Clinical Labs Bidding Up Lab Director Salaries

Surprise! Strong demand for medical directors, PhDs who can sign out molecular, genetic tests

CEO SUMMARY: There’s great news for pathologists and PhDs with expertise in molecular and genetic testing. Salaries are on the rise as more clinical labs build up their molecular and genetic testing programs and need talent to implement and supervise this activity. One experienced medical recruiter recently surveyed all the current pathology openings nationally. He determined that the subspecialties of molecular pathology and hematopathology have the highest demand in the hiring marketplace.

IT MAY SEEM COUNTER-INTUITIVE that the compensation for pathologists, PhDs, and medical doctors is climbing even as clinical lab budgets are shrinking and lab test prices are decreasing. But higher compensation packages are the reality in the job market today, asserts a well-known medical recruiter.

“Hiring in the lab business slowed dramatically beginning in 2008, at the start of the deep recession,” observed Rich Cornell, owner and founder of Santé Consulting LLC, a healthcare search firm in St. Louis. Santé specializes in recruiting pathologists and clinical lab scientists at the director level and above for positions nationwide.

“Each year since 2008, more positions have become available and salaries have been rising,” commented Cornell. “When demand for executive and director-level talent outstrips the supply, which is the case today, that’s when salaries start to climb.

“Three reasons fuel this increased demand for lab positions,” he said. “First is an aging workforce, because older pathologists and lab directors are retiring, thus opening positions for younger colleagues.

“The second reason is that laboratories today have adjusted to the chilling effect on jobs and salary increases in pathology that resulted from successive cuts in Medicare payment for Part B testing,” commented Cornell.

“Reason number three is the growing economy,” he continued. “The robust economy not only boosts salaries but also helps pathologists in another way. After 2008, a number of pathologists were unwilling to retire because they had lost so much value in their stock portfolios. So, rather than retire, they continued to work. Today, the rising stock market has lifted the value of stock portfolios retiring pathologists hold.

Nest eggs Bounce Back

“Thus, older pathologists are retiring now because their nest eggs have come back,” explained Cornell. “In turn, those retirements create demand specifically for employed pathologists—whether they are hospital-based or in fee-for-service groups. That’s because the lab organizations that employed them need to replace the senior people who retired out of those practices.”

“What plays a roll in driving up salaries are new diagnostic technologies, such as genetic and molecular tests. An increased number of these tests require hospitals and independent labs to hire specialized pathologists, PhDs, and medical directors,” he added.

Why Do Younger Pathologists Decide to Change Jobs?

ARE NEWLY-HIRED PATHOLOGISTS looking for utopia on the job? Maybe, said Rich Cornell, of Santé Consulting LLC, a health- care search firm.

“In their first five years on the job, about 40% of pathologists and maybe more, change jobs,” Cornell said. “At our firm, we wanted to know why. We did a survey and determined that when they end their training, many pathology residents or fellows get into a job they weren’t expecting.

“The reason for that is — right out of school—most residents and fellows choose their first jobs based on geography,” he said. “Basically, they have tunnel vision because they’re looking for a job in a specific location. Therefore, they take whatever comes along.

“But then, within two to five years, they find the practice wasn’t exactly what they expected, they weren’t made partner or were treated poorly,” he said. “Maybe they don’t like the workflow because they have to push out too many cases.

“So, for their second and successive jobs, they broaden their scope,” he added. “Now compensation is secondary to other issues such as an improved quality of life. That may mean they want to work well with other pathologists in the group. They look at the demeanor of the practice and how the other pathologists approach cases.

“At this stage, I always tell them, utopia doesn’t exist, but still that’s what they want,” observed Cornell.

Will Move for opportunity

“Another factor that helps drive up salaries paid by labs is that pathologists and clinical lab directors are unlike physicians in other specialties who have to build up a patient base and so often cannot move easily,” Cornell continued. “Conversely, pathologists can and do move freely within the healthcare system and thus can pursue higher-paying positions in a wide variety of cities and towns.

“Recently, I gave a presentation on a study we did of 344 pathology openings to find out who is hiring,” Cornell said. “Of those 344 openings, 47% were academic positions, 27% were hospital based, 20% were in private labs, and 4% were in large commercial labs such as LabCorp, Quest Diagnostics, or Sonic Health.

“Next, we analyzed the posted job openings for the subspecialists these organizations wanted to hire,” he stated. “It should be no surprise that the top opening in pathology was for a specialist in molecular testing. At the moment, the hottest subspecialty is broadly defined as molecular genetic pathology. That will be the case for many years.

“The number two most-sought-after subspecialty is hematopathology,” added Cornell. “For the past two years, we’ve seen demand for hempaths rising right along with molecular.

“In fact, a large number of organizations are looking for molecular hematopathologists,” he commented. “Hematopathology goes in hand with molecular testing. It’s unclear, however, whether that linkage will continue, but strong demand for molecular specialists surely will continue.

“When demand for specialists rises, then the salaries for these clinicians rises too,” noted Cornell. “That demand is why compensation for molecular pathologists and hematopathologists has risen over the past five years.

“In 2012, a fellow starting out in hematopathology would earn somewhere in the range of $175,000 to $180,000 in annual salary,” he said. “Today that same fellow would start at about $200,000 to $225,000 range.

“Mid-career pathologists are earning in a range from $270,000 to a high of $350,000,” added Cornell. “Salaries also are rising at the upper end of the scale for more experienced pathologists—but not at the same rate of increase. A director or chief at a community hospital-based practice would have a salary today that’s in the mid-$300,000 to the low $400,000 range.

“All of these salaries continue to rise from their levels following the Great Recession and from where they were just three or four years ago when there was a big hit to what Medicare paid for the Part B component,” Cornell explained. “Those fee cuts really halted the market in terms of compensation. Every lab had hiring and salary freezes, and starting salaries were very conservative. But now we see a market adjustment.

Survey of Pathologist Salaries Indicates Stability During 2015

EACH YEAR, A SURVEY OF PHYSICIAN SALARIES is published by Modern Healthcare. Below is the data it published in December 2016, about pathologist salaries for 2015, as reported by seven organizations.

                                                               % change 2014-15

HHCS  $368,284  28.4%
AMGA  $363,636  2.4%
Sullivan  $355,559  0.2%
MGMA  $342,552  -5.6%
ECG  $337,050  -3.2%
Compdata  $275,300  3.7%
Pinnacle  $211,000  0.5%

KEY: American Medical Group Association, Compdata Surveys & Consulting, ECG Management Consultants, Hospital & Healthcare Compensation Service, Medical Group Management Association, Pinnacle Health Group.

“That market adjustment shows how pathology is changing,” he said. “Today, as senior people retire, hospitals bring in pathologists who are younger and are savvy about the technology in use today. By that I mean the testing technology for genetic and molecular assays, next-generation sequencing, and whole exome sequencing.

“These younger pathologists have experience of 10 or more years and they have a vision of where pathology is going,” explained Cornell. “They can help the hospitals or pathology groups that hire them to move to the next phase of where diagnostic medicine is headed.

“One example illustrates this aspect of the demand for pathology expertise,” he noted. “Recently, I received a call from a community hospital-based pathology practice. This practice served a 220-bed, physician-owned hospital. The hospital CEO is a physician who understands where precision medicine is going. The CEO called the director of pathology to say the hospital needed to hire a molecular pathologist.

“That CEO saw what was happening in healthcare today and recognized where cancer treatment is headed,” continued Cornell. “Cancer treatment is becoming more focused on molecular testing and so the CEO suggested that this hospital hire a molecular pathologist so that it could establish a molecular program to allow them to compete effectively today and be well positioned into the future.

“Will this be a broad market trend?” he asked. “It’s a bit early to tell. Meanwhile, we continue to get calls to fill positions like the example above. This is why I predict that smaller hospital systems will want to bring on molecular testing in the coming years,” Cornell concluded. “That may be where this is headed.”

Contact Rich Cornell at 636-777-7885 or


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