If there is one thing that I think every physician should know – but most actually don’t – it’s their value. I’m not referring to value from a human perspective (that is a much more complex topic for smarter people than me). Instead, I mean value in terms of what you bring to the table as a physician. Ultimately it is this value that drives compensation. One tool for help figure out value is normative physician compensation data. So let’s explore this a bit deeper…
The importance of knowing your value as a physician
Whether you are a trainee about to become an attending for the first time or a mid-career attending looking to optimize your compensation, you need to know your value as a physician.
This is far and away the best advice that I received prior to interviewing and ultimately accepting a job.
It seems silly that we would ever go into negotiations without knowing our value
The person on the other side of the table 100% knows your value. But they don’t want you to know.
And for some reason, physicians are notoriously tight lipped about their salaries. By creating this cloud of secrecy over the topic, we give all the power to the administrators/equity owners that our colleagues are negotiating with.
So, for these reasons, it is so important for you to know what you are worth and then know why you are way more valuable than the average physician in your field.
One last argument…
Lastly, from a purely practical standpoint, it only makes sense to know your value. As doctors we are in the service business. Our clinical income is tied in a 1:1 ratio with our clinical work. But this is only in an ideal situation.
Unfortunately, most physicians are actually compensated at a ratio much less than 1:1. Probably something like 0.5-0.75:1. Why would we work more to make less? This is a recipe for burnout and clinical dissatisfaction.
Now that we have established the importance of knowing your clinical value as a physician…
How can we define our value as a doctor?
Until recently, there were 4 main strategies:
- Ask your mentors/colleagues how much they make and how their contract is structured
- Ask recent graduates/recent colleagues in your field who have re-negotiated their contract how much they make and how things went negotiating their contract
- Find out how many relative value units (RVUs) the average physician in your field does annually. Then find the average $/RVU value in your field (It’s ~$65/RVU for plastic surgeons). Multiply these two numbers and you have a good sense of what your annual salary should be.
- Make a list of the unique skills that you have that make you more valuable than an average physician in your field.
- For me, it was my training, research abilities, and even my ability to do robotic surgeries.
These were the strategies that I used when negotiating my first contract. And they all worked really well. You can learn more specifics about my contract negotiations here.
The emergence of normative physician compensation data
I actually did not use any normative physician compensation data in my initial job search and contract negotiation process.
Well, there were two main reasons:
- It felt prohibitively expensive
- I was not fully aware it was available
Normative physician compensation data is not new – it’s been around for awhile. However, until relatively recently, it was hidden behind a massive paywall.
This was a huge disadvantage for physicians because the main buyers of this expensive data was major healthcare systems and practices. And they used it administratively to help keep a lid on physician compensation.
This also ties in to why it was not as widely known that this data exists among individual physicians like my former self.
However, this data is now much more widely available, equitable, and decentralized thankfully. This functions to empower individual physicians in a massive way. By allowing us to theoretically ascertain our value in a more direct and easy manner, the power shifts back into our hands. Job satisfaction increases when we feel we are being fairly compensated. Increased job satisfaction increases overall well-being. And we become better doctors.
Knowledge really is power.
How can normative physician compensation data be accessed?
The traditional method of buying all of the data from a place like MGMA still exists. But again, this is quite expensive. Not as expensive as severely undervaluing yourself when negotiating compensation. But still, very expensive.
As I mention above, thankfully this data is now more available on an individual scale. It still remains behind a paywall, but a very, very manageable one.
I’ll focus on Compensation Rx since this is the more fleshed out service at this time. I also recently used Compensation Rx as I approach time for a contract re-negotiation. Basically, for a flat fee of $297 – a price I would have even found reasonable as a graduating trainee – I received a full report of compensation data for early career plastic surgeons in my geographical region of Western New York.
The data did not only include things like average salary, which is useful but limited. It included a breakdown of how compensation was determined – RVUs vs. collections, etc – as well as breakdowns by practice setting. The dataset also includes additional RVU data like compensation/RVU.
Also included in the flat fee however is a strategy meeting with a contract advisor to really break down the data and answer any questions.
Needless to say, normative physician compensation data like this is invaluable.
Does this data preclude the need for other strategies to gauge physician value?
While invaluable, I still do not think that it completely replaces the use of the other strategies I mention above.
Specifically, speaking with mentors and recent graduates about their compensation and compensation structure helps to put the normative data in better perspective and focus. Because the normative data is, by definition, average. The data analysis is also only as healthy as the data itself, which is past data.
Speaking with colleagues about compensation and physician value keeps you up to date with any recent trends or changes.
But the normative physician compensation data give you a foundation upon which to begin. That way you can know if you colleague’s low/high compensation is an outlier or not. You also can assess whether the RVU target set by your employer lines up with what is reasonable for others in your specialty.
Understanding your value = empowerment for all of us
There is almost no such thing as too much information when we are working to understand our clinical value (which once again is not the same as our individual value obviously – just want to make that clear!).
I hear doctors complain all the time that we as a profession have “given away the power” to administrators, insurance companies, and many other entities.
Many of the mistakes made were self-inflicted. (By the way, here are my top 11 personal financial mistakes.) And one of the biggest in my opinion is the persistent taboo that talking about money or compensation is bad. Keeping other doctors in the dark about fair compensation only hurts ourselves and our profession. Conversely, by shining a light on value and compensation, we empower our entire profession to gain back control and improve our overall well-being.
This is a huge part of the equation of massive change for the better that I believe a nation of financially free doctors would enact!
So, yes, I believe that decentralizing normative physician data is a huge step forward in this journey!
If you would like to learn more about clinical and non-clinical compensation as a physician, here are some great resources!
- Gather data for yourself with Compensation Rx from Contract Diagnostics or CompBeta from Forme Financial
- Doctors, How Do You Want To Make Your Money?
- How to Increase Your Compensation Both Clinically and Non-Clinically
- Physician Side Gigs to Make You Passive Money
- 9 Steps to Negotiating the Best Physician Contract
What do you think? Is normative physician compensation data helpful? How can understanding our value help doctors? Let me know in the comments below!