Physician executives boost clout, earning power: Overall median compensation reaches $210,000. (Careers).

PHYSICIAN EXECUTIVES looking to earn high incomes may want to turn to practice and hospital management companies or single specialty groups for the best pay.

The third bi-annual Physician Executive Compensation Survey conducted by Cejka & Company and the American College of Physician Executives reveals that in 2000 physician executives earned a median compensation of:

* $300,000 in practice management companies

* $250,000 in single specialty groups

* $247,500 in hospital management companies

* $150,000 in government-related positions

Of the 3,024 physician executives who responded to the survey, 33 percent were medical directors. And yet, the compensation of these executives varied dramatically--from an overall median compensation of $210,000 for all physician executives to $250,000 for medical directors in single specialty groups and $300,000 for those in practice management companies.

While the demand for medical directors, vice presidents of medical affairs (VPMAs) and chief medical officers (CMOs) escalated dramatically in recent years, the survey demonstrates that physician chief executive officer (CEO) and chief operations officer (COO) roles are the clear winners in the compensation race.

They earned a median compensation of $250,000 in 2000 or $15,000 more than the next top earner, board of directors member, and $50,000 more than a medical director.

Compensation by group practice size

For the most part, compensation for physician executives employed by a single specialty group was higher than the compensation for those employed by a multispecialty group.

For example, median compensation for a single specialty group medical director was $250,000, or $45,500 more than the median compensation for a multispecialty group medical director ($200,500).

Conversely, the compensation for a medical director employed by a single specialty group practice with 16 to 50 physicians was $193,000 or $8,000 more than medical directors employed by multispecialty groups of the same size.

Physician executives' financial rewards seem to justify the extra academic effort. Despite the oft-heard advice that experience outweighs education in hiring decisions, the survey shows that some physician executives who hold advanced business degrees earned more than executives who have yet to complete them.

Sixteen percent of the survey respondents hold a master's degree in business administration, qualifying it as the preferred business management degree among all physician executives.

Next at 9 percent is a master's degree in public health, followed by master's of medical management degree at 6 percent, a master's of health care administration in at three percent, and one percent with a law degree.

Although the master's of medical management degree was only represented by six percent of the total survey respondents, those physician executives holding a MMM had the highest median compensation at $225,000, followed closely by physician executives with MBAs at $220,000.

Physician executives with no post-graduate business degree trailed their degreed counterparts with a median compensation of $210,000. Certain positions occupied by physician executives with a postgraduate business management degree were compensated more than respondents without the master's degree.

Salary plus bonus is key to higher pay

Growing numbers of physician executives are receiving compensation in the form of a salary plus bonus, confirming the adage that the greater the risk, the greater the reward.

Physician executives who earned a salary plus bonus typically took home more than executives who only received a straight salary, according to the survey. While physician executives on straight salary brought in a median compensation of $200,000, those on a salary plus bonus earned a median of $220,000.

The higher the percentage of bonus included in a physician executive's compensation, the higher the median compensation. While physician executives whose bonus comprised less than 10 percent of their compensation earned $205,000, those whose bonus was 41 percent or more earned a median compensation of $350,000.

As the percent of bonus comprising the executives' overall compensation increased, so did the overall median compensation.

Achieving organizational objectives was a major component of most physician executive bonus plans (30%), followed by:

* Organization profit (20%)

* Discretionary measures (14%)

* Quality measurements (12%)

* Patient satisfaction (9%)

* Cost containment (7%)

This follows a common management trend. As executives move up through the ranks of organizations, they become increasingly willing to leverage their income and link it to a performance-related bonus.

Administrative compensation

The more time an executive spent in administration, the more compensation the executive received for administrative duties.

Median compensation for administrative duties only for all physician executives who spent 25 percent or less of their time in administration was $30,000, compared to $210,000 for those physician executives who allocated 100 percent of their time to administrative duties.

1998 vs. 2000 physician executive compensation

Between 1998 and 2000 physician executive compensation increased five percent from $200,000 to $210,000. Although some titles reported a decrease in compensation between 1998 and 2000, this loss could be attributed to the difference in survey sample size between the two reports.

Chief medical officer compensation was up 7 percent in 1998 from $210,000 to $225,000, while medical directors experienced the same jump in income from $186,500 to $200,000.

Lois Dister is senior vice president of Cejka Executive Search in St. Louis, Mo., a nationally known health care search and consulting firm.

Median Compensation

Median compensation for all physician executives by single specialty
group size ranged from


1 to 15 physicians      $235,000
16 to 50 physicians     $280,000
51 to 150 physicians    $249,000
150 or more physicians  $280,000
Median compensation for all physician executives by multispecialty group
size ranged from


1 to 15 physicians      $170,500
16 to 50 physicians     $207,500
51 to 150 physicians    $230,000
150 or more physicians  $242,500

Business management degrees pay off
Post-graduate degree performance

                  No Degree  MBA       MMM

CEO/President     $250,000   $269,500  $265,000
CMO               $220,000   $236,000  $205,500
Medical Director  $200,000   $204,500  $205,000
1998 and 2000 Median Physician Executive Compensation

The following table reports 1998 and 2000 comparisons for all titles.
For titles with more survey respondents, compensation by organization
type is included.

                                                            Percent
                                        1998      2000       Change

All Physician Executives                $200,000  $210,000     5.0%
* Associate/Assistant Medical Director  $172,000  $170,000    -1.2%
   Hospital                             $192,500  $165,000   -14.3%
   Single-Specialty Group               $230,000  $190,000   -17.4%
   Multispecialty Group                 $171,500  $196,000    14.3%
   HMO                                  $168,500  $169,000     0.3%
* CEO/President                         $240,000  $250,000     4.2%
   Hospital                             $235,000  $221,000    -6.0%
   Single-Specialty Group               $250,000  $260,000     4.0%
   Multispecialty Group                 $231,000  $240,000     3.9%
   HMO                                  $250,000  $220,000   -12.0%
* Chief Medical Officer                 $210,000  $225,000     7.1%
   Hospital                             $225,000  $220,000    -2.2%
   Single-Specialty Group               $187,000  $240,000    28.3%
   Multispecialty Group                 $210,000  $220,000     4.8%
   HMO                                  $220,000  $231,500     5.2%
* Department/Division Chair/Manager     $210,000  $233,000    11.0%
   Hospital                             $242,000  $262,000     8.3%
   Single-Specialty Group               $240,000  $300,000    25.0%
   Multispecialty Group                 $203,000  $225,000    10.8%
   HMO                                  $164,000  $190,000    15.9%
* Medical Director                      $186,500  $200,000     7.2%
   Hospital                             $200,000  $210,000     5.0%
   Single-Specialty Group               $221,000  $250,000    13.1%
   Multispecialty Group                 $190,000  $200,500     5.5%
   HMO                                  $185,000  $200,000     8.1%
* Vice President of Medical Affairs     $205,000  $215,750     4.9%
   Hospital                             $205,000  $215,050     4.9%
   Academic Health Center               $200,000  $220,000      10%
   Multispecialty Group                 $218,000  $246,000    12.8%
   HMO                                  $215,000  $240,000    11.6%

Other Titles

                                                            Percent
                                        1998      2000       Change

Chief Information Officer               $198,500  $222,500    12.1%
Chief Operations Officer                $183,500  $250,000    36.2%
Consultant                              $165,000  $180,000     9.1%
Director of Managed Care                $200,000  $225,000    12.5%
Director of Network Developmet          $190,000  $225,000    18.4%
Chair Member/Chair Board of             $225,000  $235,000     4.4%
Directors
Professor                               $172,000  $193,000      13%
Program Director                        $175,000  $181,750       4%
Vice President/Partner                  $225,500  $230,000       2%
Vice President of Quality               $200,000  $215,000     7.5%

1998 and 2000 Median Physician
 Executive Compensation

                                                            Percent
                                        1998      2000       Change

Director of Managed Care                $200,000  $225,000    12.5%
Director of Network Developmet          $190,000  $225,000    18.4%
Chair Member/Chair Board of             $225,000  $235,000     4.4%
Directors
Professor                               $172,000  $193,000      13%
Program Director                        $175,000  $181,750       4%
Vice President/Partner                  $225,500  $230,000       2%
Vice President of Quality               $200,000  $215,000     7.5%
Bonus pay

                  Median
Percent of bonus  Compensation

10% or less       $205,000
11%-20%           $230,000
21%-30%           $270,000
31%-40%           $283,000
41% or more       $350,000
Administrative duties

% of                 Mean
Admin. Time  Sample  Compensation

1% to 25%    16%     $30,000
26% to 50%   15%     $90,000
51% to 75%   7%      $150,000
76% to 99%   20%     $200,000
100%         42%     $210,000

RELATED ARTICLE: IN THIS ARTICLE...

Results of the 2001 Physician Executive Compensation Survey are in and they show that physician executives working in practice/hospital management companies or single specially groups earn the highest pay. Physician executives with advanced degrees appear to earn more, as well.