Pay Is Higher for Rural Physicians, New England Journal Article Says
To help recruit doctors to underserved areas, some institutions use a variety of financial incentives, including higher pay, student loan forgiveness, relocation compensation, and signing bonuses.
While underserved rural areas may struggle to attract healthcare professionals, the compensation for those that do come is higher than their urban counterparts, a study in the New England Journal of Medicine shows.
According to the NEJM, while myths persist that rural doctors make 25 to 30 percent more than their urban counterparts, recruiters say that isn’t really the case. The margins, they say, are more like 5 to 10 percent higher salaries.
Patrice Streicher, senior operations manager in Vista Staffing’s permanent search division, told NEJM salaries for rural physicians are falling.
“I can say on the record that, based on what we’re seeing, the difference will be minimal — maybe 10 percent at the most — between compensation in a rural versus urban or mid-sized community,” she said. “Five years ago, the rural offers might have had much higher salaries and different structures than urban ones, but with the growth of telemedicine and other market developments, that’s no longer the case.”
Other differences include recruiting incentives, such as relocation assistance, student loan repayment and signing bonuses.
Phillip Miller, vice president of communications for Merritt Hawkins, a physician recruiting firm based in Dallas, said those incentives could add tens of thousands to a physician’s first year of service.
“According to Merritt Hawkins’ 2019 Review of Physician Recruiting Incentives, signing bonuses are offered in 71 percent of our search assignments. The average signing bonus is $32,692,” Miller said. “Relocation allowances are offered in 98 percent of searches and the average allowance is $10,393. Health insurance, malpractice insurance, and retirement/401k also are standard incentives. To this may be added educational loan forgiveness, offered in 31 percent of our searches, with an average amount of $101,571.”
The average family physician salary, according to the report, was $239,000, slightly lower than the $241,000 from 2018’s report.
Miller said these incentives are used by both rural and urban facilities, but may be more important in rural areas.
“It should be noted that these incentives are used not just by rural facilities and practices, but by urban and suburban facilities, though the use of educational loan forgiveness is more prevalent in rural areas,” he said. “Given their challenges, rural facilities are particularly encouraged to include all of the incentives … and to make the salaries and other financial incentives higher than the average.”
Couple higher compensation rates with the relative lower cost of living in rural areas, and the differences begin to add up. For instance, a $400,000 house in a rural area may be a mansion compared to what $400,000 would buy in a place like the Chicago suburbs.
According to the Bureau of Labor Statistics, because rural areas are less-heavily populated, land prices are lower, leading to a lower cost of living. This is also true for many living expenses for rural families, the bureau found. Urban households spend about $8,000 more a year than their rural counterparts, mostly due to higher housing expenditures, the bureau found. And while rural households spend 32 percent more on prescription and nonprescription drugs than urban households, urban households spend 7 percent more on food.
But in many cases, Miller said, the incentives, lower costs of living and higher salaries may not be enough to draw doctors to rural areas.
“A particular barrier to many physicians who might otherwise be interested in rural practice is lack of professional opportunities for the spouse,” Miller said. “It is much more likely today that the physician’s spouse requires employment than it was in the past.”
New doctors may also be turned off by being farther from urban areas, he said.
“In addition, few doctors, particularly newly trained doctors, are comfortable being on a medical island where they do not have specialists on hand to consult with and are isolated. From a lifestyle perspective, it is difficult to turn off (in rural areas) – you are ‘doc’ 24/7, whether you are at the clinic or in the grocery store. It also is more difficult to get away on vacation. These are high barriers to many physicians.”
The shortage of healthcare professionals is staggering, according to a whitepaper from Merritt Hawkins. As of July 2018, there are nearly 7,000 Health Care Professional Shortage Areas (HPSAs) for primary care in the US, about double what it was just 15 years ago, encompassing an estimated 65 million people, most of whom live in rural areas. The ratio of primary care providers to patients in HPSAs is less that one provider for every 3,000 patients. In order to bring those areas up to a one to 3,000 ratio, the white paper says, it would require an additional 17,000 primary care clinicians in those HPSAs.
“The struggle continues and I would say the challenges are getting steeper. The number of federally designated Health Professional Shortage Areas (HPSAs), most of which are rural, keeps growing,” he said. “Merritt Hawkins’ 2019 Survey of Final-Year Medical Residents shows that only 1 percent of physicians about to complete their training would prefer to practice in a community of 10,000 people or less.”
Rural areas can still successfully recruit physicians and have a lot to offer, Miller said.
“Rural areas offer many of the things physicians highly value – including a greater level of clinical autonomy than they may have in larger areas, the ability to run their own practice, and to be paid on a fee-for-service basis. You can still be a doctor in a rural community, and not a cog in a wheel.”