The use of a structured compensation model promoted pay equity among physicians in a large academic medical system, according to study data published in Mayo Clinic Proceedings.
The Mayo Clinic employs a step-based, salary-only structured compensation model to determine physician salary. New physician hires begin at “Step 1,” in which compensation is set at a percentage of a target salary. After 5 years of employment, physicians reach “target salary,” which is equivalent for all employees in a given position and specialty. No incentive plans or bonuses are offered for additional academic work; academic rank and external recognition are not integrated in salary calculations. The Mayo Clinic claims such an approach prioritizes patient care and disincentivizes within-department competition. This compensation model is also intended to reduce pay disparities among minority and women physicians. A third-party consulting firm was employed to assess Mayo Clinic’s adherence to its own salary model and to investigate its impact on pay equity.
All permanent staff physicians employed at the Mayo Clinic medical practices in Minnesota (n=1937), Arizona (n=497), and Florida (n=411) as of January 2017 were selected for inclusion. Abstracted data elements included salary, clinical specialty, demographic information, and career elements. Benchmark pay for each specialty was also assessed. For each physician, the full-time equivalent (FTE) salary was calculated. Regression analyses were performed using the natural log of each FTE salary to determine predicted pay. CIs of 95% were generated based on the structured compensation plan.
Of 2845 physicians included in analyses, 861 (30.3%) were women and 722 (25.4%) were non-white. Salary equity was confirmed in 96% of participants. Salaries were higher than predicted for 80 individuals (2.8%) and lower than predicted for 35 individuals (1.2%); no interactions with gender or race/ethnicity were observed for these physicians. Instead, outliers were explained by factors enumerated in Mayo Clinic’s compensation plan, such as holding a compensable leadership position. Gender differences in physician compensation were attributed to the larger number of men vs women in compensable leadership positions (31.4% vs 15.9%) and the most compensated specialties (34.7% vs 20.5%) (both P <.05). In addition, part-time status was significantly more frequent among women compared with men (34.0% vs 10.5%).
These data demonstrate the efficacy of a structured physician compensation model in achieving equitable pay for all employees. However, the underrepresentation of women in leadership positions and the highest-paying specialties warrants further investigation. Initiatives to better integrate women into leadership roles at the hospital and national level are essential to achieving gender pay equity, the investigators wrote.
Hayes SN, Noseworthy JH, Farrugia G. A structured compensation plan results in equitable physician compensation: a single-center analysis. Mayo Clin Proc. 2020;95(1):35-43.