Critical Care Plus:Critical Care Compensation: Will it Continue to Rise?
October 1, 2000 9 minutes read
Critical Care Plus:Critical Care Compensation: Will it Continue to Rise?
Most Agree Salaries Don’t Meet the Level of Service Provided
By Julie Crawshaw
Financial compensation for critical care physicians is rising, but not as much as the american medical Group Association (AMGA) and others think it should. A recent letter from AMGA to congressional representatives pointed out that many of AMGA’s member medical groups care for a disproportionate number of the sicker Medicare population and have faced a sharp reduction in Medicare payments.
The AMGA, in Alexandria, Va, represents approximately 50,000 physicians in group practices from more than 40 states. Its 2000 Medical Group Compensation and Productivity Survey contains data from more than 23,727 medical group physicians throughout the United States. The study is intended to assist various management levels in evaluating and comparing current physician compensation and productivity levels, trends, and relationships between compensation and productivity.
The AMGA 2000 study gives the 1999 median compensation level for the 99 critical care physicians who responded at $201,250. Critical care physicians in the 90th percentile earned $237,638. The report also shows the median critical care group had a gross productivity rate of 47.07%, while the 90th percentile group’s is 74.41%. The 20th percentile received $150,254 in compensation and had a 33.42% productivity rate.
Despite the rise these figures reflect, Peg Stone, senior vice president of the consulting division of Cejka & Co., a St. Louis-based physician recruiting firm, sees a growing tendency across the country to pay critical care physicians solely as staff members of health systems and hospitals. She observes that this results in critical care physicians receiving fewer opportunities for financial increase than they would in specialty private practice.
"A lot of critical care patients aren’t even covered by insurance, or are Medicare patients, and critical care doctors aren’t compensated at a level commensurate with what they are doing," Stone says. "They really are significantly hit by that. Those who have a specialty in some other area will often have a mix of business."
Cejka’s Jim Smith also sees critical care physicians under financial pressure, but believes most are remaining at their posts. "I haven’t seen a mass exodus of critical care physicians returning to being a pulmonologist or internist as opposed to critical care," Smith says. "Yes, they’re being squeezed. Are they running for their life? No."
Smith says that critical care physicians are a growing group. "They’re very worthwhile and effective, both economically and for quality-of-patient service," he says.
Physician CEOs Get Top Dollar
Physicians from the critical care or other fields who move into leadership and management careers rather than hands-on hospital-based practices can reap handsome financial rewards. Ill.-based Witt/Kieffer, a large U.S. executive search firm that specializes in health care, managed care, insurance, and education, recently surveyed 439 placements for its annual Executive Compensation Study.2 The study found that managed care and education markets offer tremendous career advancement potential for exceptional leaders serving in the executive or presidential suites.
Witt/Kieffer typically does research for prominent hospitals and health systems, including those with faith-based sponsorship. The firm also serves managed care and insurance companies, specialty, venture-capital-backed and e-Health corporations, physician group practices, colleges and universities, and not-for-profit community service and cultural organizations.
The majority (59%) of Witt/Kieffer’s executive placements are on behalf of hospitals, teaching hospitals, health systems, and integrated delivery systems. Additional Witt/Kieffer healthcare and related clients feature physician groups (5% of total placements); managed care/insurance (4%); post-acute care and health group/consortiums (3% each); and health system agency, health related, financial institutions, and other clients (about 1% each). College and university clients represent 18% of the firm’s search placements, followed by not-for-profit institutions, comprising 5% of the firm’s total placements.
Highlights of Witt/Kieffer’s 1999 compensation study include:
• Physician executives as CEOs garner the highest compensation. On average, a physician in a CEO role commands the highest average base compensation: $370,000. Physician executives at college or university medical schools earn, on average, $300,000 in base compensation, followed by those at health systems and integrated delivery systems ($225,000), and hospitals ($219,500), including teaching and non-teaching institutions.
• Top healthcare leaders reach $300,000, and leading clinical educators exceed $200,000. In 1999, 11% of Witt/Kieffer’s healthcare placements received total compensation at or more than $300,000. The executives include 15 CEOs, seven COOs, four CFOs, and one EVP, as well as two medical directors, three regional/division managers, three physician/medical specialists, and one financial planner.
• Hospital and system CEOs receive nearly $200,000 in average base compensation.
• Executives in health care, managed care, and education are well rewarded for their leadership experience and expertise. The single highest compensation package reported in 1999 is $1 million, awarded to a physician in a cardiothoracic surgery leadership at a teaching hospital in the Northeast. The next highest total compensation package—for a senior executive (nonclinician) at a prominent Eastern metropolitan medical center—is $685,000 including $450,000 in base salary, a $100,000 signing bonus, and an additional 40% bonus, as well as a two-year contract including 18 months severance.
• A total of 11% of Witt/Kieffer’s healthcare placements in 1999 earn $300,000 or more holding positions such as CEO/president and COO. In education, 10% of executive placements earn $200,000 or more as CEO/president, vice president, and dean.
• Diversity gap still exists in executive ranks. While Witt/Kieffer placed minorities and women in 1999 in key executive positions such as CEO, COO, president, or academic dean at hospitals and health systems, and at colleges, universities and not-for-profit organizations, much remains to be done to achieve greater diversity in the executive suite.
| Table 1-Witt/Kieffer's Physician Placements by Job Type | |||||||
| Base Compensation | Bonus | Salary Increase | |||||
| Position Type | Number of Placements % of MD Placements |
Highest Base | Mean Average Base | # Reporting | Average Bonus | # Reporting | Average Salary Increase |
| Medical Directors | 15 (57%) | 300,000 | 206,385 | 10 (67%) | 23% | 7 (47%) | 14% |
| Clinical Department Heads | 8 (31%) | 1,000,000 | 259,000 | 4 (50%) | 13% | 5 (63%) | 19% |
| CEO | 3 (12%) | 385,000 | 370,000 | 1 (33%) | 10% | 1 (33%) | % |
| Table 2 Placements by Client Type* | ||||
| Organization Type | Number of Placements | Organization Type | Number of Placements | |
| Hospitals | 163 (37%) | Colleges and Universities | 80 (18%) | |
| Health Systems/Integrated Delivery Systems | 61 (14%) | Not-for-profit Institutions | 23 (5%) | |
| Teaching Hospitals | 36 (8%) | School | 1 (0%) | |
| Physician Groups | 23 (5%) | Other | 2 (1%) | |
| Managed Care/Insurance | 16 (4%) | Financial Institution (Bank) | 1 (0%) | |
| Post-acute Care | 15 (3%) | Health Group/Consortium | 11 (3%) | |
| Health System Agency | 4 (1%) | Health Related | 3 (1%) | |
| *The organization categories in the placements by client type chart above represent distinct, non-overlapping organization types. The job categories in the following sections, however, do overlap. For example, managed care placements include CEO and physician placements at managed care organizations. Similarly, CEO placements include those in managed care as well as physician CEO placements. | ||||
CEOs, Development Executives, CFOs, and COOs Dominate Placements
CEO placements at hospitals, health systems/integrated delivery systems, and teaching hospitals account for more than half of Witt/Kieffer’s total CEO assignments during 1999. On average, CEOs at teaching hospitals earn $376,667, followed by those at health systems/IDSs ($202,500), and hospitals ($173,448).
However, the highest reported base—$425,000 and a $58,333 sign-on bonus to take the job—went to a hospital CEO at a faith-based, not-for-profit hospital in the East. Perquisites for this CEO feature an automobile allowance, club membership, supplementary executive retirement plan (SERP), paid moving expenses, and an employment contract. CEO average base compensation for other organizations include physician groups ($180,000), not-for-profit entities ($170,625), managed care ($160,000), post-acute care ($148,333), and colleges/universities/medical schools ($142,000).
CEOs at colleges, universities, and medical schools report a 38% average salary increase when they take on a new job. In medically-based educational placements, the highest reported base compensation was $370,000 for a medical school dean in the West, whose perqs include club membership, fully paid moving expenses, and a five-year employment contract.
Also, according to the Witt/Kieffer research, CEOs at physician groups receive, on average, a 23% annual bonus and an 8% average salary increase. CEOs at not-for-profit organizations report a 19% annual bonus and a 33% average salary increase to make the career move. Managed care CEOs gain a 29% average bonus and a 25% average salary increase. A 15% average bonus goes to post-acute-care CEOs, who also earn a 30% salary increase, on average, when accepting a new career opportunity.
CEOs of not-for-profit community and cultural organizations (health care association and foundations) received an average base salary of $170,625. The average bonus and salary increase for these CEOs was 19% and 33%, respectively. The highest reported not-for-profit CEO, who leads a national nursing home association, receives $315,000 in base compensation along with a 10% annual bonus, automobile allowance, SERP, paid moving expenses, and a severance clause that features 12 months with full salary and benefits.
| Table 3-CEO Placements by Client Type | |||||||
| Base Compensation | Bonus | Salary Increase | |||||
| Organization Type | Number of Placements % of CEO Placements |
Highest Base |
Mean Average Base |
# Reporting |
Average Bonus |
# Reporting |
Average Salary Increase |
| Hospitals | 31 (40%) | 365,000 | 173,448 | 24 (77%) | 21% | 26 (83%) | 25% |
| Health Systems/IDS' |
4 (5%) | 315,000 | 202,500 | 4 (100%) | 26% | 3 (75%) | 34% |
| Teaching Hospitals |
5 (7%) | 425,000 | 376,667 | 3(60%) | 40% | 2 (40%) | 16% |
| Not-for-profit | 10 (13%) | 315,000 | 170,625 | 6 (60%) | 19% | 7 (70%) | 33% |
| Post-acute Care | 8 (10%) | 200,000 | 148,333 | 8 (100%) | 15% | 7 (88%) | 30% |
| Colleges/ Universities/ Medical Schools |
7 (9%) | 370,000 | 142,000 | 0 | — | 6 (86%) | 38% |
| Physician Groups |
5 (6%) | 385,000 | 180,000 | 3 (60%) | 23% | 2 (40%) | 8% |
| Managed Care | 3 (4%) | 200,000 | 160,000 | 3 (100%) | 29% | 3 (100%) | 25% |
| Health Group Consortium |
2 (3%) | 125,000 | --- | 2 (100%) | 20% | 2 (100%) | 9% |
| Insurance | 2 (3%) | 250,000 | — | 2 (100%) | 40% | 1 (50%) | 13% |
| Schools | 1 (1%) | 240,000 | — | 0 | — | 1 (100%) | 2% |
| Table 4-Managed Care/Insurance Placements by Organization Type | |||||||
| Base Compensation | Bonus | Salary Increase | |||||
| Organization Type | Number of Placements Placements % of MC |
Highest Base |
Mean Average Base |
# Reporting |
Average Bonus |
# Reporting |
Average Salary Increase |
| Managed Care Organization |
8 (31%) | 260,000 | 157,500 | 7 (88%) | 28% | 7 (88%) | 16% |
| Physician Group | 4 (15%) | 250,000 | 140,000 | 2 (50%) | 120% | 3 (75%) | 19% |
| Insurance | 7 (22%) | 265,018 | 219,000 | 6 (86%) | 51% | 3 (43%) | 13% |
| Hospital | 2 (8%) | 116,700 | — | — | — | 1 (50%) | 23% |
| Health Systems/IDS' | 1 (4%) | 100,000 | — | 1 (100%) | 10% | 1 (100%) | 11% |
| Teaching Hospitals | 1 (4%) | 125,000 | — | — | — | 1 (100%) | 25%. |
| Health System Agency | 2 (8%) | 175,000 | — | 1 (50%) | 50% | 0 | — |
| Provider Services Organization |
1 (4%) | 200,000 | — | 1 (100%) | 30% | 0 | — |
MCO Executives Rely on Bonuses
On average, managed care/insurance executives earn $168,058 in base compensation, rising from $148,721 in 1998. The 1999 average bonus is 46%, with an 18% average salary increase. However, one insurance division executive from the West Coast receives $265,018 in base salary—the highest salary in this category—as well as a 40% annual bonus and SERP.
Another recent survey done by the Lincolnshire, Ill.-based firm of Hewitt Associates in conjunction with Modern Healthcare Magazine,3 found that cash compensation increases for managerial, executive, and department head positions throughout the hospital industry rose an average of 6.7% between January 1999 and January 2000. This was nearly twice the 3.5% average increase that occurred during the prior year.
Judging from the above data, critical care physicians working in hospitals are being paid more overall for their work. However, that trend may not continue—and there may be more highly compensated career possibilities elsewhere.
References
1. American Group Medical Association. 2000 Medical Group Compensation & Productivity Survey. Alexandria, Va: 2000.
2. Witt/Kieffer. Executive Compensation Study: Compensation Report no. 6. Oakbrook, Ill: May 2000.
3. Moore JD, Jr. Healthcare compensation rises. Modern Healthcare; July 17, 2000.
Sources
• Shawn D. Schwartz, RSM McGladrey, Inc., 801 Nicollet Avenue, Suite 1300, Minneapolis, MN 55402-2839, (612) 376-9523.
• Kerri Kelly, Cejka & Company, 222 S. Central, Suite 400, St. Louis, MO 63105, (314) 726-1603.
• Jim Smith, Senior Vice-President, Cejka & Company, 316 Tahlequah Drive, Loudon, TN 37774.
• Hewitt Associates, 100 Half Day Road, Lincolnshire, IL 60069, (847) 295-5000.
• Modern Healthcare, 740 N. Rush Street, Chicago, IL 60611, (312) 649-5372.
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