Unlocking the Power of MGMA Report Data: A Guide to Physician Contract Negotiations

This is a re-post that was originally published on Contract Diagnostics, a SimpliMD professional partner.

By Jillian Vestal, J.D. – Senior Contract Review Specialist Contract Diagnostics

Introduction: The Potential of MGMA Data for Physician Compensation

Each year, the Medical Group Management Association (MGMA) releases a report detailing all aspects of physician compensation. The MGMA report provides data points based on specialties, regions, practice type, size, wRVU production, collections, and many more factors. While this data is known to be very helpful and is used by many health systems and other employers, it can be a challenge to learn how to use MGMA data.

Understanding the MGMA Data: Your Story in Numbers

To effectively know how to use the MGMA data as a resource for physician contract negotiations, you must understand what the data does – and does not – tell us. The data is not dispositive proof of what physician compensation should be, but it can provide great insight into where your compensation package is lacking and how you can ask for improvement.

Decoding the MGMA Report: How Data Collection and Aggregation Works

The MGMA collects data from across the country from all types of practices – private practices, academic institutions, hospitals, health systems, and many others – for all specialties and subspecialties. Any eligible provider or practice can submit data for the report. MGMA then aggregates the information and produces a report, which is used as an invaluable resource by many health care employers. Because the MGMA data is so often relied upon by employers, physicians should be familiar with it and know how to interpret it.

Applying the Right Filters: A Crucial Step in Interpreting MGMA Data

After you understand the source and intent of the data, the next step to interpreting it is to ensure that the correct filters have been applied. Obviously, the data must be specific to your particular specialty, as the MGMA annual report includes information on more than 140 specialties. After that, many employers will apply the filter based on the region of the country in which they are located. The MGMA divides the country into four regions – Southern, Western, Eastern, and Midwest. Within those regions, the newest MGMA report also provides data based on smaller groups of states within those regions, which they call minor geographic regions. As the larger regions contain 10 to 13 states, these smaller regions can provide numbers that are more representative of your specific location.

Since the data can be viewed through numerous other lenses, including the type of practice, the service area’s population size, and the physician’s experience. No particular way of filtering the data is intrinsically right or wrong. However, understanding the meaning and impact of each filter is crucial.

This is where the concept of ‘your story matters’ comes into play. A generic number doesn’t always solve the problem; it might even make it more challenging to discern what’s fair compensation. Every physician’s story is unique and carries different considerations that can’t be wholly captured by a single data point.

In essence, the story behind your specialty, region, type of practice, population of your service area, and experience should inform how your compensation negotiation is structured. Not only do we understand how to interpret and apply these filters, but we also grasp which data your employer is likely using, making us well-equipped to assist you in advocating for a fair and well-deserved compensation package.

Identifying Relevant Data Points: Customizing MGMA Data to Your Contract

After the data has been filtered, you need to identify the data points that are relevant to your contract and compensation structure. If you are going to work for a private practice that will calculate your pay based on your total collections, then the median wRVU threshold won’t be something you are used to knowing. You won’t need to focus on a signing bonus if you are considering a contract renewal with an updated compensation structure. The on-call daily rates won’t be useful for you in a position that is strictly ambulatory. Identify the numbers that matter to you.

Clarifying MGMA Terminology: Guaranteed Compensation vs Total Compensation

When using MGMA report data for physician contract negotiations, pay close attention to the meaning of the terms used by MGMA. Two of the most significant – and most commonly confused – terms are Guaranteed Compensation and total compensation. The Guaranteed Compensation refers to the base salary the physician will earn, regardless of productivity, wRVU production, collections, etc. This number does not include the value of any other incentive payments such as a signing bonus, relocation reimbursement, or student loan assistance. The Total Compensation includes the cash that is paid to the physician over the course of a year, including all quality and productivity bonuses. Neither of these categories includes the value of benefits or the employer’s contributions to a retirement plan. I have seen many term sheets and offer letters with “total compensation” numbers that include the cost of health insurance as well as signing bonuses and license reimbursements. While those benefits are certainly valuable and an asset for you, that number is not comparable to those provided in the MGMA report. You can find a glossary of the terms used on the MGMA’s website if you want clarification about how they define a term.

From Theory to Practice: How to Apply MGMA Data to Real-Life Negotiations

You’ve filtered the MGMA report data, identified the relevant data points, and accurately defined the terms to get you the best possible physician contract negotiation information, but now what? How do you use the data to get a boost in your compensation like the $70,000 raise this pediatrician got in this case study video?

Ideally, every contract would line up exactly with the MGMA, making the analysis of a physician compensation package much easier. However, this is something I very rarely see. You will need to analyze the data as it compares to the practice you’re joining. Identify certain circumstances that may be challenging to capture in the data. Are you on a partnership track with a significant increase in your income potential after the first couple of years? Is the amount of vacation time you’re getting double what is typically offered? It’s also important to understand relevant factors within the practice setting. I always encourage physicians to ask about the productivity of other physicians. Is everyone else meeting or exceeding the wRVU goal? What are the average collections for other physicians in the practice? The numbers in the contract and the numbers in the data set only tell part of the story. You need to ensure that the practice you’re joining and the position you’re being offered are set up in a way that allows you to achieve financial success. If your target is exactly the same as the median but no other physician in the practice has ever generated that many wRVUs, then it may be unreasonable for you to expect that level of production.

Leaning on Expert Guidance: Your Story Matters to Contract Diagnostics

At Contract Diagnostics, we know that each physician has a unique story. Your story matters, and it forms the foundation of our approach to helping you feel confident about your contract. We equip you with the tools necessary to advocate for yourself and ask the right questions. Most importantly, we teach you how to use these tools to their fullest advantage. The MGMA data report is an invaluable tool in your toolbox when reviewing and negotiating your contract, but it truly shines when used properly. Your story, woven through the MGMA data and various other data points, guides us to help you secure the best compensation possible, potentially impacting every physician in your department. Trust Contract Diagnostics, where your story matters and is our guide to ensuring you’re effectively compensated.

This is Tod with SimpliMD, I just want to say if you are in place where you are wondering if your compensation is fair and accurate then PLEASE spend $297 and do the Contract Diagnostics Compensation Rx, it is worth every dollar and includes a one hour consult to review the data!

If you are a place where you want your contract reviewed or negotiated for you, then let Contract Diagnostics help you with their contract review and negotiation services.

One the biggest mistakes doctors make is assuming they know and understand compensation and contracts—don’t make this mistake—let our professional partner Contract Diagnostics help you!