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Military Physician Pay & Compensation

Military MDs earn officer pay, allowances, special incentives

Military physicians earn a fairly complex mixture of officer pay, housing and subsistence allowances, and four kinds of special pay for physicians focused on specialty, length of service, length of contract, and board certification.

There are about 12,000 physicians in the military, with a little over 4,000 in both the Army and Navy (which serves the Marine Corps) and about 3,700 in the Air Force as of Sept. 30, 2001, the latest date for which information is available. Employment levels have been "roughly in equilibrium" for the last several years, with new recruits making up for experienced physicians who leave the service, says Col. John Powers, M.D., director of quality and graduate medical education for the assistant secretary of defense for health affairs. Powers adds that the adequacy of supply of military physicians varies widely by specialty and the precise needs for specialists in each service from year to year.

The military residency and fellowship programs where most of its physicians train, notes Major James Wooten, senior policy analyst for health professions retention and accession incentives in TRICARE. Those programs reduced training for anesthesiologists and radiologists and some other specialties in the mid-to-late 1990s just like private medical schools did, Wooten says, with the same results--shortages today.

Military Pay Lower Across Specialties

The military has maintained roughly constant physician employment levels despite lower compensation levels across all specialties in comparison with civilian pay levels. Congress recently raised the cap on one of the special incentives available to military physicians, and that in time may allow much of the pay gap to be bridged.

The Center for Naval Analyses (CNA), an in-house military consulting operation, did a thorough comparison of Army/Air Force and civilian physician pay as of mid-2000 in 24 specialties for persons with seven, 12 and 17 years of military service. The study, ordered by Congress in 2000 and published in February 2001 by the CNA medical programs section, used for comparison purposes the pay levels at 90 very large civilian medical organizations (56% hospital-based, 29% group and 15% HMO) with 22,000 physicians on payroll. The Hay Group, a consulting firm that tracks health system employment trends, supplied the civilian data.

The CNA authors, Shayne Brannman and Cori Rattelman, wrote that physician military service was most comparable to employment in those large organizations, and that this comparison method would give federal policymakers a conservative estimate of pay gaps that physicians would be almost assured of making up if they separated from the service. The comparisons were between total compensation levels (cash comp plus benefits) using the median civilian figure.

The study's conclusions were that:

* There is a pay gap--the shortfall of military pay as a percentage of civilian pay--in every specialty except family practice at the 17-years-of-service juncture.

* The gap varies widely by specialty--13% to 63% at the seven-years-of-service juncture and 3% to 55% at the 12-years-of-service juncture.

* The gap is generally wider for specialists, such as surgeons and radiologists, who perform mostly procedures, than for specialists, such as primary care physicians, who perform mostly evaluation and management.

* Despite strong military benefit packages, civilian benefits were usually worth more, sometimes much more.

Examples of pay gaps are:

* Internal medicine. Total compensation after seven years of military service of $149,300 versus median total civilian compensation four years out of residency of $191,300, for a pay gap of 22.0%. Pay gaps at the 12- and 17-year service junctures of 15.3% and 13.1%, respectively.

* Orthopedics. Seven-year military compensation of $164,300 versus $314,500 civilian, for a pay gap of 47.8%. Pay gaps at the 12- and 17-year junctures of 34.1% and 38.6%, respectively.

* Cardiology (invasive). Seven-year military compensation of $164,300 versus $295,900 civilian, for a pay gap of 44.5%. Pay gaps at the 12- and 17-year junctures of 36.1% and 35.9%, respectively.

* Ob/gyn. Seven-year military compensation of $159,300 versus $261,700 civilian, for a pay gap of 39.1%. Pay gaps at the 12- and 17-year junctures of 30.4% and 28.0%, respectively.

Pay Plan Mixes Many Elements

Physicians' regular military compensation (RMC) as calculated in the CNA study consists of officer's pay (taxable), housing and subsistence allowance (both nontaxable), and the value of the tax exemptions. Most physicians join the full-time military service at the captain level when their three-year residencies begin. A common RMC level as of July 2000 at the seven-years-of-service juncture was $63,300, regardless of specialty.

There are four kinds of annual salary add-ons directed specifically at physicians:

(1) Specialty pay. These vary up to a cap of $36,000 (see table, this page).

(2) Length-of-contract pay. Physicians who have repaid their student loan and tuition obligations through length of service receive $12,000 per year for two-year contracts, $13,000 for three-year commitments, and $14,000 for four years.

(3) and (4) Length-of-service and board-certification pay. These incentives are coordinated so that board-certified physicians six years into practice earn extra annual salary of $14,500, which remains roughly constant through the end of service.

In just the last few months, Congress has authorized length-of-contract special pay of $50,000 per year, far above the current $14,000 maximum level. The office of the assistant secretary of defense for health is in only the early stages of analyzing whether and how to implement this change, says spokeswoman Marianne Coates.

The $36,000 increase could fully bridge the civilian/ military pay gap in some specialties, especially primary care. This new authority may have been the congressional response to the CNA report.

Recruiting: No Student-Loan Debts

A very tangible benefit for military physicians not counted in paychecks or benefits is avoidance of student-loan obligations. Most military physicians are recruited while they are in medical school, Powers explains, and their tuition is paid by the service. Also, the student recruits are reservists and earn paychecks while in school, usually with only moderate time obligations for military activities.

Powers says this recruiting system poses a problem for the military, because commitments are made to individuals long before it's possible to know what their career plans are likely to be.

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