For an audio version of this post, please click on the speaker icon (top left).

 

When I first became a radiology attending I chose to stay at my place of training and thus took an academic faculty position.

For those that have been following my story from the beginning, you know the reason I chose this particular path was that I had just gotten married and the director of the program agreed to accept my wife into the radiology residency program if I stayed.

As it would be a 4 year training period for her, I essentially committed myself to 4 years of working in academics.

As my marriage unraveled so did her training in the program (she was terminated within a couple of months of starting her first year).

No longer bound to the initial agreement, I looked for greener pastures (which entailed searching for better weather and pay in the private sector) and fortuitously found one courtesy of Ebay, of all things.

The contrast between academics and private practice is like night and day, especially in the way physician compensation was handled.

 

 

There are probably more variations than this, but I discovered that most compensation structures fall into 3 broad categories:

• Salaried.
• Equality Based.
• Productivity (“Eat What You Kill”) Based.

 

Having directly experienced the first and the last compensation systems, I can speak with firsthand knowledge on those in particular, but I will try to touch salient points of all three.

The Salaried Compensation Model:

 

 

This is typically the model of choice seen in academic/teaching centers as well as hospital based practices.

Essentially you agree to be paid a set amount each year regardless of your productivity.

The Benefits:

• Having a reliable salary makes it far easier to budget and save as you know exactly how much is coming in each month.
  • Newly minted physicians who have not established a financial reserve/emergency fund can benefit from this guaranteed salary.
• Your vacations are truly your vacations and can be classified as paid time off.

 

The Drawbacks:

• It is very rare that you come out ahead or even break even in terms of the money you bring into the organization and the money the organization pays you.
  • This is especially true in the “for profit type” businesses who use the spread between collection and pay out to come out financially ahead.
• This pay system can be abused by some individuals which can create “seniority” warfare, something I definitely experienced during my brief time in academics.
  • There were several more senior faculty that tended to disappear into their offices despite having responsibilities that included reading studies in their assigned modalities.
  • The unread worklist was then unceremoniously dumped onto the night shift attendings which, as a junior level attending, fell predominantly onto me and a couple of other young colleagues.
    • Because of my work ethic I always finished not only what I was responsible for but also these “leftover studies” that really should have been done in the first shift.
  • This was the main factor I, as well as another colleague, chose to leave, feeling there was quite an inequality in both pay and workload which depended on seniority and not productivity or talent.
• There is no incentive to streamline your practice with personnel choices or add offerings to your practice as you will take no part in the excess revenue that would be generated.

 

The Equality Compensation Model:

 

 

This type of compensation structure is one that I have never been a part of so I am only going by what I have read about it.

Essentially an equal partnership is formed between all members regardless of seniority level in the practice or whether there is sub-specialization or not.

After all expenses are removed from collections received, each partner collects an equal share.

The Benefits:

• Easiest method for administration/accounting.
• Promotes streamlining.
  • Incentivizes each individual in the group to be as efficient as possible to maximize take home pay for all.

 

The Drawbacks:

• Assumes all partners bring equal skills and productivity to the table.
  • Can lead to one or more partners feeling slighted.
    • In this system additional training/specialization does not impact salary as you will still get the same draw as a partner who did not specialize.
  • Similar to the academic setting described above, this system can be taken advantage of by individuals.
    • It is highly unlikely that each partner is equally productive.
    • The higher producing physicians may feel slighted for carrying the load for the “under producing” physicians.

 

The Productivity “Eat What You Kill” Compensation Model:

 

 

This model is considered by many to be the fairest compensation model out there.

If you choose to work hard and see more patients/read more studies you will be rewarded by the increase in your financial bottom line.

If you choose instead to prioritize lifestyle and see less patients/read less studies you, and you alone, will bear the financial impact of that decision.

Therefore you are allowed to prioritize how you want to tilt the scale in regards to personal time or money.

The Benefits:

• Income is directly tied to productivity and independent of other members in the group.
• Encourages entrepreneurship and profit producing activities.

 

The Drawbacks:

• Depending on how the practice is structured, can have wide variances in take home pay, making it harder to budget/save.
  • Specialties that have seasonality may have high incomes in certain months and much lower incomes in down months
    • For example, pediatricians may have higher patient visits during cold season and experience drop offs in the summer months.
• No such thing as a “paid vacation.”
  • Taking time off directly impacts your financial bottom line as you are not producing, and thus earning income, when you are away.
  • This can lead to the undesired effect of not taking as many vacations as you need or should take, which can initiate or exacerbate burnout.

 

In my particular practice we have a hybrid model that addresses the first drawback quite elegantly.

Each physician has a “base salary” with set periodic payments throughout the year (bi-monthly paycheck).

• Therefore each physician has a known income floor that they can plan expenses and budget around.

 

During the course of the year each physician will create a positive balance when collections exceed payouts (or conversely a deficit if collections fall behind this base salary).

Typically these “overages” are settled bi-annually (although a physician can request a payout sooner if the balance gets to be fairly significant).

 

So for the physicians in my audience, what kind of compensation model are you currently subjected to?

Any positives or negatives I may have missed?

Please comment below.

 

 

 

 

Note:

If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”

Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.