This is an excerpt of a 1,488-word article in the November 8, 2021 issue of THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.
CEO SUMMARY: In its 28th Annual Physician Compensation Survey, Modern Healthcare put pathology income at number 14 of 23 medical specialties. It reported the range of pathologist compensation during 2020 at $287,000 to $409,528, with the salary midpoint at $384,264. However, that’s not the full story, said two experts in pathology recruitment and compensation arrangements. They pointed out the Modern Healthcare survey did not account for experience or different practice settings.
DEMAND FOR PATHOLOGISTS IS AT ITS HIGHEST LEVEL IN 20 YEARS. Yet one annual national survey of physician income ranks pathology income at number 14 of 23 medical specialties.
This data came from Modern Healthcare’s 28th Annual Physician Compensation Survey. Published in July, Modern Healthcare reported that pathology income ranged from $287,000 to $409,528.
Based on the survey’s pathology compensation range, the midpoint for a pathologist salary is $348,264. Pathologists, on average, make $68,724 less than the average paid to physicians in 2020.
Overall, doctors’ compensation “plateaued” in 2020, increasing about 0.5% in 2020 to $416,966, Modern Healthcare’s survey said. Pre-pandemic, however, physicians got on average a 2.7% salary boost in 2019 over 2018, the survey added.
Modern Healthcare’s report analyzed salary data from 10 consultancies, physician search firms, and associations. The highest reported pathology income of $409,528 was shared by Sullivan-Cotter, a Chicago consulting firm, while the lowest of $287,000 came from Merritt Hawkins, a Dallas-based physician search firm.
When showed the Modern Health physician compensation data, experts in pathologist recruitment, retention, and compensation advised caution in how pathologists and pathology practice managers use that information. They recommended this report only be as a baseline that provides a general overview of physicians’ salaries.
Not a ‘Holy Grail’
The experts pointed out a proper compensation analysis would provide more complete data about:
- The survey sample size of pathologists;
- What compensation is offered by different types of employers (such as hospitals, private practices, commercial labs, and academic institutions); and,
- Productivity in medical laboratories involved in the survey.
“The survey provides a general overview of the market for physicians and relative differences in how individual physician specialties are paid,” said Rich Cornell, President, Santé Consulting, a pathologist and laboratory medicine recruiting firm based in St. Louis. “But it is not 100% representative of the profession because the subset of pathologists reporting data may be quite small.”
Cornell’s opinion was mirrored by another expert in pathology group management and compensation arrangements. “My feeling is you have to make the distinction in these national surveys between those pathologists that are lumped together, those that are broken out by private practice, and those who are salaried by the hospital,” noted Robert Tessier, Founder and Principal, HBP Services, Woodbridge, Conn., and Panelist, Panel of National Pathology Leaders (PNPL). At HBP, which stands for Hospital-Based Physician, Tessier’s responsibilities include advising hospitals on their contracts with pathology groups.
“There is a big gap in the range of annual pathologist compensation reported by Modern Healthcare. It goes from a low of $287,000 to a high of $498,528,” Cornell noted. “There are many variables within that gap. Someone in private practice for 10 years may make $409,000 and someone in practice for three years may make $287,000. Pathology practice administrators should not be using this survey data as a ‘Holy Grail,’” Cornell said.
Variables in Pathology Income
Tessier shared key data from a Pinnacle Healthcare Consulting study commissioned for HBP. Unlike the Modern Healthcare survey, the Pinnacle study focused on pathologist productivity and compensation. Findings varied based on employer type—either private practice or hospital-employed—and work relative value units (wRVUs).
For example, the Pinnacle study determined that median compensation in 2019 for anatomic and clinical pathologists employed in private practice was $375,997 as compared to $363,528 for those employed by hospital laboratories. However, the wRVUs per FTE, according to this study, were a median of 6,614 in private practices and 6,110 in the hospitals.
Private vs. Hospital Settings
“One obvious conclusion from these data are that a pathologist in private practice is paid slightly more [than in a hospital setting], but doing more work,” Tessier observed. He also noted a trend for salary surveys, generally, to be more representative of hospital-employed pathologists over private pathology practices. “Those (with hospital-based data provided by American Medical Group Association, for example) are the ones who dominate surveys and drag the salaries down,” he explained.
“The key point here is that a study of pathologist compensation must be put in the context of productivity,” Tessier continued. “Further, many physician compensation studies fail to include the value of fringe benefits, payroll taxes, and coverage for malpractice insurance.
“Again, it is important to recognize the difference in practice settings,” he added. “Most hospitals quote fringe benefits worth 25% of compensation. By contrast, evaluations of compensation from private practice groups show fringe benefits as representing approximately 17% to 18% of compensation.”
Other variables affecting pathology income include individual experience and subspecialty, according to Cornell. The highest compensation goes to dermapathologist at $300,000, followed by molecular pathologist at $275,000, and pathologists specializing in gastroenterology or genitourinary at about $275,000, said Cornell, who based these numbers on his work with employers.
“The above estimates are for graduating fellows with no experience and entering into the private sector,” he noted. “Pathologist compensation in academic settings is, of course, different.”
The good news is that pathology income is up by about 10% in 2021 after a tough-go in 2020, according to Cornell.
“We see overall increases in starting compensation over 2019 of up to 10%,” he noted. “Further, bonus structures this year are more conservative because of the financial disruptions experienced by pathology groups last year. If there is a bonus, it is not guaranteed.
Hiring Freeze in 2020
“When the pandemic first hit, most healthcare systems, pathology groups, academic centers and labs enacted a hiring freeze. And they made adjustments in compensation, not knowing when volumes would come back,” Cornell added.
“It was not until the third quarter of 2020 when testing volumes rose and demand increased as more patients went to see their doctors,” he recalled. “That demand is still high and is fueling a competitive compensation model that’s driving up pathologist salaries.”
This demand, he said, is greater than the number of pathologists who are completing fellowships or who are actively looking for jobs.
“This results in a more competitive hiring market across all of the employment sectors that utilize pathology professional services,” Cornell commented. “What these organizations paid pre-COVID is not the norm post-COVID, as there’s a 5% to 10% or more increase across the board—from junior pathologists to senior pathologists in all regions and subspecialties across the country.”
Not only are employers paying more to recruit a new pathologist, they are also boosting pay of recently-hired employees to bring them to parity with each other, Cornell said.
“If a pathology group does not bring a person they hired last year to the same level of their new hires this year, they risk an unhappy employee within the group because of ‘water cooler discussions’ about salaries that inevitably happen,” Cornell warned.
Pathology has been impacted by other factors beyond the pandemic. The Dark Report recently explored the issue of an aging pathologist workforce, even more dire in light of residency training programs with fewer pathologists.
“The number of pathologists we are seeing retire is the highest I have ever seen in 30 years of doing this. And that cliff is not going to plateau, in my opinion, for the next couple of years,” Cornell said.
“Residency slots are not being filled, medical students who choose pathology as their field enrollment is down, and over a period of time it is going to impact lab workflows,” Cornell added.
An anatomic pathologist signing out 4,000 surgical cases a year may need to sign out 5,000 cases a year until things start stabilizing and catching up, Cornell said, noting that digital pathology (DP) can change that. “We are not there yet. Some pathology groups are doing a good job in digital volume. Also, academic physicians are laser-focused on educating medical students on pathology as a career.”
As a pathologist, how does your salary compare to those salaries quoted in the article? Please share your thoughts with us in the comments below.