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Physician executive pay levels rose 7% over two years, from a median of $210,000 in 2000 to a median of $225,000 in 2002, the American College of Physician Executives (ACPE) and Cejka Search report in their biannual joint effort, the 2003 Physician Executive Compensation Survey, published the first week of November.

Pay levels in several key jobs rose more than the surveywide median of 7% (see table, p. 10). For instance, median pay for chief medical officers (CMOs) climbed 13% to $254,000 in 2002; for associate or assistant medical directors, it rose 20% to $204,000; for organization CEOs or presidents, it increased 11% to $278,000; and for hospital physician CEOs, it jumped 42% to $313,000.

Among the key factors that cause physician executive pay to vary, Cejka and ACPE say, are:

* Type of organization. Single-specialty groups paid a median of $249,000 in 2002 to medical directors, compared with $215,000 paid by multispecialty groups. HMOs paid $300,000 to CMOs, compared with $250,000 paid by hospitals and multispecialty groups.

* Size of organization. Medical director pay in 2002 ranged from a median of $200,000 in organizations with revenues of $5 million or less, up to a median of $239,000 in organizations with $1 billion or more in revenues.

* Specialty of physician executive. Cardiologist executives earned $310,000 in 2002, compared with $219,000 for pediatrician executives.

* Business degrees. Physician CEOs/presidents with MBA degrees earned $350,000 in 2002, compared with $260,000 made by their colleagues with no business degree. CMOs with MBAs earned a median $260,000 of 2002, those with a Master of Medical Management (MMM) degree earned $300,000, and those with no degree made $247,000. But medical directors earned the same $216,000 regardless of whether they had an MBA, and made $193,000 with an MMM. The percentage of all respondents with management degrees edged up from 35% in 2000 to 38% in 2002.

* Management experience. Physician executives with one to two years experience had a median income of $190,000. Those with 16 or more years of experience earned a median of $242,000.

The sample in this survey is limited to ACPE members. The sample size fell 32% from the previous ACPE/ Cejka survey, to 2,060 respondents.

Cejka Search is a health care executive and physician recruiting firm based in St. Louis.

Bonus Mix Is Key Pay Factor

The survey contains information on pay plans and benefits for physician executives.

The nearly 40% of respondents who earn only salary had median income of $201,000 in 2002, compared with median income of $240,000 for those who also earned a bonus.

For the nearly 50% of respondents whose income includes a salary and bonus, total pay rises sharply with the percentage of pay that comes in a bonus. Physician executives receiving 10% or less of total compensation as a bonus had median pay in 2002 of $220,000. Those with 21% to 30% of pay in bonus form earned a median of $275,000. For those receiving more than 40% of pay as a bonus, median compensation was $342,000.

The median percentage for bonus pay as a part of total pay was about 14% for those receiving at least some bonus.

As for the determinants of bonuses, use of supervisory discretion jumped from 20% of those responding to the question in 2000 to 36% in 2002. Quality measurements increased from 15% of respondents in 2000 to 24% in 2002, and cost containment rose from 17% to 23%. Organizational goals and profit fell in frequency but remained the most common bonus criteria (49% and 46%, respectively). Patient satisfaction and personal goals declined as bonus criteria.

It is common for health care executives to have several bonus criteria.

The frequency of many types of benefits in physician executive pay packages fell moderately from 2000 to 2002. For instance, employer-paid health insurance declined from inclusion in 90% of pay packages in 2000 to 88% in 2002. Malpractice insurance premium payments dipped from 74% to 70%, and disability insurance slid from 77% to 73%.

Other items that declined in frequency from 2000 to 2002 were life insurance, directors and officers insurance, auto allowance, and paid continuing medical education courses.

Inclusion of deferred compensation benefits plummeted from 21% in 2000 to 4% in 2002. But contributions to 401(k) or other retirement plans edged up from 79% to 80%.

The survey contains detailed data for 13 job title categories, and there are some interesting differences between jobs. For instance, while medical directors and CMOs have similar functions, two-thirds of CMOs have bonus pay, compared with about half of medical directors. Medical directors' median pay is $214,000, compared with $254,000 for CMOs.

The report is available for $150 to ACPE members and $350 to nonmembers. Contact Cejka Search at (800) 678-7858 or www.cejkasearch.com, and ACPE at (800) 562-8088 or www.acpe.org.