Physicians and their salaries

Doctors aren’t paid enough. There, I said it. Before you start throwing stones, read this and maybe some of you will understand where we’re coming from:

. . . what really pisses [doctors] off is the gap between their incomes and those of the rest of the high-end college graduates of America. The Center for Health Systems Change analysis of average physician income adjusted for inflation between 1995 and 2003 showed that income for all physicians declined by 7.1 percent over the period; for primary care doctors, by 10.2 percent; for medical specialists, by 2.1 percent; and for surgical specialists, by 8.2 percent. This is in sharp contrast to the 6.9 percent gain that all professional and technical workers made in the same period.

Put in stark local terms, my surgeon neighbors at Stanford drive Chryslers, my software neighbors drive Mercedes, my lawyer neighbors drive multiple BMWs (they are good at multitasking) and my venture capitalist neighbors have off-site garages to store their many exotic cars. If I were a doctor, the smartest kid in my high school class, the top 2 percent of my college class, and magna cum laude at Stanford, I would be pissed off, too. It is pretty bad when the lazy geography graduates like me make more than the surgeons.

While many like to point to the fact that doctors make more money in America than in any other country””which is true””they miss the big point. There are way more undeserving, highly compensated pigs at the health care trough than doctors.

(via THCB)

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  • Zelda

    I gotta tell you Kevin…I am hooked on your site but it’s starting to really grind me down. I’m a second year med student and I can’t tell you how oblivious all the other kids in my school are about these types of issues. They all have dollar signs gleaming in their idealistic eyes…if I had the grades I would be shooting for derm or some other cushy lifestyle specialty, but what am I to do when my grades hover at slightly above average in a slightly better than average medical school in the US? I’m stuck like everyone else and it’s making me wish I had just cashed out and gone to law school like some of my (apparently savvier) friends.

    Although the reasons I came to med school did not involve money, they did involve having a rewarding job, one where I did something different every day, where I could use my brain, not be bored, and have good job security. But when I see stats about how many docs are totally dissatisfied, and other docs ripping the “concierge” docs for finding their own solution to the problem (albeit one that is not universalizable; who would be a concierge doc to the homeless-et-cetera?) I just want to bury my head in my hands and cry.

    Blah.

  • Anonymous

    Kevin, how much more do you guys need to get so you’ll feel properly paid?

  • Kevin

    Having physician salaries keep up with inflation is not unreasonable.

    Instead, a 10% Medicare paycut is looming.

    Thanks,
    Kevin

  • Anonymous

    Should every industry get that promise?

  • jb

    I wish that you were right, Kevin, but do the math. The 10% cut is to the top line. Subtract overhead, which goes up every year, and what is left over is the doc’s income. Most docs run 40-70% overhead, so if your gross revenue decreases by 10%, the doc’s take home pay may go down by 25-40%.

    Nice.

  • Anonymous

    my software neighbors drive Mercedes
    Hello? Maybe “software neighbors” were driving Mercedeses during internet boom, but since then the salaries have fallen a lot. Maybe our salaries aren’t cut by the government, but they sure are cut because of our collegues in India and China willing to work for a fraction of our salaries.

    At any rate, what one drives is hardly an indication. Some people earn a lot of money but choose to buy used Hondas Civic for cash. Others take loans to buy Mercedes and are heavily in debt.

    I don’t know about anybody else’s salary, and I sympathise with your situation. But I can assure you that software engineers salaries are NOT adjusted for inflation. Years without raises are common; so are layoffs. Every year major companies do surways of what other guys are paying to determine market average for specific positions. This average doesn’t go up with inflation automatically, but is related to supply-demand. Basically it is “how little can we pay and still attract/keep top people in the current market”. Your raise (and if you get one) is based on where you are relative to this market average, what your evaluation is, and how well the company is doing. Years without raises are common, in fact on the average 1 out of 3 years you don’t get a raise at all. If market salaries fall e.g. because the economy is bad or some projects are outsourced to other countries, then companies may lay off some of higher paid employees and hire others for less.

    Yes, how convenient of you to ignore layoffs when comparing yourselves to others. A lot of people who lost jobs after dot-com bust spent over 2 years without jobs before they could find something, often for much less. A friend of mine with PhD in CS spent almost 3 years without a job.

    I wish doctors stop using engineers as a reference. As the thread “doctor vs engineer” showed, you are clueless. Not to mention arrogant thinking you’d be one of the top engineers just because you had so much post grad education. Does education equal leadership or creativity? You know nothing about what life is like in corporate America. How would you like being laid off after 23 years with a company? Just happened to a friend of mine who by the way has 40+ patents, some of which were deemed “exceptionally valuable” by the company. Yes he was making a nice salary – 140K to be exact, but he was hardly average. He wasn’t a VP, “just” a Director. But now he is in late 40s and has to find a new job.

    Each profession has its own pros and cons. The grass is always greener on the other side.

  • Anonymous

    Anonymous 11:44 asked “How much more to feel properly paid?” A very fair question. Here is the answer for Primary care:

    Professional services = $100 per hour (Look what even the most junior atty charges).

    80 Hours per week, including call duties.

    50 weeks per year =

    $400,000.

    Now that wasn’t hard, was it?

    (Most PCPs are lucky to see $160K)

  • Anonymous

    You do realize that when people bill by the hour, they don’t get to bill for breaks, time spent talking to the wife on the phone, going to the bathroom, emailing about your fantasy football league, initial client meetings to determine if you’ll take the case, etc.

    Most major law firms have 2200 hour per year minimum billing requirements, which works out to about 44 hours per week BILLED TIME. Ask anyone who works at those if they only work 44 hours a week. For you to bill 80 hours a week, you would likely have to be there 100, if not more.

    But, if you want to try it, set up a practice, post your rates, and go for it. Nothing stopping you but you.

  • The Happy Hospitalist

    If your overhead runs 50% and you want to take home $200,000 a year, you have to generate about 4$400/ hour.

    Medicare pays a level 3 (out of 5) outpatient followup visit about $60. It pays a level 4 about $90.

    At an average mix ($75 per visit), in order to generate a medicare only practice take home wage of $200,000, you would have to see 5 people an hour.

    12 minutes from start to finish.

    For complex medical problems.

    It is no wonder volume rules and referrals win the day.

    A 2 hour wait for a 12 minute visit. Welcome to the economics of the Medicare National Bank.

    Take it or leave it. It is the reality of the current reimbursment system.

  • Anonymous

    Anon 1:13 is so right. One thing you physicians forget is that the govt., no matter how frustrating it is to work for, ain’t going out of business. You don’t have to worry about it not having enough money to pay its bills.

    When you take all the risks of the private sector in dealing with private enterprises and individuals for your payment, you will have a more comparable situation.

  • Anonymous

    I was at Stanford and the dumbest guy in our freshman room of 4 was the doctor. He makes the most money. The others were physicist (most intelligent), Software engineer (most creative), and business (best grades). Doctors, in general, are the least creative, curious, and interesting of the top 2%.

  • Anonymous

    “You don’t have to worry about it not having enough money to pay its bills.”

    Right. As soon as the money looks like it will fall short, they pay less for the same service. You can take that as a guarantee of payment.

  • Anonymous

    “I was at Stanford and the dumbest guy in our freshman room of 4 was the doctor. He makes the most money. The others were physicist (most intelligent), Software engineer (most creative), and business (best grades). Doctors, in general, are the least creative, curious, and interesting of the top 2%”

    You forgot to mention that the “dumb doctors” group provide the highest value to society.

  • Anonymous

    The “best and the brightest” are often NOT going to med school anymore. We see loads of obsessive, fairly smart women as the more typical cohort of students.

    Are these new women docs more likely to put up with the endless exploitation and abuse from the government/insurance industry tyrants?

    No business can possibly remain open with 10% income cuts and out of control expence increases, much less EMTALA theft of services, etc. I predict the new docs will be far more likely to drop out of medicine and pursue other careers than we older types ever thought possible.

    Ed Sodaro MD

  • Anonymous

    A pediatrician I know left medicine and is now a drug rep. When he was detailing me I asked why?. He said more money, better hours, no call, no weekends, no malpractice. Hard to argue with his move. Wake up America, it is a sad state of affairs when an MD finds being a drug rep is a better deal than caring for your children.

  • Happyman

    some device reps, eg. ortho, make 2-3x what a pediatrician typically makes. sad, isn’t it?

  • Anonymous

    So do some luxury car dealers and real estate agents that sell autos and houses to doctors respectively.

  • Criminallopath

    Nope. No more money for you. Apparently the brigandage of the Flexnerian generated oligopoly is still not enough when it comes to those that support the Ferrari dealerships.

  • Anonymous

    Take a drink of water, Crim, you sound like you’re choking.

    Sounds like there’s better money in other forms of brigandage, lke maybe selling legal drugs (another “oligopoly” for you, go figure), or Ferraris.

  • K

    Ed Sodaro,

    Thanks, a healthy dose of gender politics was exactly what the issue needed.

    When enrollment ratios turn significantly more than 50/50 in gender, I’ll accept your premise that the future physicians of America are “obsessive, fairly smart women.”

    I’ve seen plenty of extremely bright women choose to become doctors, or decide they’d rather make better money in another field. Rationality isn’t exclusive to the male sex.

    A general poll of medical students would come up with a group of people who still chose their field because they loved their chosen profession. If they drop out in frustration, it won’t be because of a plague of women overrunning the school. It’ll be because very few accept a lack of payment for their work…unless funded by external wealth.

    You’d have much better luck with the first-generation immigrant or wealthy-people-only theory, from what I hear.

  • Anonymous

    “The “best and the brightest” are often NOT going to med school anymore. We see loads of obsessive, fairly smart women as the more typical cohort of students.”

    Who says they were going that much in the first place?

    “You forgot to mention that the “dumb doctors” group provide the highest value to society.”

    Really? By what measure?

  • Anonymous

    Ah! But there is no brigandage in selling Ferraris. One could sell Fords (as in the Shelby Mustang now that the GT has seen its production run), Dodges (Vipers), Chevrolets (the new Corvette Z06), etc. Customers, of course, also have that choice. Now the legal drugs and the legal drug dealers are another interesting matter… being a libertarian (small l not big L) it should be obvious what I would suggest in that regard.

    ~Criminallopath~

  • Anonymous

    The only oligopolist I know buying
    Ferraris is the CEO of the local Medicare HMO. In fact, he is also building a 10,000 sq. ft. waterfront mansion, a beach home, and has a swoopy Mercedes for use when more than one other person needs transportation. (Oh, forget the “Rolls-Royce” golf cart). Did I mention this fellow is young, as in in his thirties?

    Doctors are capitated at less than Medicare rates based on utilization of the enrolled population. Patients get to travel miles to see some of the least qualified low bidders with some of the highest complication rates, that is when you can get them to operate.

    And the silencing of the lambs all starts with a free breakfast at Denny’s. If any physician did this to attract patients, he would be hung from the nearest tree for such solicitation of the federally indentured.

  • Anonymous

    the most inane question is how much more we need to get so we’ll feel properly paid. The market place should decide, not HMO’s, or the govt. In any other business, if you do your job well, you can be rewarded by raising your rates. As things currently stand, to bring more money into a practice requires seeing more patients…but that creates an exponential rise in the amount of work that needs to be done during the course of a day (paperwork, phone calls, etc). then the misery factor rises (getting home later and later to see the family).

    sure we have the choice of not accepting insurance, but how realistic is that for most physicians?

    there should be a serious change in the reimbursement of physicians, or we should be allowed to unionize.

  • Anonymous

    I think a crucial distinction to make is that not all doctors are compensated equally. Primary care doctors (family practitioners, internists, pediatricians etc) make around $200,000 a year. Specialists make significantly more. The median salary for a cardiologist for example is $380,000 a year. For a neurosurgeon it’s $581,000. I don’t know about you, but I certainly wouldn’t complain about $300 to $500,000 a year, even if I did do three more years of residency. The problem is not that doctors aren’t paid enough. It’s that specialists are paid too much and primary care doctors are paid too little. Given that about 2/3 of doctors in the US are specialists, I don’t think I can feel too sorry for the average doctor. These figures are based on the 2008 Physician Compensation Survey, by the American Medical Group Association (AMGA). Here’s the link: http://www.cejkasearch.com/compensation/amga_physician_compensation_survey.htm.

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