Negotiating physician salaries: Addressing compensation misconceptions

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While recent media coverage may reduce physicians to mere salary figures, the reality is far more nuanced. The critical truth is that these professionals dedicate their lives to saving others. How do you quantify the value of a career spent preserving health and preventing loss of life?

A recent USA Today article called U.S. physicians “conspicuously well-paid” and stated that “doctors like money,” yet such claims ignore the data surrounding rising shortages, workloads, burnout, student debt and ongoing pressures that health care professionals face. The article also focuses only on the highest-paid specialists but leaves out the largest group of practitioners: primary care physicians. According to the Medical Group Management Association, primary care physicians earned an average of $300,000 annually in 2023, significantly lower than the $432,983 average for nonsurgical specialists.

Maureen Cragon, CMSR
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Rising health care costs are a shared societal concern, but the underlying causes are systemic. These include increasing administrative inefficiencies, limited residency slots and high malpractice insurance premiums, which create financial pressures for providers and patients alike. In this competitive environment, advocating for fair compensation is not about greed but recognizing the value physicians deliver to public health.

Negotiations shouldn’t be taboo; primary care physicians can leverage their critical impact on improving patient outcomes and reducing overall health care expenses. They can also look beyond base salary to variable elements such as benefits, bonuses, loan repayment and more. Additionally, physicians have the option to pursue locum positions, in which higher daily rates and flexible schedules offset the absence of benefits.

Five tips for better negotiations

Effective compensation negotiations are essential for both primary care physicians and medical practices to establish clear expectations and ensure mutual satisfaction. By approaching these discussions with preparation and a focus on priorities, physicians can secure packages that align with their personal and professional goals. It’s advantageous to define specific priorities and carefully review contracts before sitting across from a potential employer.

If you’re preparing for a negotiation — whether for a permanent position or a locum role — here are some key factors to consider:

1. Understand the full compensation package. There are many possible add-ons to an offer, but if they’re not confirmed up front, it’s very difficult to go back and negotiate after the fact. For full-time roles, it’s important to proactively ask about benefits, sign-on and retention bonuses, relocation compensation and loan repayment. Increasingly, physicians are also asking about a practice’s philosophy around scheduling, paid time off (PTO), family leave and more.

While locum physicians are not offered the same packages as W-2 employee providers, it helps to confirm the hourly rate, start and end dates, shift schedule, shift cancellation policy, onboarding process, overtime and administrative responsibilities.

2. Understand medical malpractice coverage. Carrying insurance is essential and even required by law in some states. When negotiating with a practice, it’s important to understand what it covers and what falls on you. Locums who are not working through an agency need to be proactive in educating themselves on buying their own policy.

Ensure you understand tail coverage, which protects you from claims filed after your policy ends. This is crucial when switching jobs or insurance carriers, as it can save you from unexpected legal or financial issues. There may be the opportunity to receive assistance with this coverage from the medical practice, so be sure to include it in your discussions.

3. Familiarize yourself with relative value units (RVUs). While uncommon in private practice and locum assignments, it’s still helpful to understand RVUs and how they may be used to track your productivity and value to the organization. If you want to know your true earning potential on an RVU compensation plan, make sure to ask what the multiplier is per work RVU and the threshold expectation to start earning the multiplier.

4. Leverage market research. Because practices want to maintain equity among comparable staff, there’s usually a threshold of what they’ll negotiate. If possible, try to understand the lay of the land before entering negotiations. Whether it’s a permanent or locum role, do your research and reach out to others who may be willing to provide you with guidance on their compensation package, which can serve as a reality check for negotiations.

5. Know when to walk away. Set your deal-breakers and clear boundaries. For instance, if a practice can’t meet your minimum salary expectations or offer reasonable work-life balance, it’s important to step away. Determine what is and isn’t negotiable ahead of time and recognize that not every position is worth compromise. Walking away isn’t a failure; it’s an opportunity to find a better fit. Locum work is a compelling option that provides the chance to work in different practice settings and locations to determine what is best for you.

Special considerations for locum physicians

One of the biggest challenges for locums negotiating their own pay rates is overcoming the “locums are too expensive” misconception. In reality, every day without a full-time employee is a greater cost to the practice than hiring a locum and has the potential to reduce patient capacity, increase the burden on permanent physicians and diminish patient outcomes. In rural areas, for instance, a locum physician might enable a clinic to stay open, providing care to hundreds of patients who would otherwise travel miles for basic services.

Locums help bridge this gap to generate revenue that would be lost during the search for a permanent hire, which on average takes eight months. One estimate of return on investment found that by swiftly filling vacancies and preventing millions in lost revenue per physician, locums ensure continuity of care while delivering a return on investment between two- and sixfold across specialties — averaging a return of 3.2 times the investment (or 220%) within one year.

It’s true that locums have higher hourly pay rates, but they also don’t receive employee benefits, unemployment benefits or paid time off. And locums are typically not considered for sign-on bonuses, relocation costs or student loan repayment opportunities. Most locums are willing to make this trade-off because they prioritize flexibility and work-life balance over a larger total compensation package and should keep that in mind when negotiating hourly rates.

Primary care physicians are vital to communities

Primary care physicians are often the first and most trusted touchpoint for patients navigating complex health systems — a role essential to fostering trust and ensuring long-term health outcomes through preventive care, early detection and management of chronic conditions. Despite these patient benefits, it’s estimated that over 100 million Americans are medically disenfranchised and at risk of not having access to a source of primary care due to a shortage of providers in their community. This interactive map illustrates just how pervasive the problem is across the country.

As a society, systemic changes need to be made, and policy makers, health care systems and insurers must collaborate to increase funding for primary care. This includes supporting residency programs and implementing incentives to attract more providers to underserved areas. In the short term, we need to recognize that the work primary care physicians do is foundational to the U.S. health care system and equitable compensation is not just about fairness; it’s an important step toward stabilizing our health care system and improving outcomes for all.

Maureen Cragon, CMSR, is vice president of Caliber Healthcare Solutions, where she oversees both the advanced practice and primary care divisions. Her background includes leading provider recruitment for nonprofit and for-profit health systems, as well as health care staffing companies.