How Do You Get Paid in Anesthesiology?: Private Practice vs Academic Medicine
Editor’s Note: Dr. Sunny Vig is an anesthesiologist who blogs at youbethree.com. She has a lot of great insights into best practices for business. While her specific clinical experience is primarily in anesthesiology, her insights on business are broadly applicable to the medical profession more generally. This is a great discussion about the difference in pay between private practice and academic medicine. While the focus is primarily in anesthesiology, it’s applicable to medicine more generally. I appreciate her contribution to The Scope of Practice!
Anesthesiology is a field that’s pretty well known for making good money. Whether you work in the city or in a rural area, you are well within the six-figure zone. For many who are graduating medical school with student loans, the higher pay is especially attractive to help pay off all that debt. Plus, withthe lifestyle of anesthesiology, the shiftwork, the pace and the procedures make it a great option for anyone who likes to be hands-on, and maybe doesn’t like talking to people too much 🙂
Salary is important in any field. However, where you practice and the specifics of your job can make a significant difference in how much you actually make. Consequently, this affects how much you have to work to hit your salary goals. Given that this is a significant factor that affects our job hunt, I think it’s important to know the differences that may exist.
Generally speaking, private practice pays more than academic medicine. However, the pay structure is drastically different. I’ll break down the general structure of each. Keep in mind that individual states may have different laws that govern different your practice. This can affect your compensation. So, wherever you go and interview, make sure to do your own due diligence.
The Basic Pay Structure of Anesthesiology and Incentives
Let’s break down where the money comes from in anesthesiology.
1. Base Pay
Depending on where you work, you may receive what’s called “base pay.” This is a baseline salary that you earn by simply completing a set of contractual requirements. This often includes a certain number of days per week that you work. It may also include your call shift requirements throughout the year and how many days of vacation time off you may earn or have.
2. RVUs
Relative Value Units help insurance companies determine the dollar value for a certain service or procedure. In anesthesiology, earning RVUs requires that you cover surgical cases or outpatient procedures. The RVUs for each case are divided up into the following:
First, there are base units, or startup units, per case. So if you’re doing a hernia repair, for instance, that case will command a certain amount of predetermined start up units or base units.
The rest of the pay for the case is determined by time units (15 minutes – 1 unit) and then what’s known as modifiers. This includes comorbidities, age and certain interventions by anesthesiology in the OR which will command extra units for that case.
So the earnings per case = base units + time units + modifying units.
The dollar amount that YOU earn per RVU you generate can vary greatly. Compensation depends on where you are and is calculated based on the institution’s total revenue divided by the total RVU’s they generate over a given period of time. As an example, at my institution, the dollar amount given per RVU for general anesthesiology is $3.84.
3. Incentives
This includes various things that some employers will say “incentivize” you to work more, or take on certain cases or shifts. These are paid out separately. Some incentives to ask about are:
- In-house call shifts
- Solo pay (for doing cases on your own, this could be an extra payout per hour)
- Extra clinical time or ECT (typically a jump in your hourly rate after 5pm)
4. Bonuses
Departments that are profitable may pass on bonuses to each member of the department. This amount can vary each year, however.
Getting paid in anesthesiology means that your salary could be coming from many different directions. In regards to your clinical work, it most often comes from generating RVUs and incentive pay.
Private Practice
This is usually a productivity-based or an “eat what you kill” model. If you don’t do a case, you don’t get paid. Most of your pay is directly related to the number of cases you do and RVUs you generate. So, the more you work, the more cases you do, the more you get paid.
Usually there is no base salary, but there is sometimes an option to take part in the “partnership” track. This means after a certain contractual period (usually 2 years), you may be eligible to be a partner in the practice. This opens up the possibility that you earn some revenue through division of profits.
RVU Payouts
RVU dollar value per unit reimbursement is based on a conversion factor assigned by CMS. It differs based on where you live, and different insurance companies may reimburse differently. Medicare may follow CMS assignments, but private insurance companies may use different rates.
Also, if the patient has an HMO the rates may change depending on the case. This gets incredibly complicated quickly. Generally speaking, private insurance usually pays better than state-based insurance plans. Depending on how the practice is set up, you will bill your dollar amount per RVU in one of two ways:
- You are an independent contractor with EACH insurance company. You will fill out a billing sheet per case and submit to billing companies. Those companies then put in CPT codes and generate the dollar amount per case. Billing companies earn about 6% commission and you get the rest of what’s paid (keep in mind, sometimes insurance companies won’t pay, and sometimes patient’s can’t pay either).
- The practice uses a blended unit system. In this system, the number of RVUs generated over a certain period of time is divided into the amount of money made during that same period. The result is the average cost of an RVU, and that is what everyone is paid out. This is what I described above at my academic institution. Some private practices do the same.
Blended units make it a little bit more fair and eliminate some competition for doing certain cases. It also provides a cushion if you get stuck dealing with poorly insured patients.
What Your Day Looks Like
Oftentimes, attendings work solo. Sometimes, a practice will also employ CRNAs. In those cases, it’ll be a ratio of one attending to 3-4 CRNAs. Some private practice groups are so big that they help staff local hospitals as well as surgery centers.
I’ve also heard that in some cases you may have to follow up with your own patients who get admitted as inpatients. This is the case when there is no one in-house to otherwise address questions related to anesthesiology and pain management. 
The upside with having a diverse set of options through your private practice group is that there is no shortage of cases for you to do. Therefore, you know that you will be able to make a good salary. The downside is that you may have to commute or travel farther than you want in order to cover some of those shifts. There may also be a lack of consistency of anesthesiology culture across the sites.
Your Benefits
Many practices are set up to where they don’t pay your benefits, so then your entire paycheck includes the cost of you paying for your benefits yourself. For instance, you’ll have to take care of your own disability, malpractice insurance, health care etc. You will also have to figure out your own 401k, or pre tax investment/retirement situation.
Often, as a new graduate you may see your gross paycheck amount (in the 30-40k range) and get really excited that you’re making the big bucks. However, once you pay for all those essentials like insurance and retirement, the reality of your take-home pay is about half (if not less). So, make sure you confirm with the practice what they include (if anything) in terms of your benefits. Get an idea of average costs of uncovered items so that you can make a more realistic calculation of your earnings.
This is definitely a situation where you will need to be on top of things. Get your finances in order and do your research!
Taxes
Everyone in private practice files taxes under a 1099 form, which is great for writing things off and saving on taxes. However, the downside is that you’re also responsible for keeping track of all your tax withholdings. You also need to make sure that you are paying estimated taxes four times per year so you don’t get hit with prepayment penalties.
Academic Medicine
Academic pay varies greatly depending on the institution. However, most all of them have the same basic setup. There’s typically a base pay, and then some places will have incentive pay.
Base Pay and Your Contract
In academics, base pay often comes from the medical school, the department of anesthesiology or both. Your retirement pay is calculated on this base pay. Also, some institutions will only take into account the base pay you get from the medical school, not the total. The base pay includes some contractual requirements in your work.
For instance, say you make 150k in base pay. For that pay, you work 4 days per week and do 50 calls per year. Incentive pay is on top of that and may include RVU’s, ECT, and solo pay. In some institutions, you also get a base fee for working in-house calls. That fee is not part of your base pay and may be part of your incentive pay instead.
The final amount you make in academic medicine can vary depending on the kinds of cases you do and the number of calls you ultimately take. However, because there is a guaranteed base, you can work the minimum and still know that you will pull that minimum amount.
What Your Day Looks Like
Academic medicine coverage is much more diverse than private practice. You could work solo, with CRNA’s or with residents. Sometimes you’ll get a medical student as well. I also help staff the preoperative anesthesiology clinic and supervise nurse practitioners, nurses, and other clinic staff.
Some centers have a Veteran’s Affairs hospital attached. If you work at a VA facility, then be aware that payouts through the VA have a different structure. As a federal institution, they work under different laws as well.
Your average week may consist of clinical days, call shifts, post-call days and some administrative time.
Additional Academic Work
An issue with academic medicine is that there is often pressure to produce intellectual materials of some kind. This includes patient-related prospective studies, review papers, and book chapters. It may also include teaching requirements for residents and medical students in the operating rooms and weekly lectures.
There is no extra pay for this, nor is there protected time during the week. The only people who do receive protected time are ones that bring in grant money. Alternatively, if you are an administrative leader you may be able to negotiate for it.
Benefits
When you sign on in academic medicine, they give you a list of benefits that are “included” in your salary. Some of it is paid for by your department.
However, you will also have to pay a small amount into all of it each month. All of your benefits will be taken directly from your paycheck. You won’t have to worry about shopping around or finding your own coverage plans.
Taxes and Retirement
As employees, you have a W-2 tax return. There is usually employee matching into a retirement program as well. Make sure that you opt-in to any such program!
Reimbursement in Academic Medicine: Some Examples
To bring this all home, as it can get confusing in academic medicine, here are a few example of payout structures:
Example 1
- Base from the medical school: 100k (401k retirement based on this)
- Base from dept. of anesthesiology: 100k (not included in retirement calculation)
- Incentive pay from solo time, in-house calls, ECT and RVUs: totals anywhere from 50-100k or more depending on amount worked and types of cases.
In total then, the yearly salary is about 250-300k.
Example 2
- Base from department: 250k (retirement calculation)
- Base from medical school: 50k
- Incentive pay: number of call hours in excess of what’s required by contract multiplied by an hourly rate, ECT = 50-100k
- Bonuses: dependent on how profitable the department was: anywhere from 25-50k
Total salary for the year: 375-400k
As you can see, at this institution, the incentive pay is different and there’s no solo pay. However, bonuses pay out once a year.
Example 3
- Base from medical school: 100k
- Pay from department: overtime (twice per year) and clinical day payouts 50-100k
- No incentive pay
- Bonus once a year: 25-50k
Average yearly salary 200-250k
Many of the big name institutions do not pay well in terms of their base salary. So, then your final paycheck will be dependent on other factors.
However, for all academic centers, your paycheck will include benefits such as malpractice and likely disability insurance. The cost for these times will be deducted from each paycheck. Any pretax deductions will come out of your total compensation. Depending on where you practice, your taxes and the amount to contribute to retirement accounts, your take-home pay can vary.
Bringing It All Together
This table lists the differences and similarities of private practice and academics.
| Academic Medicine | Private Practice |
| Base Salary +Incentives | Often no base salary, driven by productivity only |
| Sometimes have bonuses | Can have bonuses and/or partnership track |
| Benefits are paid for automatically from your paycheck | Have to figure out and pay your own benefits, including retirement |
| Must produce academically – papers, research, teaching | No academic requirements |
| W-2 | 1099 |
| Work solo/CRNAs/residents/fellows/students | Work solo or CRNAs. |
| Sicker patients overall | Healthier patients overall |
| Don’t deal with billing at all | May have to deal with your own billing |
| In house call requirements | In house call only if staffing a hospital |
Sign-On Bonuses
I wanted to make a comment about sign-on bonuses. Usually, you’ll only get these in private practice. These can make it seem like private practice is the place for you, and many will use that bonus towards student loans or house payments. However, a word of caution:
To keep that bonus, you need to complete a certain contractual period with that practice. If you leave before that period is over, you will have to pay it back.
Example, if you get a $30k sign-on bonus, you may have to work for 3 years to ensure that the bonus is yours. If you decide to break the contract beforehand, you’ll have to pay back the $30k before you leave.
On top of that, a $30k bonus has to come from somewhere, and it will likely come from your own paycheck. So pay attention to your contract; your actual salary those first three years will likely be $10k less per year.
Which Should You Choose?
There are pros and cons to each choice. There is no right answer for what you’re supposed to choose for your career path. I also tell everyone that you can always change if you decide you don’t like one or the other. Nothing is set in stone and everything happens for a reason. Whatever your experience, you will learn what works for you and what your preferences are, and you will find the job that’s right for you.
Meet the author
Sanjana Vig is an anesthesiologist living and practicing in Southern California. She has a lifestyle blog at youbethree.com where she aims to empower others. Her blog reflects this mission through stories on life (finances, dating, relationships, and dealing with adversity), career (job advice, navigating the workforce), and travel (budgeting, solo experiences, tips, and tricks to being safe and having fun!). She can be contacted at contact@youbethree.com.
Further Reading
- Listen to the latest podcast episode.
- Top 10 Mistakes Physicians Make When Negotiating Their Contract
- Choosing the Right Specialty
- Coding and Billing Basics
Return to The Specialist Series
Return to Anesthesiology
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