Comments on: "A board-certified, internal-medicine physician makes $7 more an hour than a hairstylist" http://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html Tue, 14 Feb 2012 21:39:00 +0000 hourly 1 By: Michael Rack, MDhttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68658 Michael Rack, MD Fri, 10 Nov 2006 16:05:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68658 "Yes, you can't know what the interest rate will be in the future, but historically speaking we know it is almost certainly going to be less than 15%."<br/>In the early 80's interest rates were between 15 and 20%, before our greatest President fixed things. “Yes, you can’t know what the interest rate will be in the future, but historically speaking we know it is almost certainly going to be less than 15%.”
In the early 80′s interest rates were between 15 and 20%, before our greatest President fixed things.

]]> By: Criminallopathhttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68654 Criminallopath Fri, 10 Nov 2006 07:54:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68654 "...There is a physician shortage in this country and its only getting worse..."<br/><br/>Thank you. At least there is one MD who is willing to admit the truth. “…There is a physician shortage in this country and its only getting worse…”

Thank you. At least there is one MD who is willing to admit the truth.

]]> By: Anonymoushttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68651 Anonymous Fri, 10 Nov 2006 03:49:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68651 Anon at 8:49, what is the problem? Go back to college, take engineering or Computer Science. You will not even need to go back as an undergrad since there are special graduate programs in CS, for example, that would take people with BS in other fields provided they take a few extra classes. Or you can even go to law school. I know a scientist who gave up the whole thing, left his job, went to a law school and came back to the same company as a patent attorney.<br/><br/><i>Real estate appreciation certainly isn't pegged.</i><br/>I would leave out equities and real estate. Prices go up, but they also go down. Remember how real estate prices went down during the 90s?<br/><br/>How much does a physician working for a medical group makes? Is he/she salaried? Anon at 8:49, what is the problem? Go back to college, take engineering or Computer Science. You will not even need to go back as an undergrad since there are special graduate programs in CS, for example, that would take people with BS in other fields provided they take a few extra classes. Or you can even go to law school. I know a scientist who gave up the whole thing, left his job, went to a law school and came back to the same company as a patent attorney.

Real estate appreciation certainly isn’t pegged.
I would leave out equities and real estate. Prices go up, but they also go down. Remember how real estate prices went down during the 90s?

How much does a physician working for a medical group makes? Is he/she salaried?

]]> By: Anonymoushttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68649 Anonymous Fri, 10 Nov 2006 01:49:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68649 I would happily take a pay cut and work for $80,000 a year if it meant not having to deal with the piece of shit lawyer sodomites. I would happily take a pay cut and work for $80,000 a year if it meant not having to deal with the piece of shit lawyer sodomites.

]]> By: Anonymoushttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68648 Anonymous Fri, 10 Nov 2006 01:47:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68648 There are ways around the whole issue. I moved to a smaller community with a desperate need for a physician. I'm salaried at a rate much, much higher than the national average with fringe benefits I could only dream about. Poor Reimbursement? I don't care. Indigent population? I don't care. Office overhead? I don't care. Malpractice rates? I don't care. These are all the hospitals issues. They can take all of these issues on the chin, not me. There is a physician shortage in this country and its only getting worse. Salaries are up not entirely due to volume. If a hospital doesn't have docs, they don't have a hospital. There are ways around the whole issue. I moved to a smaller community with a desperate need for a physician. I’m salaried at a rate much, much higher than the national average with fringe benefits I could only dream about. Poor Reimbursement? I don’t care. Indigent population? I don’t care. Office overhead? I don’t care. Malpractice rates? I don’t care. These are all the hospitals issues. They can take all of these issues on the chin, not me. There is a physician shortage in this country and its only getting worse. Salaries are up not entirely due to volume. If a hospital doesn’t have docs, they don’t have a hospital.

]]> By: cdclledhttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68647 cdclled Fri, 10 Nov 2006 01:25:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68647 <i>"Why is a 6% interest rate to be assumed?"</i><br/>See page 24 for net present values using interest rates of 3, 6, 10, and 15% Even at 15%, the doctor still outearns the college grad by half a million dollars. Yes, you can't know what the interest rate will be in the future, but historically speaking we know it is almost certainly going to be less than 15%.<br/><i><br/>"Costs exceed tuition and fees by between 60 to 80% depending on the local costs of living."</i><br/>This would not affect the calculation because you bear the cost of living whether you attend medical school or not. The fact that the student will borrow money and have to pay it back with interest does not change things either. Both the college grad with a job in NYC and the NYU medical student have to pay the cost of living in New York in 2006 dollars. The medical student will pay back more nominal dollars in the future, but in real terms the amounts will be the same. (for example paying $1000 for rent in 2006 dollars is the same as paying back $1000+interest in the future, ie future dollars are worth less) Cost of living is a sunk cost that is incurred by both of the hypothetical individuals.<br/><br/><i><br/>"where is the consideration in your model for a decreased reimbursement per net unit of work that has effectively applied to most outpatient physicians"</i><br/>This article was written in 2004 and uses the average physician earnings as reported in 2004 for all calculations. This article doesn't claim to be valid for any year other than 2004. Decreases in reimbursement since then would obviously have a negative effect on the net present value. “Why is a 6% interest rate to be assumed?”
See page 24 for net present values using interest rates of 3, 6, 10, and 15% Even at 15%, the doctor still outearns the college grad by half a million dollars. Yes, you can’t know what the interest rate will be in the future, but historically speaking we know it is almost certainly going to be less than 15%.

“Costs exceed tuition and fees by between 60 to 80% depending on the local costs of living.”
This would not affect the calculation because you bear the cost of living whether you attend medical school or not. The fact that the student will borrow money and have to pay it back with interest does not change things either. Both the college grad with a job in NYC and the NYU medical student have to pay the cost of living in New York in 2006 dollars. The medical student will pay back more nominal dollars in the future, but in real terms the amounts will be the same. (for example paying $1000 for rent in 2006 dollars is the same as paying back $1000+interest in the future, ie future dollars are worth less) Cost of living is a sunk cost that is incurred by both of the hypothetical individuals.


“where is the consideration in your model for a decreased reimbursement per net unit of work that has effectively applied to most outpatient physicians”
This article was written in 2004 and uses the average physician earnings as reported in 2004 for all calculations. This article doesn’t claim to be valid for any year other than 2004. Decreases in reimbursement since then would obviously have a negative effect on the net present value.

]]> By: Okulushttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68644 Okulus Thu, 09 Nov 2006 23:50:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68644 Why is a 6% interest rate to be assumed? Interest rates for school loans aren't pegged. Investment return in equities aren't pegged. Real estate appreciation certainly isn't pegged. Your analysis makes some broad assumptions, not the least of which is a constant rate of return. <br/>""One way of looking at the value of an investment is to compute a net present value, based on assumptions of future costs and revenues. The costs for a medical education are primarily tuition, and the revenues are stipends expected as a resident and income expected as a practicing<br/>physician."<br/><br/>Costs exceed tuition and fees by between 60 to 80% depending on the local costs of living. Don't believe me? Private example: NYU Medical Schoo,l tuition and fees $37,750, total annual estimated expenses : $57, 550. Public example: University of Florida, tuition and fees $19,316, total annual expenses $35,741 (at the in-state tuition rate). <br/><br/>Also, where is the consideration in your model for a decreased reimbursement per net unit of work that has effectively applied to most outpatient physicians (excluding efficiency offsets which approach sweatshopping)? Had you made a per service analysis over time, the return would be flat to negative. Why then is that to be assumed to be positive?<br/><br/>I just don't buy that that your model has any validity. Why is a 6% interest rate to be assumed? Interest rates for school loans aren’t pegged. Investment return in equities aren’t pegged. Real estate appreciation certainly isn’t pegged. Your analysis makes some broad assumptions, not the least of which is a constant rate of return.
“”One way of looking at the value of an investment is to compute a net present value, based on assumptions of future costs and revenues. The costs for a medical education are primarily tuition, and the revenues are stipends expected as a resident and income expected as a practicing
physician.”

Costs exceed tuition and fees by between 60 to 80% depending on the local costs of living. Don’t believe me? Private example: NYU Medical Schoo,l tuition and fees $37,750, total annual estimated expenses : $57, 550. Public example: University of Florida, tuition and fees $19,316, total annual expenses $35,741 (at the in-state tuition rate).

Also, where is the consideration in your model for a decreased reimbursement per net unit of work that has effectively applied to most outpatient physicians (excluding efficiency offsets which approach sweatshopping)? Had you made a per service analysis over time, the return would be flat to negative. Why then is that to be assumed to be positive?

I just don’t buy that that your model has any validity.

]]> By: cdclledhttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68643 cdclled Thu, 09 Nov 2006 23:20:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68643 Also running a medical practice is essentially the same as running a small business. It is unrealistic to think that the sole fact that you are a physician will give you success in business. My guess is this physician is not a very skilled businesswoman or she is practicing in an area that doesn't need more physicians.<br/><br/>I would like to know...<br/>how many patients did she see a day?<br/>how long did she spend with each one?<br/>where was she practicing?<br/>was the area saturated with FPs?<br/>how much was she paying her staff?<br/>was she managing her employees efficiently so that they were as productive as possible?<br/>could she have seen more patients by hiring more employees to handle billing, paperwork, etc?<br/>was she renting the building?<br/>did she perform any in house high-yield procedures?<br/><br/>there are so many factors that determine whether a business will be successful and a lack of business sense with regard to any one of the can really cut into profits. Criminallopath was correct, this is a "shock and awe" piece that does not accurately portray the average FP. Also running a medical practice is essentially the same as running a small business. It is unrealistic to think that the sole fact that you are a physician will give you success in business. My guess is this physician is not a very skilled businesswoman or she is practicing in an area that doesn’t need more physicians.

I would like to know…
how many patients did she see a day?
how long did she spend with each one?
where was she practicing?
was the area saturated with FPs?
how much was she paying her staff?
was she managing her employees efficiently so that they were as productive as possible?
could she have seen more patients by hiring more employees to handle billing, paperwork, etc?
was she renting the building?
did she perform any in house high-yield procedures?

there are so many factors that determine whether a business will be successful and a lack of business sense with regard to any one of the can really cut into profits. Criminallopath was correct, this is a “shock and awe” piece that does not accurately portray the average FP.

]]> By: cdclledhttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68642 cdclled Thu, 09 Nov 2006 23:01:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68642 okulus,<br/>actually the aamc released a very detailed economic study in 2004 that researched the monetary value of a medical education compared to a college degree. They used discount rates and compound interest calculations to account for the length of the education. The report essentially contradicts everything you said in your post. Here is an excerpt from the paper, which can be found <br/><a HREF="https://services.aamc.org/Publications/showfile.cfm?file=version21.pdf&prd_id=102&prv_id=113" REL="nofollow"> here </a><br/><br/>"One way of looking at the value of an investment is to compute a net present value, based on<br/>assumptions of future costs and revenues. The costs for a medical education are primarily<br/>tuition, and the revenues are stipends expected as a resident and income expected as a practicing<br/>physician. One must also take into account as a cost the foregone income a medical student<br/>physician would have received as a college graduate. Finally, a net present value calculation<br/>must use an assumed discount rate, which determines how future values are reduced to take<br/>account of the fact that funds received in the future are not as valuable as funds received today.<br/>When this calculation is made for medicine using a 6% discount rate, the net present value of<br/>investment is $1.1 million for a private medical school education and $1.2 million for a public<br/>medical school education. If, instead of going to medical school, one were given a million<br/>dollars to invest at 6% interest and pursued a career as a college graduate instead, the financial<br/>returns would be roughly the same as going to medical school.<br/>The calculation certainly indicates that a medical education is very worthwhile as a financial<br/>investment." okulus,
actually the aamc released a very detailed economic study in 2004 that researched the monetary value of a medical education compared to a college degree. They used discount rates and compound interest calculations to account for the length of the education. The report essentially contradicts everything you said in your post. Here is an excerpt from the paper, which can be found
here

“One way of looking at the value of an investment is to compute a net present value, based on
assumptions of future costs and revenues. The costs for a medical education are primarily
tuition, and the revenues are stipends expected as a resident and income expected as a practicing
physician. One must also take into account as a cost the foregone income a medical student
physician would have received as a college graduate. Finally, a net present value calculation
must use an assumed discount rate, which determines how future values are reduced to take
account of the fact that funds received in the future are not as valuable as funds received today.
When this calculation is made for medicine using a 6% discount rate, the net present value of
investment is $1.1 million for a private medical school education and $1.2 million for a public
medical school education. If, instead of going to medical school, one were given a million
dollars to invest at 6% interest and pursued a career as a college graduate instead, the financial
returns would be roughly the same as going to medical school.
The calculation certainly indicates that a medical education is very worthwhile as a financial
investment.”

]]> By: Criminallopathhttp://www.kevinmd.com/blog/2006/11/board-certified-internal-medicine.html#comment-68641 Criminallopath Thu, 09 Nov 2006 22:50:00 +0000 http://clients.emmense.com/kevinmd/2006/11/a-board-certified-internal-medicine-physician-makes-7-more-an-hour-than-a-hairstylist.html#comment-68641 "...physicians who are well established in their practice.." would consist of those who have"...markedly greater earnings in the subsequent years." The statistics, which I have not posted in some time, are from the Bureau of Labor Statistics not some "recruitment team." <br/><br/>May 2005 National Occupational Employment and Wage Estimates for mean anual wages is $140,370 with a median of $140,400.<br/><br/>http://www.bls.gov/oes/current/oes291062.htm “…physicians who are well established in their practice..” would consist of those who have”…markedly greater earnings in the subsequent years.” The statistics, which I have not posted in some time, are from the Bureau of Labor Statistics not some “recruitment team.”

May 2005 National Occupational Employment and Wage Estimates for mean anual wages is $140,370 with a median of $140,400.

http://www.bls.gov/oes/current/oes291062.htm

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