This point of view matches a compensation structure that might have a new residency grad start at a lower salary that increases to the “mature” level after 12 to 18 months, and remains there without future tenure-based increases—that is, a single step up in salary based on tenure. I think this makes sense for most practices.
Exceptions to the Rule
I can think of two reasonably common situations in which a group might deviate from a single tenure-based salary increase. The first is private groups in which the physicians are the contractual owners of their practice (i.e., they’re employed by a corporation they own, and not employed by the hospital or another large entity). In this structure, new physicians typically have a lower salary until they become a partner, usually after a year or two with the group. Becoming partner could require buying into the practice with tens of thousands of dollars, and might include the opportunity to share in future profit distributions. (Although buying into physician practices has been a common and appropriate model for decades, I think a new hospitalist should think carefully about whether what they will own after buying in is really worth the cost of the buy-in.)
Another exception is when hospitalists are part of a large multi-specialty physician group that offers multiple tenure-based salary increases for all physicians in all specialties. It probably makes sense to structure the hospitalist compensation plan the same way. But remember, it might take several years for primary-care physicians and surgeons to build robust patient populations and referral streams, and annual increases in salary for the first five years might mirror the pace by which a typical doctor builds his or her practice.
A new hospitalist, even one just out of residency, has an essentially mature referral stream within days of starting. So a five-year, tenure-based increase in salary could look more like the practice is simply underpaying the hospitalist until their fifth anniversary with the practice.
Automatic Increases
Some hospitalists have automatic cost-of-living salary increases. In some cases, the increases are tied to an external benchmark (e.g., the consumer price index), but it is probably more common that the future increase is simply estimated and compensation is contractually assured of increasing by a few percentage points annually.
Most hospitalists don’t have such a provision in their contracts. Indeed, most working Americans with salaries in the hospitalist range and higher don’t have cost-of-living increases. Instead, future salary adjustments are made based on market data, such as the results of salary surveys. TH
Dr. Nelson has been a hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.