The Tradeoffs Between Academic and Private Practice

July 19, 2010
Ed Rabinowitz

With managed care and the rising cost of running a medical practice continuing to eat away at physician incomes, it would be easy to assume that the gap between compensation in academic practices versus private practices would have narrowed. That assumption would be wrong. A recent survey shows compensation in academic practices continues to lag that of private practices.

With managed care and the rising cost of running a medical practice continuing to eat away at physician incomes, it would be easy to assume that the gap between compensation in academic practices versus private practices would have narrowed. That assumption would be wrong.

A recent member survey conducted by the Medical Group Management Association indicated that, from 1999 to 2009, compensation in academic practices continued to trail that of private practices. According to Gordon Ewy, MD, professor of cardiology, and director of the University of Arizona Sarver Heart Center, the key words in that sentence are “continued to trail.”

“Private practice has always, always paid much better than academic,” emphasizes Ewy.

A Passionate ChoiceThe reasons why are clear. According to the MGMA survey, academic primary care physicians reported annual compensation of $158,218 in 2008, while specialty care physicians reported compensation of $238,587. The numbers for private practices averaged $186,044 and $339,738, respectively.

Crystal Taylor, director of surveys for MGMA, says the discrepancy is not surprising, considering the structures of the two career paths. Academic practitioners spend just as much time, if not more, teaching and conducting research as they do in clinical work. Taylor points out that in the private sector, physicians can equate their productivity to their salary. Work harder, see more patients, generate more charges, and thereby more collections. That equation doesn’t directly translate on the academic side of the ledger.

“There are probably not the same monetary rewards on the research side, but I think what is not taken into consideration is it’s really about lifestyle and passion for the academic group,” Taylor says. “You come to that fork in the road where you have to set your priorities in motion. Do you really have a passion for teaching and research, or for patient care? I think that’s what helps decide which path you’re going to choose, not necessarily the money piece.”

Well, maybe. Ewy explains that when he graduated from medical school in 1961, most of his class went into internal medicine or primary care. Look, in comparison, at last year’s graduating class at the University of Arizona, where only seven went into internal medicine. Instead, the majority went into orthopedic surgery, radiology and dermatology -- among the highest-paying medical jobs. The reason, says Ewy, is simple.

“They go to college and it costs a fortune,” he explains. “Then they go further into debt in medical school. Somehow, they have to pay off their debt.”

Pressures on Both SidesTaylor says lifestyles might be different between academic and private practitioners, but there are inherent pressures in both career paths: “They’re just different pressures.” Increasingly, academic practitioners are facing greater pressure to generate income for their affiliated groups or medical schools, she says. “In that respect, there’s pressure for them to look, feel and act more like physicians in the private sector.”

Ewy agrees, adding that the future of academic medicine in some ways is going to depend on endowed chairs or professorships -- positions paid for with the revenue from an endowment fund specifically set up for that purpose.

“That’s the only thing that allows [physicians] academic or protected time, because there’s no money for teaching,” Ewy says. “When I hire young people into academic medicine, I tell them they have to essentially generate their own salary. They ask, ‘How is this different than private practice?’ I tell them that without an endowed chair, it isn’t.”

Ewy says the secret to successful fundraising is to make something so good that people want to invest in it. “Every school is trying to do that,” he says. It’s an approach that has been successful at the University of Arizona Sarver Heart Center, and one that Ewy hopes will further attract young physicians whose passion is research and being a part of something special.

“That’s what we would hope. We have 400 applications for our five cardiology fellowship positions each year, he says. “I used to think that I could just recruit these people because they’re interested in academics. Then I learned that I couldn’t recruit any of them because they are so deep in debt they can’t afford to go into academic medicine.”

Taylor says it’s a tradeoff -- a choice everyone must make regardless of their career. When it comes to academic vs. private practice, “There are some very clear lifestyle choices that have been made by each of those groups that results in either higher or lower pay,” she says. Taylor adds that medical students understand those tradeoffs, and that the risk can be much greater if you hang out a shingle and go into private practice. “There is a risk-reward tradeoff.”