Closing the Gap on FQHC Provider Compensation

We hear all the time about the struggles that not-for-profit health centers have in recruiting providers, and time and time again, it seems that the primary cause is alleged to be compensation.  After twenty years of working with FQHCs, we’ve found that while offering less than the competition doesn’t help matters, there are dozens of other reasons, totally unrelated to pay, that can impede a health center’s ability to recruit and retain providers.  It may very well be that falling back on the old “it’s just because we can’t afford to pay more” song-and-dance blinds FQHC managers to some of the other factors that come into play when a provider decides to work elsewhere.  These other concerns are for another day, however, as today we look once again at economics.

Medscape.com recently released the results of their annual survey of physician compensation.  The survey contains a lot of interesting information concerning not just salaries, but hours worked, patients seen and administrative burdens, all of which we will cover in further posts.  For the moment, let’s look just at earnings: the survey reports the following “average earnings” or “overall income” (we assume this is base salary plus incentives, but not benefits) for the major specialty areas of interest to the typical FQHC:

  • Family Practice – $175,000  (up 5%)
  • Pediatricians – $173,000 (up 7%)
  • Internists – $185,000 (up 9%)

What do those numbers tell us?  Well first of all, recognize that if you provide a 3% annual increase, or something similar, your providers will fall behind their colleagues in other employment settings.  Provider pay growth has outstripped overall labor market growth for a number of years, and shows no sign of stopping or slowing.

Looking at Merces’ own survey data, as well as that of NACHC and some of the state PCAs, our estimate of the industry’s average earnings (nationwide base pay and incentives, projected to 2013 to match the Medscape survey) are:

  • Family Practice – $170,000 (97% of Medscape)
  • Pediatricians – $168,000 (97% of Medscape)
  • Internists – $177,000 (96% of Medscape)

Within five percent of the national average for the profession tells us something.  Without considering anything but compensation, there is no reason that the typical FQHC shouldn’t be able to compete.  Another interesting finding is pay by practice setting — those physicians (of all specialties) reporting their practice setting as “outpatient clinic” reported average compensation of $185,000, while those in “solo practice” reported average earnings of $211,000.  From the numbers above it’s clear that FQHCs are in the ballpark of outpatient clinics (90 to 95%), and well, providers in a solo practice don’t have to run a business, and only the individual person can tell you what the value of not having that headache might be.

Now as our clients will note, we are not always recommending base compensation levels at those of the national averages displayed above, and also note that these are “overall earnings” not base salaries.  Salaries for medical providers, like many other professions, vary by region, by setting, and certainly by the size of the organization.  The point we’re trying to make here is that when you’re within five percent of the national average, you’re paying more than a pretty good part of the profession, and that should be enough.  If you can’t meet your provider staffing goals, it’s time to consider that there may be other reasons your organization can’t recruit and retain.

 

 

About Edmund B. Ura

Edmund B. Ura, MAIR, JD, works with governing boards, executives and human resources staff to develop methodologies for ensuring fair and equitable compensation programs that support achievement of organizations' missions. Contact Ed at ebura@mercesconsulting.com.
This entry was posted in Compensation, Competitive Data, Provider Compensation, Staffing. Bookmark the permalink.

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