Nurse Doc

How Medical Service Shortages Affect Physician Compensation

Cortney Ikpe

One of the issues at the forefront of healthcare is the physician shortage the U.S. is presently facing. It is important for all residents and practicing physicians to understand how this shortage could affect the job market, especially compensation.


One of the central tenants of economics is that as supply decreases or remains stagnant and demand increases, prices will rise. This is as true for produce markets as it is for job markets. Therefore, it is easy to assume that as the supply of American physicians remains unchanged and more Americans seek medical care, economic forces would push salaries upward in order to attract more physicians to meet the country’s medical needs. As you will see, this assumption is generally correct, especially in certain specialties and in certain shortage areas.

The Association of American Medical Colleges estimates that by 2025 demand for physicians will exceed supply by a range of 46,000 to 90,000 physicians. While this is a wide range, in either scenario the shortage of physicians is severe.

The AAMC cites that primary care physician shortages will be the greatest, however, there are several other specialties which may also be in short supply in the near future.

Not Just Primary Care

According to research, some of the specialties which may see the biggest increase in demand, and thus in salary, over the course of the next decade are Family Medicine, Dermatology, Urology, Orthopedic Surgery, and several Pediatric Specialties. Many of these specialties require an extended period of advanced training, which may be contributing to the flat supply.

Surveys conducted by a variety of healthcare firms about the most heavily recruited specialties have supported this research. Generally, the increased demand for physicians is attributed to an aging U.S. population which needs specialized services such as urological care. Another example is Orthopedic Surgery, which is predicted to experience a shortage of services due to increased lifespan and desire to remain functional at all ages.

Rural Shortage

Typically professionals don’t think of a rural area as a bastion of wealth and opportunity. However, as these areas face a medical shortage that is stark in contrast with their suburban and urban counterparts, it is clear to see why they would offer a more lucrative salary.

Again, this is most likely an economics problem of too little supply and too much demand. These practice areas are not seen as highly desirable places to work, especially for young physicians. Also, a lack of training programs in close proximity can contribute to physicians simply not knowing or being unfamiliar with opportunities in an area.

Starting Salaries on the Rise

As practices try to prepare for the ever increasing demand for medical services, competition becomes intense to attract both young physicians and seasoned physicians. This competition often results in higher salaries. As we can see from recent data of reported salary offers over the last five years, there has been an upward trend.

For example, in 2010, Family Medicine physicians were receiving offers averaging around $175,000. Now, starting offers for these physicians are averaging $200,000. This same upward trend can be seen in several other specialties as well. These include higher starting salary averages in Emergency Medicine ($60,000 increase over five years), General Surgery ($40,000 increase over five years) and Urology (nearly a $100,000 increase over five years).

Benefits up as well

In addition to salary, employers are also trying to boost their appeal to physicians by offering enhanced benefit plans. These benefits range from signing bonuses to continuing medical education reimbursements. One of the most valuable benefits, especially for those physicians who just recently completed training, is loan forgiveness.

Employer’s offers for loan forgiveness average around $80,000 and can even get as a high as $300,000 for more long term agreements. Keep in mind that many of these loan forgiveness programs are offered in shortage areas, such as the previously mentioned rural setting or even in urban community health organizations.

Maximize Your Value

Over the next decade, the demand for healthcare services is set to grow exponentially, requiring healthcare administrators and employers to make sure they have enough professionals on staff to meet this demand. For physicians, the demand should reflect in your compensation package, making it increasingly more important to hire a physician-specific contract attorney.

Having a team like Resolve to guide you through this process can make the difference in your ability to make the most of your job search and contract negotiations. See how Resolve’s in-depth market knowledge and physician-specific guidance can help you maximize your compensation.