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What Does the Physician Compensation Roadmap Look Like?

Many external factors have impacted physician compensation over the past several years. The extensive list includes pandemic-era volume reductions, volatile survey data, Medicare Physician Fee Schedule changes, rising inflation, and the list goes on! If there is any constant, it is that change is inevitable. With so much uncertainty, how can healthcare systems possibly plan for the future in terms of a sound physician compensation strategy? The answer lies in understanding expected shifts in the physician workforce, and the need for a nimble compensation structure that can adapt to market forces.

The Association of American Medical Colleges’ (AAMC) 2021 physician supply and demand study warns that a large portion of the physician workforce is nearing traditional retirement age, which could be exacerbated due to burnout concerns brought on by the pandemic. A wave of physician retirements will shift the composition of physicians to a younger generation that favors hospital employment versus private practice. In fact, according to an April 2022 study sponsored by the Physician Advocacy Institute, physicians employed through hospitals, health systems, or corporate entities increased from 62 percent before the pandemic to 74 percent after the pandemic. The AAMC also projects that physician shortages will range from 37,800 to 124,000 by 2034. During that same timeframe, people aged 65 and over are expected to increase 42.4%.

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