 to $141,697, up 12.9%. Other academic specialists with large pay boosts were neonatal medicine physicians (12.5%) and orthopedic surgeons (10.9%).

Anesthesiologists also recorded a high four-year compensation jump of 25.2%, going from $193,492 in 2000 to $242,297 in 2004, the MGMA survey notes.

"Anesthesiology and radiology are two highly compensated subspecialties, and when the difference between private practice and academic practice is as much as $250,000, well, that's a lot of money to leave behind to teach," Grab says. "Schools know this, and they struggle to pay physicians more in these areas to stay a bit more competitive, but they'll never come close to the private sector numbers."

Medical schools may pull from as many as eight sources for providers' wages, some of which include

Despite the large funding pool, most academic institutions cannot compete with the private sector, North says. And the salary chasm between private practice and academia is leading to short-staffed medical schools.

"There are some real physician shortages [in medical schools], just as there are a great number of shortages in some of these private practice fields," she says. "But without the teachers, we're going to see even greater doctor shortages overall-and reciprocally, you'll see even greater pay increases for those specialties with the greatest shortages."

Still, the doctors who love academic medicine and teaching choose to give up the huge salary to help educate the next generation of physicians, North says. "And these doctors get a different kind of payment for their work."

Insider sources

MarieAnn North, MBA, FACMPE, director, Navigant Consulting Inc., 101 East Kennedy Blvd., Suite 2200, Tampa, FL 33602, 813/277-1900; www.navigantconsulting.com.

Edward Grab, president and CEO, University Physicians Group, 6126 Wurzbach Road San Antonio, TX 78238, 210/257-1515; www.upg-sa.com.

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