Comparing the Anesthesiologist W-2 to the MGMA Physician Compensation Survey

Comparing the Anesthesiologist W-2 to the MGMA Physician Compensation Survey

Everyone wants to know if they are being paid fairly.   National and regional salary surveys exist for most occupations.   The most prominent survey for physicians is the Medical Group Management (MGMA) annual Physician Compensation and Production Survey.   The survey breaks down its results by specialties including anesthesiology.   Historically, anesthesiology has been one of the top specialties in terms of the number of physicians participating in the MGMA survey.

 

When the report is received, there is a tendency for anesthesiologists to turn to the Compensation by Region table and compare one’s salary to the regional median.   The anesthesiologist may be disappointed, elated or somewhere in between at the comparison.

 

We will examine some of the factors that should be taken into consideration to determine how anesthesiologist compensation should be compared to the MGMA salary survey.

  

First, what is anesthesiologist compensation?  When an anesthesiologist thinks of salary or compensation, it is usually the amount on the W-2 that is considered.    However, there are two compensation amounts on the W-2:  Box 1 and Box 5 (http://www.irs.gov/pub/irs-pdf/fw2.pdf)  Anesthesiologists may consider Box 1 as their compensation.   However, the MGMA Physician Compensation Survey directs survey respondents to report the amount in Box 5 of the W-2 on the survey questionnaire for physicians paid on a W-2 basis.   

 

So what is the difference between Box 1 and Box 5?    In Box 1, taxpayers are allowed to exclude from Federal taxes certain items such as retirement plan contributions.   However, these items cannot be excluded from FICA and Medicare tax and must be reported in Box 5.  For example, many anesthesiologists make the maximum contribution to their 401k plan.   For 2010 this amount is $16,500 for those under 50 years of age and $22,000 for those older.  So $16,500 or $22,000 would be included in Box 5 but not in Box 1.    Other items treated this way are Flexible Spending Accounts and Cafeteria Plans.    In addition, some anesthesiologists include their disability premium amounts in Box 1 and Box 5 of the W-2.    Due to the differences in these items and whether they are included on the W-2 by the anesthesiologists who participate in the MGMA survey, there could be an artificial variance between the physician’s W-2 and the MGMA survey data in the range of $10,000 - $30,000.  In addition, some anesthesiologists do not have a 401k component of their retirement plan and report a “pure” W-2 amount with no retirement plan contribution added to wages.   Compounding things further, it is possible that an individual completing a survey misinterprets or does not read MGMA instructions carefully and erroneously reports Box 1 wages rather than Box 5 wages.

 

Another factor to consider in comparing anesthesiologist salary with the MGMA survey is the number of weeks worked.   The last few MGMA surveys report the median number of weeks worked as 44 which equates to 8 weeks of vacation/leave.    If more or less leave is taken, an adjustment should be made for the differing number of weeks when comparing   W-2 compensation to the MGMA survey.   If, for example, an anesthesiologist takes 10 weeks of leave and works 42 weeks, this is 42/44 or 95.5% of the MGMA reported 44 weeks worked, so 95.5% would be the adjustment factor.  The adjustment factor should be applied to W-2 compensation and benefits.

 

If a practice receives hospital support based on the market rate salary and benefits of anesthesiologists, the MGMA survey will probably be examined by hospital administrators as they look for validation of  comparable market anesthesiologist compensation, so the factors mentioned above should be taken into consideration when making the comparison.

 

The MGMA Physician Compensation and Production Survey is not a scientific survey and its participants are self -selected.   However,   its respondents represent a significant percentage of non-academic full-time anesthesiologists in the US.    Therefore, its results can and will be used to compare W-2 compensation to national and regional averages.   To increase the accuracy of the survey, we strongly encourage anesthesiology practices to participate in the annual MGMA survey and receive the survey results electronically free of charge.   If an anesthesiologist outsources billing and management services, participation in the MGMA surveys should be a contractual obligation of the outsourced entity.

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