Physician Pay Increases Will Decline

Although physicians can still expect to see salary increases next year, the increases will be smaller than they were in 2011, according to a study released by Hay Group. Overall, salaries will increase by 2.5% in 2012, compared to 2.7% in 2011.

Physicians in group-based practices can expect a larger increase than those in a hospital-based setting with increases of 3.2% and 2.5%, respectively. Hospital specialists can expect the lowest increase overall with only 2.4% in 2012. However, their group-based counterparts will enjoy a much more generous increase of 4.5%.

Primary care physicians will do well enough in 2012 with increases of 2.9% in hospitals and 3.3% in groups.

"Primary care physicians are becoming the quarterbacks of hospitals," Jim Otto, senior principal in Hay Group's health care practice, said in a statement. "The shortage of primary care physicians combined with the anticipated higher reimbursements for primary care and need to oversee the health of a broader population has led to pay increases for primary care physicians outpacing those for specialists within hospitals."

In addition to slightly smaller salary increases, the survey revealed that in 2011 the prevalence of annual incentive plans was only at 64%, down from 69% in 2010. And almost a quarter of respondents has no annual incentive plans and do not expect to implement any.

"While nearly one in four providers are not yet implementing annual incentive plans, the remaining three see the benefit or potential benefit of linking pay to performance measures,” Otto said in a statement. “If designed correctly, annual incentive plans will have profound positive effects on culture, behaviors and the success of the organization."