Decoding Physician Compensation: A Guide to MGMA Salary Data

Negotiating a physician employment contract can be a complex process. Many physicians lack adequate training in the business aspects of medicine, making it difficult to determine fair market value for their services. Access to relevant physician compensation data is crucial for stating salary expectations during employment interviews. This article explores the importance of MGMA (Medical Group Management Association) salary data in understanding physician compensation, with the goal of equipping student doctors and practicing physicians with the knowledge to navigate contract negotiations effectively.

The Significance of Comprehensive Physician Salary Data

Both employers and physicians benefit from efficient salary negotiations. It is crucial for doctors to avoid definitive answers about compensation until a formal offer is made and they have engaged professional legal help in reviewing it. Compensation packages consist of various components, including base pay and productivity requirements. If an employer's offer falls short in one area, it may be possible to compensate in another.

Comprehensive and current physician salary data is essential. Data derived from actual contracts reviewed by attorneys provides valuable insights into salaries, signing bonuses, relocation allowances, and other compensation elements. Such data reflects up-to-date trends in each specialty's job market, offering an unbiased basis for negotiation.

MGMA as a Key Resource

The MGMA report provides data points based on specialties, regions, practice type, size, wRVU production, collections, and many more factors. Each year, the Medical Group Management Association (MGMA) releases a detailed report on physician compensation. This report is widely used by health systems and other employers. The MGMA data serves as a valuable resource for physician contract negotiations, providing insights into potential areas for improvement in compensation packages.

Data Collection and Aggregation

The MGMA collects data from various practice settings across the country, including private practices, academic institutions, hospitals, and health systems. The data encompasses all specialties and subspecialties. Eligible providers and practices can submit data for the report. The MGMA then aggregates this information to produce a report that serves as an invaluable resource for healthcare employers. Due to the widespread reliance on MGMA data by employers, physicians should familiarize themselves with it and understand how to interpret it.

Ensuring Data Trustworthiness

To ensure the reliability of salary data, several criteria should be considered:

Verification: Reliable salary information is compiled using actual contracts, not just crowdsourced data.
Specificity: Data should be broken down by specialty, subspecialty, geographic region, practice setting, and position type. An "average physician salary" is too broad to be helpful.
Geographic Relevance: Data should account for specific states, subregions, urban and rural comparisons, and practice types within geographic zones. A national average does not accurately reflect local market conditions.
Real-Time Market Shifts: Data should be updated frequently to reflect current market conditions. Standard industry surveys may be outdated by the time they are released. The data on Resolve’s dashboard is updated every day.
Comprehensive Compensation Analysis: Data should account for more than just base pay, including productivity expectations, call schedules, tail coverage, and noncompete clauses.

Navigating the MGMA Report

To effectively utilize MGMA data in physician contract negotiations, it is essential to understand what the data reveals and its limitations. While the data provides valuable insights, it is not definitive proof of what physician compensation should be.

Applying the Right Filters

Interpreting MGMA data requires applying the correct filters to ensure relevance. The data must be specific to your particular specialty, as the MGMA annual report includes information on more than 140 specialties. Employers often filter data based on the region of the country, dividing it into Southern, Western, Eastern, and Midwest regions. The newest MGMA report provides data based on smaller groups of states within those regions, called minor geographic regions.

The data can be viewed through numerous other lenses, including the type of practice, the service area’s population size, and the physician’s experience.

Identifying Relevant Data Points

After filtering the data, it is crucial to identify the data points that are relevant to your contract and compensation structure. For example, if your pay will be based on total collections in a private practice, the median wRVU threshold may not be relevant. Similarly, a signing bonus may not be a focus during a contract renewal. On-call daily rates may not be useful in a strictly ambulatory position.

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Clarifying MGMA Terminology

When using MGMA report data for physician contract negotiations, it is essential to understand the terms used by MGMA. Two of the most significant terms are Guaranteed Compensation and total compensation. The Guaranteed Compensation refers to the base salary the physician will earn, regardless of productivity, wRVU production, collections, etc. This number does not include the value of any other incentive payments such as a signing bonus, relocation reimbursement, or student loan assistance. The Total Compensation includes the cash that is paid to the physician over the course of a year, including all quality and productivity bonuses.

It is important to note that neither of these categories includes the value of benefits or the employer’s contributions to a retirement plan.

Applying MGMA Data to Real-Life Negotiations

After filtering the MGMA report data, identifying relevant data points, and accurately defining the terms, the next step is to apply the data to real-life negotiations. Ideally, every contract would align perfectly with the MGMA data, but this is rarely the case.

It is essential to analyze the data in comparison to the practice you're joining, identifying any circumstances that may be challenging to capture in the data. Consider factors such as a partnership track with a significant increase in income potential after the first couple of years or an amount of vacation time that is double what is typically offered.

It is also important to understand relevant factors within the practice setting. Physicians should inquire about the productivity of other physicians and the average collections for other physicians in the practice. The numbers in the contract and the numbers in the data set only tell part of the story. It is crucial to ensure that the practice and the position are structured in a way that allows you to achieve financial success. If your target is exactly the same as the median but no other physician in the practice has ever generated that many wRVUs, then it may be unreasonable for you to expect that level of production.

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The Importance of Context and Individual Circumstances

While MGMA data is a valuable tool, it is essential to remember that it is just one piece of the puzzle. Every physician's situation is unique, and their compensation should reflect their individual circumstances. Factors such as experience, skills, and the specific needs of the practice should all be taken into account.

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