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Editor’s note: This is the first in a three-day series on salaries paid to top health-insurance executives, hospital executives and hospital physicians in Montana.

HELENA – At the Billings Clinic, dermatological surgeon Mike Wentzell earned $943,000 for the fiscal year ending in mid-2008 –  the highest-paid physician on staff at any of Montana’s largest hospitals or major health care organizations.

While Wentzell’s salary is certainly generous, it’s not necessarily unusual. Many other specialist physicians on hospital staffs in Montana command salaries in the $500,000 to $850,000 range, according to tax documents filed annually with the Internal Revenue Service.

Their employers say salaries paid to these highly trained specialists are the product of a competitive market, in which Montana hospitals must compete for talent against hospitals and medical centers across the country.

“We’re trying to create an organization that has not just a regional reputation but a national reputation,” says Jim Duncan, president of community relations for Billings Clinic. “These doctors can go anywhere they want.”

Of course, physician salaries figure into the cost of health care in America, which spends more of its collective wealth on health care than any other country.

Hospital officials, however, say the money paid to physicians and other high-priced staff is just one of many factors in the cost of care. Complex billing procedures, government requirements, expensive equipment, legal costs and the demands of customers are a few others.

Physicians on staff at hospitals in Montana and elsewhere are paid based on a contract, but they’re also paid based on the number of patients they see and procedures they perform.

Specialists such cardiologists and oncologists, who treat cancer, also can act as a business draw for the hospital, attracting patients for multiple procedures that they might do elsewhere, if that physician weren’t on staff.

The health reform bill before Congress wants to change parts of the payment system, attempting to move away from paying for volume and toward something that would spend less money but still maintain quality care. Whether the bill ultimately passes and how this payment shift would work remains to be seen.

While the current payment system rewards procedures by volume, hospital officials say physicians make decisions based on what’s best for the patient, and are not “incentivized” to perform based on volume.

Wentzell is a specialist in Mohs surgery, a microscopically controlled surgery for skin cancer. He will cut out portions of the cancerous tissue, examine it under a microscope and then determine whether further tissue must be excised to remove the cancer. He also does reconstructive surgery on the damaged skin area.

“Patient demand to see Dr. Wentzell has been extremely high since he joined the clinic in 1988,” Duncan says. “It’s one of the highest cure rates for cancer of all of the cancers that we treat. He has blazed the trail in Montana for this specialty.”

Duncan says Mohs is a cost-effective procedure because it can preclude radiation, chemotherapy or other costly treatments in the future.

Wentzell was paid $943,000 in fiscal 2007 and about $1 million in each of the previous two years, according to hospital records. Duncan says dermatological surgeons in private practice could make more money, because they might own part of the labs or other facilities that do associated work.

St. Vincent Healthcare in Billings has several cardiologists and neurosurgeons on staff who earned $560,000 to $840,000 a year in 2008, and St. Patrick Hospital in Missoula, a heart-surgery center for western Montana, has at least four cardiologists or cardiac surgeons who earned $500,000 to $725,000 that same year.

St. Patrick spokeswoman Lara Shadwick says the hospital uses guidelines to ensure its physicians receive pay that is “fair market value and reasonable,” based on salary surveys at other hospitals – and, of course, the number of patients and procedures for each physician.

“We apply the same principle in setting compensation levels for all employees, whether they are nurses, housekeepers, radiologists, physicians or executives,” she says. “We pay wages in the market-median range for all employees.”

Even at the smaller of Montana’s major hospitals, certain specialists and staff physicians often are highly paid.

At St. Peter’s Community Hospital in Helena, oncologist Thomas Weiner was paid $751,000 and gastroenterologist Johnathon Riegler $627,000 in fiscal 2007. Bozeman Deaconess Hospital paid staff oncologist Anne Castillo $600,500 in 2008.

Peggy Stebbins, spokeswoman for St. Peter’s, says physicians are in high demand, and that if hospitals don’t pay market wages, it creates turnover and higher costs. Vacancies sometimes are filled by temporary physicians who cost more than regular employees, she says.

St. James Healthcare in Butte had several radiologists on staff in 2007, earning $350,000 to $582,000 apiece, because the community couldn’t otherwise recruit this needed specialty, says hospital spokesman Linda McGillen.

Since then, the hospital has contracted with a private radiological practice, so it no longer needs to have this high-paid specialty on staff, she says.

Kalispell Regional Medical Center, one of the larger hospitals in Montana, generally hasn’t employed a lot of high-end specialists, but that may be changing, says Charles Pearce, the hospital’s chief financial officer.

“There are some physicians that are highly specialized that you can’t recruit unless you employ them,” he says.

Kalispell Regional does employ some relatively lower-paid family physicians, and the rationale is similar: That type of doctor is needed in the community and may not want to come to town without a guaranteed income.

“They won’t even come and visit us unless you have the employment model,” Pearce says. “Doctors (often) don’t want to come out of a university setting and start their own business.”

Coming Monday: A look at salaries paid to hospital executives in Montana.

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