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To minimize their financial risk, more psychiatrists seeking employment through APA's Job Bank want salaried positions rather than those offering fee-for-service or stipend compensation, according to survey results reported in APA's May/June Psychiatric Practice and Managed Care newsletter.
Salary topped the list of desired compensation for 87 percent of the 563 psychiatrists registered with APA's Job Bank between April 1, 1997, and March 15, 1998. A close second, at 78 percent, was salary plus an incentive bonus. The percentages for both categories were 5 percent higher than last year's. The least-requested form of compensation was income based on a percentage of the employer's revenues (24 percent), followed by a stipend plus a guaranteed loan to cover startup costs (40 percent). About 42 percent of the psychiatrists sought fee-for-service positions.
"Young psychiatrists starting their careers typically prefer salaried positions," according to Steven Berkowitz, M.D., an independent consultant who specializes in physican services and was formerly with the Hay Group. "They are reluctant to enter private practice because of the unpredictability of the marketplace. Psychiatrists' reimbursement rates are being cut by managed care companies, and payers are shifting patients more frequently to nonphysician practitioners."
Rising medical expenses and a desire for a less demanding schedule to pursue personal interests are also reasons physicians may prefer to be employees. "Self-employed psychiatrists generally make more money, but the trade-off is that they have to work longer hours and see more patients," Berkowitz told Psychiatric News.
The average net income for self-employed psychiatrists was $141,000 in 1996 (the last year data were available), compared with $129,000 for employed psychiatrists, according to the AMA's 1997 Socioeconomic Monitoring System Survey. The average net income for psychiatrists who were both employed and self-employed was $133,700 in 1996. The AMA survey tracks physicians involved inpatient care and reports income before taxes and after expenses.
The average net income for self-employed physicians (covering all major specialties) in 1996 was $232,000 compared with $159,200 for employed physicians, according to the AMA survey.
Marketplace trends show that employers also favor salaried positions. Of the 343 employers who used APA's Job Bank between April 1, 1997, and March 30, 1998, 275 (mainly group practices, general hospitals, and freestanding mental health centers) advertised compensation consisting of salary or salary plus bonuses, according to Kilmer.
Psychiatrists with some experience seeking clinical positions can expect starting incomes between $115,000 and $130,000, while psychiatrists just out of residency can expect starting incomes between $90,000 and $115,000. Psychiatrists seeking administrative positions have starting incomes between $140,000 and $150,000.
Many employers offer incentive bonuses to reward physician productivity. Sixty-one of the 275 salaried positions advertised in APA's Job Bank earlier this year offered such bonuses.
"The trend is to pay physicians lower fixed salaries and increase their earning potential through bonuses," Berkowitz commented. Physician bonuses range from 10 percent to 20 percent of their salaries, with psychiatrists at the low end.
"The bonus is based mainly on a doctor's financial productivity, but it should be balanced with issues of quality of care and patient satisfaction," said Berkowitz.
Bonuses and incentives made up a larger percentage of all physicians' compensation in 1996, increasing 4 percent from 14.6 in 1995, according to a compensation report in the July 28, 1997, issue of Modern Healthcare magazine. Furthermore, two-thirds of 124 health care organizations surveyed in 1996 by consulting firm William M. Mercer in New York had incentive arrangements for some or all their physician employees. In 72 percent of those organizations, incentive awards were determined at least in part by the physician's contribution to the employer's operating income or net revenues. Only about 33 percent included patient satisfaction and 24 percent included quality of service as bonus criteria, noted the report in Modern Healthcare.