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Studies Find Physician Compensation Gaps By Setting, Gender

Two separate studies show that physician compensation is lower among female physicians and those working in practices acquired by hospitals or health systems.

Jacqueline LaPointe
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Published: 07 Dec 2021

Physician compensation may hinge on your gender and where you practice, two studies published in the December 2021 edition of Health Affairs suggest.

One study analyzed data from over 80,000 full-time physicians across a variety of settings, including academical medical centers and community sites, and a variety of specialties. It found that physicians labeled as female by sources such as the National Plan and provider Enumeration System, National Provider Identifier Registry, and the American Board of Medical Specialists earned about 25 percent less than their male counterparts over the course of simulated 40-year career. That represented a $2 million difference over a physician’s career.

The simulation calculated that male physicians earned an average adjusted gross income of over $8.3 million while female physicians earned over $6.2 million. These estimates were also after adjustments for factors “that may otherwise explain observed differences in income, such as hours worked, clinical revenue, practice type, and specialty,” researchers stated.

Physician compensation gaps by gender accelerated over time, which for the sake of the study was 2014 through 2019. This further suggests that “any potential reductions in nonclinical responsibilities that may occur later in women’s careers are not associated with recovery in annual income.”

“Moreover, our findings suggest that later in their careers, despite working full time and having accumulated years of experience, women do not ‘catch up’ in terms of income; early income disparities persist,” researchers wrote.

They said that the “magnitude of these career differences suggests that policies that address underlying causes of gender differences in physician income may have large economic impacts over the course of a career.”

Compensation differences by practice ownership

A separate study also published in the latest edition of Health Affairs also found physician compensation differences, but this time, among physicians practicing in independent and hospital-owned practices.

More physicians work for a hospital or a practice in which they do not have an ownership stake, according to the American Medical Association (AMA). This is largely due to hospitals and health systems acquiring physician practices, in a trend known as vertical integration.

Research has shown that vertical integration is associated with higher hospital profitability, researchers pointed out in the Health Affairs study. However, less is known about its impact on physician compensation among those working in the practices.

Researchers analyzed national survey data on physician practice ownership with data on physician income from 2014 through 2018. During that time, hospital and health system ownership of physician practices increased by about 89 percent, they found.

At the same time, physician compensation for providers working in acquired practices was 0.8 percent lower, on average, compared to the income of independent physicians. The difference translated to an average of $2,987.

Notably, hospital ownership of physician practices was associated with steeper physician compensation declines when the practice was in a more competitive market and if the hospital acquiring the practice was a non-profit organization.

Researchers said the difference in physician compensation by practice setting was modest though. However, these deals are slightly impacting income for physicians.

“Our findings suggest that although vertical integration between hospitals and physician practices may be profitable to hospitals or health systems, physicians in practices that are acquired might not receive significant financial benefits in the form of higher income,” they wrote.

This is in contrast to evidence that hospitals can benefit from practice acquisitions, with some studies finding an estimated 19 percent increase in hospital revenue following an acquisition.

Physicians may not be reaping the financial benefit of vertical integration because the deals support “monopsony purchasing of physician labor, whereby concentrated employers face little competition for physician labor and thus depress compensation,” researchers explained.

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