February 2001 Bulletin

Small salary gains expected

Change in compensation will be linked to productivity

Relatively small salary increases are on tap for orthopaedic surgeons in year 2001.

It’s part of a trend that produced a 2.23 percent increase in salaries in 1999, and over the past five years, an average increase per year of 1.15 percent, according to the Medical Group Management Association (MGMA) Physician Compensation and Production Survey 2000, a report based on 1999 data.

Any change in compensation will probably be associated with increased productivity, says David N. Gans, survey operations director at the MGMA. "For the majority of orthopaedic surgeons in independent practice, their compensation is determined by what remains after their expenses, such as personnel costs, building rent, medical supplies costs and malpractice insurance are paid," points out Gans.

"Since their costs will most likely continue to go up while reimbursement nationally is constrained by managed care, the only way orthopaedic surgeons can get an increase in salary is to work harder or to work more efficiently. And there is substantial effort to work more efficiently."

At the same time, there’s a high demand for specialists and subspecialists in the marketplace. Recruiting efforts are up–and so are starting salaries, says Michael W. Taylor, executive vice president, Cejka & Co, a St. Louis, Mo. healthcare consulting and search firm.

"We’re beginning to see slightly higher initial income guarantees for specialists and subspecialists in terms of what the new physician can get when he or she joins their first practice–that’s the good news," says Taylor. "The bad news is that in some cases, the hiring organization is putting so much money out to attract new specialists and subspecialists that physicians will stay at that level of salary for several years or until their productivity warrants significant increases in income."

According to Lawrence D. Stewart, president, Weatherby Health Care, a national recruitment firm in Norwalk, Conn., starting salaries for orthopaedic surgeons at the absolute minimum begin at $150,000 on up to $400,000 depending on the location. "In addition to the salary, there’s generally some kind of production bonus which can be figured as follows: two times the salary, less your share of operating expenses, times 25 percent would equal or could equal your bonus." However, compensation plans vary depending on the geographic location and health care community.

According to the MGMA Physician Compensation and Production Survey 2000, a report based on 1999 data, an orthopaedic surgeon’s medium starting compensation was $221,810. Over the past five years, the median compensation for orthopaedic surgeons in their first year of practice varied between $206,682 and $227,369, a relatively narrow range of less than 10 percent, notes Gans.

Taylor notes that orthopaedic surgeons are going to do fine. "They’ll be making a lot more when they adjust their productivity to match the demands of quality care–while at the same time matching the demands of the contract," he says.

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