When it comes to physician compensation, there is a correlation between the cost of living and salary expectations. The goal is to create a comp plan that takes into account the value of the compensation in light of the location in which you serve. This article will look at the various factors that physicians and healthcare facilities should consider when looking at cost of living in relation to physician compensation.
Factoring Cost of Living into Physician Compensation
The locations with the highest cost of living typically pay higher salaries. The cost of living is a key metric for how far salaries stretch, whether you are a physician or a medical assistant. High-paying roles can sound very attractive, but if home or apartment rentals are out of proportion to the value of that salary, your new employee may still struggle to make ends meet. Fortunately, there are tools available to calculate the cost of living by city or geographic location.
Salary alone is not the best metric for determining the attractiveness of a job offer. Culture and work environment matter, of course, but from a purely financial perspective, the median cost of housing, taxes, and even a cup of Joe, should all factor into determining the pros and cons of an employment package. The reality is that even clinicians paid at the highest levels may find much less value in their salaries if they live in an area with an exorbitant cost of living. When considering designing a job offer for a provider, or if you’re a clinician considering one, there are two things to also factor into the decision process:
- Location, location, location. If you’re considering relocation, it’s a good idea to reverse engineer the process by beginning your search with the cities that have a lower cost of living. Consider the lifestyle you want to lead and then gear your search for the kinds of communities and salaries that will support your goals.
- Expenses and salaries. Housing prices, whether renting or owning, is a critical consideration when considering a compensation package. How affordable is the housing, utilities, taxes, food prices, healthcare, entertainment, and more? Transportation figures into the compensation package; how far is the commute and what does this add to not only the overall cost of living, but also the quality of that living?
Clinicians, take note: If you can find a location that offers a higher pay scale combined with a lower cost of living, your salary will stretch further. Sometimes big city living, within this context, isn’t necessarily the best option, although it may seem to be the case due to the higher salaries often offered by healthcare providers in these locations.
HCPLive introduced an interesting concept called “geographic arbitrage.” They point out that physicians are needed everywhere so supply and demand are particularly important for trying to determine salary. Because many doctors seem to want to settle in an urban environment, it drives down the salary potential. But they also point out, “Fortunately, some physicians would rather be surrounded by farmland and feedlots rather than freeways. For this, they are rewarded handsomely.”
UHC Solutions works with clinicians and executives to find them the right fit for their lifestyle goals. We are experts in matching the best opportunities in the community health space with top talent. Call on our team and see how we can help.