Op-ed: Doctors’ pay cuts save little in health costs

The following op-ed was published on August 22nd, 2008 in the USA Today.

“Why should I care if doctors get a pay cut?” my patient recently asked me.

Therein lies the delicate dilemma physicians face today. While the common perception is that the medical profession is well-compensated, there are serious implications in targeting physician pay to control medical spending.

Congress recently passed a bill protecting doctors from a 10.6% cut in Medicare payments, overriding President Bush’s veto in the process.

The U.S. boasts the world’s most expensive health care system. Costs exceed $2 trillion annually and outpaces inflation and growth in national income. In an attempt to cut costs, Medicare has instituted a formula that calls for regular decreases in physician payment of more than 20% by 2010.

The number of physicians who do not accept new Medicare patients is dramatic; in states like Texas, this number can exceed 40%. No wonder, as Medicare pays less than half of doctors’ fees. This scenario comes as a record number of Boomers approach Medicare age.

Those without Medicare are not spared the consequences. Seniors sometimes delay their care, leading to expensive treatment in the emergency department. Doctors who lose money seeing Medicare patients could pass on the costs to the privately insured.

According to the Kaiser Family Foundation, there are more significant drivers of health costs, including new prescription drugs, technology and administrative needs. Princeton economist Uwe Reinhardt estimates that physicians’ take-home pay represents roughly 10% of national health care spending. Cutting physician pay by 20% would only reduce spending by 2%.

A more effective option would be for the government to enhance the nation’s primary care by paying physicians to coordinate care between specialists, install electronic medical records and encourage patient communication via e-mail or telephone. The New York Times recently reported that a pilot program increasing primary care spending in North Carolina saved Medicaid upwards of $160 million in 2006.

Furthermore, improving access to providers such as internal medicine and family physicians would provide timely care and keep patients out of the hospital and emergency room.

With medical spending estimated to rise nearly 10% annually, costs need to be curbed. But by focusing on physician payments, government alienates the profession for little in return.

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  • travelingwriter1

    This column is an excellent argument for single-payer health care. Two important points that were left out of this article:

    1. If the U.S. had single-payer health care (as almost every other developed nation does), physicians would not be refusing Medicare as there would be only one payer.

    2. U.S. physicians are the highest paid physicians in the world and are the highest paid of any large profession in the United States.

    Also, I’m sick of hearing the argument that physicians spend so many years in school. PhDs often spend an even longer period of time than physicians do getting their education and their pay, on the average, doesn’t begin to approach that of physicians.

    Finally, we largely have the AMA to thank for not having universal health care as they have vehemently fought it since the 1930s and only recently have begun to change their tune.

    The physicians in this country have for too long had a ‘holier than thou’ attitude and have yet, as a group, accept responsibility for their historical role in our broken health care system.

  • Anonymous

    I am so sick and tired of people who downplay the work that physicians do. I took on a 70 hour workload just last week at my hospital. I was barely even home and slept in my office at times. To say that physicians have too good salaries is absolutely stupid. For 70 hr/week, my take home is only slightly over 175K after taxes and expenses (malpractice mainly). Corrected for a standard 40 hr/week that other NON-physicians make, my salary would be equivalent to roughly 100K (Is that still too much for anyone?)

  • Tired med student

    To the first poster above (travelingwriter1):
    The difference between PhD students and MD students is that PhD students go for free or are often PAID to go to school, through assistantships or stipends, while this is rarely the case with MD students (unless on a combined MD/PhD track). My yearly tuition for medical school is approx. $30,000 a year. My husband is a graduate student at the same institution and he pays less than $10,000 a year in tuition. My tuition is actually pretty low compared to national averages at med schools; some private and osteopathic schools charge more than $50,000 a year in tuition. After four years in medical school, we also get the privilege of training for an additional 3+ years at less than minimum wage, and all the while our hefty medical school loans, in the hundreds of thousands, are drawing interest and doubling or tripling before we can afford to pay them back. I have friends and family (including my brother) who are PhD candidates or recipients, and I can tell you, from personal experience, that they don’t face near the monetary nor time commitments that MDs/MD students do. When is the last time you’ve ever heard of a PhD student working over 80 hours a week (as 3rd year med students do)? My brother recently graduated from a PhD program in audiology, debt-free (thanks to the aforementioned assistantships), and in his first job he will be making an estimated $60,000 to 80,000/year. On the other hand, in 8 years from now, when I finish with my training, I will be over $200,000 in debt (just original principle, not including the accrued interest), and most of my salary will go toward paying that back for another 10 years before I start to see any real compensation for my hard work.

    You talk about a broken system and that we only have ourselves to blame. How is my generation, the current medical students and residents, to blame? Yet, we are the ones who will have to pay for this through reduced salaries while the cost of medical education only rises each year.

    Like the poster above me said, those who cite doctors as being the highest paid profession are not correcting for hours worked. Dentists make over $100,000 a year but they work on average 35 hours/week. I know of no medical specialty where one could work 35 hours/week and still make over $100,000. The same is true for all mid-level providers as well, such as NPs, PAs, CRNAs, and the like. They enjoy comparable compensation to primary care MDs but with a much-reduced workload and not having to deal with all the other bureaucratic and administrative bull**** that MDs do (hours spent that they are not compensated for, by the way, since most are only paid for patient care).

    You, like others who love to complain about doctors’ inflated pay, are very ill-informed and perpetuate misinformation. Check your facts.

  • GG Freeman

    This dovetails with med-student’s comments.

    The problem is that each person is myopic (and I don’t mean this in a negative way) when it comes to “their own workload.”

    While I would never impugn a PhD or NP, RN, and yes, even a.. a.. lawyer… etc for the work they do, which can be just as challenging and stressful as a physician at times- especially from their own perspective, people forget that (stealing part of a line from Melvin Konner MD) there are only two people that get the privilege of digging into your flesh while you are alive and only one is given the privilege willingly: doctors (and similar practitioners) The others are murderers!

    Say all you want about doctors as over-paid quacks – they hold a trust in society that deserves to be compensated based on the commensurate risk.

    You see, there’s a reason that lawyers sue doctors for multiple millions of dollars when they make a mistake. We are trusted with people’s health and lives.

    Sure, if you’re a civil engineer or even a bus driver you can be responsible for multiple injuries and lives at once, but is it the same as someone coming to me saying, “Fix me.” (Trust me, it all boils down to those simple two words for many, many, many “patients”)

    I think you know the answer.

    Take this example. When a team, be it a military team, sports team or a business team makes it all the way to the battle zone, championship, or final deal closing meeting… if it all ends in shambles, each team member bears a responsibility, but who has THE responsibility? The team leader. Period. This is how human society works. Period. End of story.

    The nurses, technicians and managers (and PhD theorists?) I work with as a new physician all affect the patient’s life deeply, profoundly, perhaps patients will remember their contribution to their medical care more than mine (and often they should) but in the end, whose responsibility is it ultimately to make sure the patient gets “good care”?


    I was a technician and nurse for many years before becoming a physician. I feel the difference every day when I say, “Hi I’m Doctor ______.”

    SHOULD that mean I get paid more?

    Believe you me, I will get sued more if I make a mistake. I lose more respect in a patients eyes when I make a mistake (than a nurse or technician)

    I didn’t do this to get rich. I made a graph of how much MORE money in salary, benefits and NOT paying $250k for medical school and investing that I would make if I furthered my nursing career instead of becoming a physician.

    Guess what? The break even point is about age 60 for me.

    And as far as US physicians making more than any other doctors in the world… I have a friend whose son went to medical school in the UK at a cost of ~1/6th of what I paid, and a resident salary 3x what I get paid working 20 hours less a week than me.

    Is this myopic on my part? You bet. But you also know it’s true. You cannot get good medical care if your intention is to “stick it to the doctors”.

  • http://www.physiciandispensingsolutions.com David Riethmiller

    With medicare on the rise do you think physicians are taking a closer look at ancillary programs like dispensing to help increase practice profits? Dispensing is a great way to increase profits without having to see additional patients.

  • http://greatervalleyphysicians.com Pankaj Karan,MD

    Doctors are scapegot of healthcare crisis because AMA and ACP has filed us all doctors. We have people in AMA and ACP and other colleges stawarts who have sided with HMO for last 25 years and has sided with Pharmaceutical company because they have been associated with them as a researcher or has been sitting in their boars or something of that sort. Doctos salaries has not even kept with inflation and we have put in more hours year after year.
    We are in a professoin where where we are getting paid as capitaiton in CA where we see pt or not and most of the time we are in loss because the capitaiton rate has barely buzzed. HMO and IPA take their cut from top and after that they their best to deny coverage to patients and deny the services provided by doctors.
    They is no other profession where so much work and stress is put in for so less money.On average an internist put in 80 hrs per week ( equivalent to 2 jobs, I am sure Phd earned people do not do that and doesnot have to pay for malpractice).
    Running your own practice is extremely stressful and expensive and not much rewarding.Only benefit I find is my freedom.I donot like to be told how to take care of my patients. and I do it well.
    Cost can be contained in medical field if we can contain the greed and fraud.

  • http://kalamazoopost.blogspot.com Tony

    I am a physician and I’m okay with single payer. Bring it on…

    … and we’ll unionize just like teachers and postal workers. I mean really unionize with strikes and work slow downs and everything.

    Compare the education and expertise and time spent (teachers have summer off, pension after 20 yrs with full bennies; postal wokers have HS education, 40 hr weeks– what’s that?– and pensions and health care for life), and I’m thinking this might work out fine.

  • Janice

    And teachers make a 1/3 of what Physicians make and are far more valuable.

  • http://kalamazoopost.blogspot.com Tony

    Janice, I’m not here to pick a fight with teachers or postal workers, I’m just sayin’….

    My brother in law is a hs ceramics teacher, works 32 hr weeks, 37 wks/yr. Post-secondary education is 1/2 number of years (and I won’t even factor in the number of hr/d study for ceramics vs. pre-med and med school). He makes 40% of my salary, has “tenure” protection against getting fired, pays no FICA tax, and his bennies are WAY better. After 25 yrs, he gets 80% salary pension for the REST of his life,,, at age 55… and with a cost of living raise every year!

    I’d gladly take half my salary for that lifestyle and pension, and I’m not bustin anyone’s chops, I’m just sayin that all professionals deserve such a lifestyle and maybe medicine would be better off for it.

  • Janice

    Well if you want that life style, go be a teacher. That was my point. I want to win the Peakness, guess what, I better learn to ride a horse and certainly not berudge others if I’m unable to do what they have done to achieve what they have achieved.

    Teachers work really hard and do not get the automatic (and often unearned) respect of physicians. I’m not crying for you, Argentina.

  • http://kalamazoopost.blogspot.com Tony

    I don’t want to be a teacher; I want to be a doctor. I’m not begrudging anyone anything. I’m actually saying that we SHOULD have a single payer system (you can rifle thru my blog under tag “health” to read more of my opinions.) I’m just looking at the labor model that other professionals live by and think it would work better than the fee-for-service system we have now in medicine that rewards over-treatment and expensive “care”.

    I’m sure teachers work very hard. And I’m sure many physicians have unearned respect. And I’m certainly not asking you to cry for me. Grow up.

  • William S Maxfield, MD

    Let us look at some comparisons to past and present values. 40 years ago my malpractice insurance was $1,500/ year but today it is $34,000/ year. When I entered radiology 40 years ago I made 4 x the income per year as did the hospital CEO. At least in the Tampa Bay area the figures are now reversed. An article in the ST Pete Times last year listed the / year income for the CEO of the 5 largest hospitals in the area. The lowest was $1,000,000 and the highest was $3.8 million. Consider also Insueance Company salaries. I beleive I am correct that the Wall Street Journal last year said the CEO of United Health Care had an income of only $ i Billion. Then in California a few years ago a woman who was turned down for a bone marrow implant suided her HMO. At trial it was shown that the bone marrow transplant for the wife of one of the VPs of the HMO had been approved for her transplant by the HMO. However, the VP realy needed that insurance coverage as his income was only $25 million/ year. Tom Dashle in his book Critical indicated the overhead for our medical expenditure was 31%. Based on the above I believe his figure is low. Also to control medical costs we must correct the epidemic of obesity. Not only does obesity increase incidence of disease but it severly limits early diagnosis.

  • http://www.kidshousecalls.com Edward Kulich

    I have to disagree with the comparison regarding PhD’s length of education and compensation. A PhD candidate does not put innearly the amount of time a physician in training does, they do not put up with even a fraction of the abuse that we endure in medical school and residency, and most importantly, a PhD candidate gets PAID while they are in training. They do not pay tuition and they get compensated as they go. As a pediatrician in primary care, it’s almost impossible to compensate for the my huge student loan payment every month. And they wonder why medical care and spending has reached such a citical point these days…
    low compensation for primary care, making it a low unit, high volume business. We are given incentives for high volume, and not for quality. It is in a physicians best interests to see as many patients as possible, which decreases the time spent with each patient, decreasing the quality of care.

    A potential solution may be to provide standard payments to physicians in a geographical region. Someone needs to regulate these unscrupulous insurance companies that serve only to rob the public of quality care, and physicins of their livelyhood.

  • A Baum, WHNP, BC

    1. If the U.S. had single-payer health care (as almost every other developed nation does), physicians would not be refusing Medicare as there would be only one payer.

    2. U.S. physicians are the highest paid physicians in the world and are the highest paid of any large profession in the United States

    First, just why are those MDs refusing Medicare? Because it doesn’t cover the bills. Mandating Medicare coverage means no private options and we all get to share in the same mediocre level of rationed care. Thinking that you’ll get the same quality of care you do now for “free” with government as the single payer is a pipe dream not based on observable reality.

    Your second point is just a pure Marxist class envy. Why shouldn’t physicians be highly paid? Would you put in four years undergrad, four years of med school, two-three years of residency, all the while accruing debt over $100,000-200,000 to make $30,000 a year? The Soviets already tried paying physicians like teachers and no sane person would ever want to repeat that experience (research it if you aren’t familiar with it).

  • A dedicated MD

    A few words and thoughts:

    1. Find ONE PhD who is $200,000 in school debt when graduating (which BTW w/ interest will be close to a million dollars when paid off)

    2. Find ONE PhD who works on average 80 hours per week on their feet running around a hospital..let alone find any other profession who will work on their feet in a stressful situation saving people’s LIVES for a 30 hour straight shift.

    And I’m sorry, sitting in front of the computer working on a grant for 30 hours doesn’t count!

    3. There are only a handful of professions with such a competitive road as in medical school. No other professsion has so many licensing and board exams throughout a career as physicians have to deal with.

    4. PhDs don’t go through residency buddy. Our residency COUNTS as a part of our education. So given most residencies last from 3-8 years, that is up to 16 years of education before practicing as a doctor and making the salary we do!

    5. Physicians are under-appreciated and under-respected for what we do. Pick any other profession with so much responsibility as having someone’s LIFE in our hands. We are held responsible for so much!

    6. If you cut down on physician compensation, competitiveness for medical school wil drop like a fly and the drive for research will go down as well. I know it sucks but that’s the reality of the world..money drives everything. THIS will considerably LOWER your quality of healthcare and the prospects for advancement in medicine. Not every doctor goes into it for money but if we’re investing so much of our life (sacrifice in family, in debt, working like dogs for others) for medicine, I’m sorry but $50k salary a year won’t cut it. Physicians are humanitarians, servicing mankind but come on…we’re not all mother Teresa willing to give up our ENTIRE life for others without any compensation. get real buddy!

    Okay, I’m done.

  • A dedicated MD

    One more thing…

    US physicians may be some of the highest paid in the world but in NO OTHER COUNTRY can you SUE a doctor for millions like in the US. No other country’s physicians pay as much malpractice insurance and also in taxes (w/ Obama’s new tax plan) as we do.

    We give our patient’s more autonomy than any other international physician will EVER give you.

    And we get LESS respect than in any other country.

    So realize what we do and give a little respect!

  • http://www.kidshousecalls.com Edward Kulich

    ok guys… here’s how we fix the health care crisis. right now… no problems ever again… you all listening?

    every doctor charges a reasonable fee and every doctor stops taking any insurance, health care will again be affordable and doctors will no longer treat their patients as 8 minute cogs in a machine.Insurance companies have no right to do what they do, and it’s about time someone puts them in their place.

  • andrew

    I’m a fairly recent graduate from residency and am dismayed to find myself starting my career at a time when respect for the medical profession seems to be at an all time low. Not only are we considered overpaid, we are also apparently responsible for part of the failure of the healthcare system because we so greedily order extra tests to pad our pocketbooks.

    The road to medical practice is long and grueling. I have friends that have graduated medical school $300,000 in debt. I finished a 5 year residency and 1 year fellowship before the institution of the 80-hour (double what “normal” people do!) work week, during which I consistently worked 100 hour weeks and 36 hour shifts. I think my record shift was somewhere around 42 hours with no sleep. As an attending, I find myself often exceeding the resident mandated hours restrictions. In my specialty, I am responsible on a daily basis for life and death decisions that often have to made with inadequate information on an immediate basis. If I fail, I am critiqued by my colleagues and face the possibility of a career limiting lawsuit. Needless to say, the stress is amazing. A recent survey regarding physician burnout found rates of some 30-40%, and that over 20% entertained suicide.

    I didn’t go into this for the money, but it may ultimately be the reason I leave.

    Seriously, when your blood pressure is 60/palp, your pulse is 150, your hgb is 5, your base deficit is -13, and the proverbial brown material is hitting the spinning blades, do you really want the person taking care of you to be underpaid?

  • Outrider

    >>6. If you cut down on physician compensation, competitiveness for medical school wil drop like a fly>>

    What baloney. As a DVM entering a residency program, I’m not sympathetic at all!

    If you want to see high student loan debt, long working hours, competitive admissions, licensing and board exams, residencies (yes, many of us don’t stop with the DVM degree), stress, burnout and daily responsibility for lives, talk to some veterinarians. Let’s add in adverse working conditions and relatively high risk of occupational injuries, too.

    Even though the average DVM earns much less than the average MD, veterinary schools still manage to attract top candidates. People still want to be veterinarians, and veterinarians certainly don’t expect to be rewarded financially – if we did, we’d have gone to medical school (and we could have). Most veterinarians are financially comfortable – not in the salary class of physicians – simply comfortable.

    Maybe the medical profession would be vastly improved if people chose to become physicians despite – gasp – no expectation of financial reward?

    Stop whining.

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  • MD

    I am in full agreement with you and all the critics of the medical profession. Choose a salary the you think a physician should earn (people seem to think $100,000 a year is fair for physicians so therefore PA’s and NP’s would earn about $50,000 and nurses would be restricted to $25,000) and stand up and say. “This will be the new salary. I will take full responsibility for any disruption in medical care delivery. If future doctors and nurses and midlevel providers cannot afford to pay off professional school tuition and drop out of school, if medical school enrollments plummet. I will take full responsibility. When all the foreign trained doctors that we so depend on leave the US, I will also take full responsibility. When your mother cannot find a doctor, I will take full responsibility. If doctors cannot afford to pay their malpractice insurance bill and close their practices, I will be responsible for that too.

    Oh yeah, don’t forget to sign your name and leave your phone number. We might need to talk to you about your decision sometime.

  • http://www.kidshousecalls.com/ Edward Kulich MD

    well put MD, very well put. I would also like to point out that when we all need doctors to make us feel better when we have the flu, to pick up a subtly presenting heart problem that only an experienced physician can, to do a spinal tap on a 3 day old, we would beg borrow and steal to have the best doctor possible take care of our loved ones, and then we cringe when we get a bill. It’s sickening how we treat doctors in this country. Imagine your child is about to die in font of your eyes, would you really want the doctor who’s split second decision means life or death for your child to be overworked and underpaid? (or even worse, imagine the only person who is available to treat your child is not even a doctor, but a PA or a nurse practitioner who is working there because they are more “cost effective.”)

  • http://kalamazoopost.blogspot.com Tony61

    I appreciate the sentiment of MD and Dr. Kulich, but the fact remains that we should have a good idea of what proper compensation should be for a physician. The wealthiest physician colleagues I know all made most of their fortune as businessmen, not as a direct consequence of their labor as physicians.

    Compensation for physician labor will become increasingly non-monetary which is a continuation of a trend that has endured over my entire 20 year career in medicine (reimbursement for my services has been flat or decreasing over the last 15 years.) Perhaps we as a society will need to pay tuition for medical school and/or increase med school enrollment and/or increase use of midlevel providers: what economists call “reducing barriers to entry”, but the fact is we will need more practitioners who make less money. Period.

    My salary has remained stagnant for over a decade while my workload has increased because the acuity of *my* patients has increased. I now supervise many midlevels and take care of their sickest patients and this is a trend that will continue. No longer will I have the luxury of the “coin drop”, ie, billing top dollar for routine services. Basically, the “system” is saying that the average run-of-the-mill patient can’t afford me… or is it me saying that?

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