Author: Aaron Starr
The growing shortage of physicians — a gap the American Association of Medical Colleges estimates will reach 86,000 by 2036* — coupled with persistent financial pressures has forced healthcare employers to opt for new avenues to improve both clinical and financial performance. Many have empowered their advanced practice provider (APP) cohorts to function more independently. This enhanced independence allows APPs to see more patients and provide higher-level medical decision-making.
However, as APPs' traditional roles within the care team expand, many organizations realize they lack the infrastructure to support and communicate with their APPs. Such insufficient infrastructure ultimately leads to many APPs failing to meet their goals. Improved APP leadership structures offer a way to avoid many of these pitfalls and reach the performance improvements that organizations need to stay afloat.
Physician leadership structures serve as a template
Formal APP leadership structures represent a new phenomenon for many organizations; for others, such leadership structures remain only an idea on the horizon. Over the last five years, the number of APP leaders in Gallagher's National Advanced Practice Provider Compensation Survey report has approximately doubled, as organizations increasingly implement APP leadership roles.
Formal or informal site-specific APP lead roles have occurred for years, often as an extension of typical nursing management structures. As a next step, organizations increasingly have added broader APP leadership roles, with individuals overseeing and managing entire specialties and departments, and even functioning in an executive-level role. These developments closely mirror the structures organizations use to manage their physician groups.
Many organizations use pyramid reporting structures for their physicians, including a medical director for each practice location. These practice-specific medical directors then report to a specialty-wide medical director, who reports to a physician leader over an entire department or group of similar specialties (such as primary care, surgical and hospital-based). Each departmental leader then reports to a chief medical officer.
Many in the industry agree that this pyramid-style structure offers the most efficient physician self-management and creates clear pathways for two-way communication and performance management. However, as APP cohorts have grown with increasing independence, organizations find that physician medical directors aren't well equipped to provide leadership for APPs. Instead, a dedicated APP leadership structure running in tandem with the physician leadership structure allows for greater peer-to-peer feedback and ultimately greater APP growth and performance.
APP Leadership structures and compensation
Recognizing the value of an APP leadership structure serves only as the first step toward improving APP performance and means nothing without effective implementation. As more organizations venture down this path, Gallagher has identified common themes and four leadership levels. Each role varies in size and scope. The table below describes the general functions of each role and the median administrative full-time equivalent (FTE) dedicated to each role, as reported in Gallagher's 2024 National Advanced Practice Provider Compensation Survey:
| APP Leadership Role Definitions and Time Commitments | ||
| Position | Typical Responsibilities | Median Admin FTE |
| Lead | Oversee and lead APPs in a single practice location. Provide mentorship, leadership, direction, orientation, education and training, typically with a 10% administrative time requirement. | 0.10 |
| Supervisor | Provide clinical oversight and leadership to specialty APPs, including mentorship, orientation, education, training, recruitment involvement and contributing to APP development. Typically involves a 10% to 30% administrative time requirement. | 0.20 |
| Manager/Frontline Director | Oversee and lead APPs; ensure uniform education, training and clinical practice; direct patient services and staff development; and manage the work environment. Typically requires more than 30% administrative time. | 0.40 |
| Executive Director/VP | Lead APPs across departments; oversee clinical practice, patient services, staff development and budget management; serve as a resource for interdisciplinary divisions. Typically requires 60% to 100% administrative time. | 0.85 |
While the descriptions above provide a general rule for how the market has grown to see these positions, the specifics vary greatly between various organizations. For any APP program, the management and compensation structure must serve as an extension of the care model, with the systems mirroring how providers actually practice. The need to customize has meant that organizations may use more or fewer leadership tiers than outlined above. A variable amount of time dedicated to administrative services will apply based on the specific functions of the role.
Similarly, organizations use different compensation strategies for these positions. Some organizations opt to provide an additional stipend on top of the regular clinical model, while others develop a separate leadership compensation structure including a performance incentive. While the specifics may vary, one thing is clear — a well-defined leadership structure can make all the difference in enhancing the clinical performance of APPs as well as supporting patient care.
Gallagher's Physician Compensation and Valuation consulting team can help your organization navigate the increasingly complex landscape of APP compensation and align your provider compensation program with market trends. Let our industry-leading data help to drive your decisions to face the future with confidence
