PCP Compensation, Part 1

I recently read an op-ed piece in which the author wondered if any young people entering the practice of medicine felt that they were answering a “calling.” I suspect that there will continue to be, and will always be, idealists whose primary motivation for choosing medicine is that they will be healing the sick or at least providing comfort to the suffering. I occasionally hear that about a former patient who has been inspired by a personal or familial experience with a serious illness.

Unfortunately, I suspect those who feel called are the providers most likely to feel discouraged and frustrated by the current state of primary care. Luckily, I never felt a calling. For me, primary care pediatrics was a job. One that l felt obligated to perform to the best of my ability. Mine was not a calling but an inherited philosophy that work in itself was virtuous. A work ethic, if you will. Pediatrics offered the additional reward that, if well done, it might help some parents and their children feel a little better.

Fifty years ago I was not alone in treating medicine as a job. Most physicians were self-employed. Although there were exceptions like Albert Schweitzer, even those of us with a calling had to obey the basic rules of business as it applied to medicine. We were employer and employee and had to understand the critical factors of overhead, profit, and loss.

I have burdened you with this little history recitation not to suggest that things were better in the good old days, but to provide a stepping stone into the murky and uncomfortable topic of primary care physician (PCP) compensation. Because almost three quarters of you work for a hospital, health system, or corporate entity, I am going to illuminate our journey by leaning on the advice of an international company with 7000 employees and revenue of 2.5 billion dollars that considers itself a “global leader” in management consulting. Your employer is listening to some management consultant and it may help us to view your compensation from someone on their side of the table.

First, you should be aware that “most health systems lose money on their primary care operations — up to $200,000 or more per primary care physician.” This may help explain why despite being in short supply, you and most PCPs feel undervalued. However, if we are such losers, we must provide something(s) that the systems are seeking. It is likely that the system is looking to tout its ability to provide comprehensive care and demonstrate that it has a patient base broad enough to warrant attention and provide bargaining leverage on volume discounts.

The system also may want to minimize competition by absorbing the remaining PCPs in the community into their system. With you outside of the system, it had less control over your compensation than it does when you are under its umbrella.

Your employer may want to grow and feed its specialty care network, and it sees PCPs as having the fuel stored in their patient volume to do just that. In simplest and most cynical terms, the systems are willing to take a loss on us less profitable high-volume grunts in order to reap the profits of the lower-volume high-profitability specialties and subspecialties.

So that’s why you as a PCP have any value at all to a large healthcare system. But, it means that to maintain your value to the system you must continue to provide the volume it anticipates and needs. While the system may have been willing to accept some degrees of unprofitability when it hired you, there are limits. And, we shouldn’t be surprised if they continue to urge or demand that we narrow the gap between the revenue we generate and the costs that we incur, ie, our overhead.

In Part 2 of this series, I’m going to discuss the collateral damage that occurs when volume and overhead collide in an environment that claims to be committed to patient care.

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics, including “How to Say No to Your Toddler.” Other than a Littman stethoscope he accepted as a first-year medical student in 1966, Dr. Wilkoff reports having nothing to disclose. Email him at [email protected].

I recently read an op-ed piece in which the author wondered if any young people entering the practice of medicine felt that they were answering a “calling.” I suspect that there will continue to be, and will always be, idealists whose primary motivation for choosing medicine is that they will be healing the sick or at least providing comfort to the suffering. I occasionally hear that about a former patient who has been inspired by a personal or familial experience with a serious illness.

Unfortunately, I suspect those who feel called are the providers most likely to feel discouraged and frustrated by the current state of primary care. Luckily, I never felt a calling. For me, primary care pediatrics was a job. One that l felt obligated to perform to the best of my ability. Mine was not a calling but an inherited philosophy that work in itself was virtuous. A work ethic, if you will. Pediatrics offered the additional reward that, if well done, it might help some parents and their children feel a little better.

Fifty years ago I was not alone in treating medicine as a job. Most physicians were self-employed. Although there were exceptions like Albert Schweitzer, even those of us with a calling had to obey the basic rules of business as it applied to medicine. We were employer and employee and had to understand the critical factors of overhead, profit, and loss.

I have burdened you with this little history recitation not to suggest that things were better in the good old days, but to provide a stepping stone into the murky and uncomfortable topic of primary care physician (PCP) compensation. Because almost three quarters of you work for a hospital, health system, or corporate entity, I am going to illuminate our journey by leaning on the advice of an international company with 7000 employees and revenue of 2.5 billion dollars that considers itself a “global leader” in management consulting. Your employer is listening to some management consultant and it may help us to view your compensation from someone on their side of the table.

First, you should be aware that “most health systems lose money on their primary care operations — up to $200,000 or more per primary care physician.” This may help explain why despite being in short supply, you and most PCPs feel undervalued. However, if we are such losers, we must provide something(s) that the systems are seeking. It is likely that the system is looking to tout its ability to provide comprehensive care and demonstrate that it has a patient base broad enough to warrant attention and provide bargaining leverage on volume discounts.

The system also may want to minimize competition by absorbing the remaining PCPs in the community into their system. With you outside of the system, it had less control over your compensation than it does when you are under its umbrella.

Your employer may want to grow and feed its specialty care network, and it sees PCPs as having the fuel stored in their patient volume to do just that. In simplest and most cynical terms, the systems are willing to take a loss on us less profitable high-volume grunts in order to reap the profits of the lower-volume high-profitability specialties and subspecialties.

So that’s why you as a PCP have any value at all to a large healthcare system. But, it means that to maintain your value to the system you must continue to provide the volume it anticipates and needs. While the system may have been willing to accept some degrees of unprofitability when it hired you, there are limits. And, we shouldn’t be surprised if they continue to urge or demand that we narrow the gap between the revenue we generate and the costs that we incur, ie, our overhead.

In Part 2 of this series, I’m going to discuss the collateral damage that occurs when volume and overhead collide in an environment that claims to be committed to patient care.

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics, including “How to Say No to Your Toddler.” Other than a Littman stethoscope he accepted as a first-year medical student in 1966, Dr. Wilkoff reports having nothing to disclose. Email him at [email protected].

I recently read an op-ed piece in which the author wondered if any young people entering the practice of medicine felt that they were answering a “calling.” I suspect that there will continue to be, and will always be, idealists whose primary motivation for choosing medicine is that they will be healing the sick or at least providing comfort to the suffering. I occasionally hear that about a former patient who has been inspired by a personal or familial experience with a serious illness.

Unfortunately, I suspect those who feel called are the providers most likely to feel discouraged and frustrated by the current state of primary care. Luckily, I never felt a calling. For me, primary care pediatrics was a job. One that l felt obligated to perform to the best of my ability. Mine was not a calling but an inherited philosophy that work in itself was virtuous. A work ethic, if you will. Pediatrics offered the additional reward that, if well done, it might help some parents and their children feel a little better.

Fifty years ago I was not alone in treating medicine as a job. Most physicians were self-employed. Although there were exceptions like Albert Schweitzer, even those of us with a calling had to obey the basic rules of business as it applied to medicine. We were employer and employee and had to understand the critical factors of overhead, profit, and loss.

I have burdened you with this little history recitation not to suggest that things were better in the good old days, but to provide a stepping stone into the murky and uncomfortable topic of primary care physician (PCP) compensation. Because almost three quarters of you work for a hospital, health system, or corporate entity, I am going to illuminate our journey by leaning on the advice of an international company with 7000 employees and revenue of 2.5 billion dollars that considers itself a “global leader” in management consulting. Your employer is listening to some management consultant and it may help us to view your compensation from someone on their side of the table.

First, you should be aware that “most health systems lose money on their primary care operations — up to $200,000 or more per primary care physician.” This may help explain why despite being in short supply, you and most PCPs feel undervalued. However, if we are such losers, we must provide something(s) that the systems are seeking. It is likely that the system is looking to tout its ability to provide comprehensive care and demonstrate that it has a patient base broad enough to warrant attention and provide bargaining leverage on volume discounts.

The system also may want to minimize competition by absorbing the remaining PCPs in the community into their system. With you outside of the system, it had less control over your compensation than it does when you are under its umbrella.

Your employer may want to grow and feed its specialty care network, and it sees PCPs as having the fuel stored in their patient volume to do just that. In simplest and most cynical terms, the systems are willing to take a loss on us less profitable high-volume grunts in order to reap the profits of the lower-volume high-profitability specialties and subspecialties.

So that’s why you as a PCP have any value at all to a large healthcare system. But, it means that to maintain your value to the system you must continue to provide the volume it anticipates and needs. While the system may have been willing to accept some degrees of unprofitability when it hired you, there are limits. And, we shouldn’t be surprised if they continue to urge or demand that we narrow the gap between the revenue we generate and the costs that we incur, ie, our overhead.

In Part 2 of this series, I’m going to discuss the collateral damage that occurs when volume and overhead collide in an environment that claims to be committed to patient care.

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics, including “How to Say No to Your Toddler.” Other than a Littman stethoscope he accepted as a first-year medical student in 1966, Dr. Wilkoff reports having nothing to disclose. Email him at [email protected].