Targeting physician salaries is a poor strategy for health care costs

Targeting physician salaries is a poor strategy for health care costsA recent study from Health Affairs took aim at physician salaries.

Well, not exactly their salaries, but fees. It’s a subtle difference, but that nuance is lost in the mainstream media narrative.

According to the study, “American primary care and orthopedic physicians are paid more for each service than are their counterparts in Australia, Canada, France, Germany and the United Kingdom.”

Thankfully Aaron Carroll, a pediatrician and progressive-leaning health policy expert, goes deeper into the study and finds that, yes, fees paid to American doctors are higher, but not so much with primary care physicians:

Targeting physician salaries is a poor strategy for health care costs

The fact that primary care doctors often get lumped into the “physicians get paid too much” debate is regrettable, especially when you compare their salaries to generalist physicians in other countries.

And, when you consider the cost of an American medical education, the pay difference becomes more negligible.

Targeting physician salaries is a poor strategy for health care costs

Studies that compare United States physician salaries with other countries need to make a better distinction between primary care doctors and specialists, as well as include medical school and malpractice costs of American doctors in their analysis.

Policy makers often target physician salaries because it’s low hanging fruit. And the public generally doesn’t have much sympathy for doctors when it comes to their pay.

However, respected Princeton economist Uwe Reinhardt wonders in the New York Times whether targeting doctors for immediate savings is worth it in the long term:

Cutting doctors’ take-home pay would not really solve the American cost crisis. The total amount Americans pay their physicians collectively represents only about 20 percent of total national health spending. Of this total, close to half is absorbed by the physicians’ practice expenses, including malpractice premiums, but excluding the amortization of college and medical-school debt.

This makes the physicians’ collective take-home pay only about 10 percent of total national health spending. If we somehow managed to cut that take-home pay by, say, 20 percent, we would reduce total national health spending by only 2 percent, in return for a wholly demoralized medical profession to which we so often look to save our lives. It strikes me as a poor strategy.

Dr. Carroll agrees, providing a chart showing that physician salaries comprise only a small portion of health care costs:
Targeting physician salaries is a poor strategy for health care costs

Reforming how doctors are paid should not be the only piece to solve the health care cost puzzle. Tackling a problem this large requires shared sacrifice, from both patients and health professionals alike.

But in this climate of austerity and economic gloom, “rich doctors” are easy punching bags. Targeting their salaries will bring dubious health savings at a high emotional price for a profession that’s going to be counted on to care for both a ballooning Medicare population and 30+ million newly insured patients in the coming years.

Poor strategy indeed.

 is an internal medicine physician and on the Board of Contributors at USA Today.  He is founder and editor of KevinMD.com, also on FacebookTwitterGoogle+, and LinkedIn.

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  • http://twitter.com/erwiest Edward Wiest

    This is coming out in a number of forms.  Turn, for example, to p.100 of this e-book: http://deanbaker.net/images/stories/documents/End-of-Loser-Liberalism.pdf

  • http://pulse.yahoo.com/_2777TIXQT36XXRFBKFKZYPCGQM John

    Here’s the problem Kevin. No arguments here that PCPs have gotten the shaft by comparison to specialists. Worse, PCPs have done little or nothing on the financial (and sometimes medical) effect on patients. This country is the unparalleled leader in medical bill driven bankruptcies. In plenty of cases, PCPs have sent patients to specialists (appropriately medically in many cases but also as a means of keeping up productivity #s when they could have dealt with the issue had they invested more time) with no concern to the financial peril that would put the patient in. Rather than questioning the broken system, they just sucked it up and kept their mouths shut.

    It’s as though PCPs have been continually watching “crimes” take place across the street and never stepped in or called the cops. Now that is coming home to roost. Most PCPs know the problems with insurance putting a heavy burden on care…perhaps doubling the cost of care. It seems that the only action they’ve taken is to opt out an be concierge docs. Or they’ve thrown up the white flag and sold their practice to work for the man (where it’s shown care costs go up when docs go to work for hospitals). At least there’s some docs doing a low cost version of concierge practices — e.g., Symbeo, Brian Forrest, etc. Those are the heros. They’ve shown the way. It’s not rocket science. PCPs may perceive it as a risk to move to those direct care models but I think it’s a much bigger risk for them to accept the status quo. You don’t need an advanced degree to connect the dots to where things are going if they stick with the status quo. 

    • http://www.facebook.com/people/Craig-Koniver/100001463176810 Craig Koniver

      I whole-heartedly agree with you on this one. For far too long, doctors have been way too complicit with this divide. Until doctors step outside of the system and go direct-pay and/or patients stop participating with the health insurance system,  we will continue to have this problem. I have stopped taking insurance and transitioned my practice to direct-pay. This has helped me (much less hassle, increased quality of life) and has shown patients how high quality care can be provided at much less of a cost. It is too easy for doctors to stick with the status quo and keep churning through the system, but that is the path we need to radically change, not just tweak.

  • http://www.facebook.com/people/Craig-Koniver/100001463176810 Craig Koniver

    Thanks for sharing this info–I really liked how you included the charts and graphs. We are certainly easy targets as physicians. The tough aspect to all of this health care reform is that the economics have been completely uncoupled from the services being provided. Since patients don’t have a clue about the true costs, it is easy to point blame to greedy doctors. No other sector of our economy operates on a credit basis like our health care system operates. Until this aspect is made more transparent, I am afraid we are going to hear this same mantra repeated over and over again. 

  • Anonymous

    All very true. Some of what you say has the potential to divide physicians into groups and that can create conflict. Physicians need to stay united on this issue. The statement “A house divided cannot stand” applies. One of the reasons US specialists make more than their European or Canadian counterparts is that because of patient demand we work longer hours and do more procedures. My Canadian colleagues tell me that waiting time for a joint replacement is typically over 1 year. After they have done their quota of joints for the month they stop operating and some of them then take mandatory “time off” once they reach a certain level of work and cost to the system. In the US, a Medicare patient can come into my office with severe arthritis and within a few weeks they can have a new knee. This level of service is demanded by patients in the US. This service demand creates 70 hr work weeks and many more procedures done, which increases our pay. Increased pay for increased work seems reasonable to me. If the government wants to decrease the number of procedures we do and the hours we work, year long waiting lists will be the norm in this country as well.

  • http://twitter.com/chasedave Dave Chase

    For those MDs considering moving to a model such as Dr. Koniver’s, I wrote a piece recently on overcoming the barriers to switching to a direct primary care practice. There are a few organizations setup to help with that transition that I highlighted. Read the article at http://www.kevinmd.com/blog/2011/09/overcoming-barriers-building-direct-primary-care-practice.html. From what I have observed, the biggest reward for PCPs shifting to the direct primary care model hasn’t been the increased income (though it does help close the gap). Rather, what they consistently say is they are back to practicing medicine the way they were trained. 

    When I asked one doctor why he shifted as it was certainly a perceived risk, he echo’ed the point above. He said that when he was in what he called the “hamster wheel” of having to see patients for an average of 8 minutes, he felt he was using 40% of his medical training. He said it tore himself inside as he knew if he asked a patient certain questions to get at the root cause of an issue, it would lead to a long conversation that would blow his productivity numbers out of the water. He just couldn’t deal with that anymore.

    Another direct primary care doctor shared the story of a patient complaining of migraines. The doctor said that previously (when she was in an insurance-based primary care practice), she would have had her patient get a CT scan with it’s accompanying cost and radiation exposure. Instead, in the course of the longer conversation she learned that the patient had recently had her mother-in-law move into her home. The doctor advised setting some limits, taking walks, etc. That ended up solving the patients problem AND saving money in the process. 

    In my view, when we stop insuring the equivalent of getting our car tuned up or brakes replaced we can easily save significant money. Keep insurance what it does best – insuring rare stuff you hope never happens. Cancer, house fire, major car accident, etc. That’s what I do personally and am seeing more and more folks do the same particularly as employers have capped what they are willing to put towards health benefits. The direct primary care docs are positioned to capitalize on that trend.

  • Anonymous

    Yes.  Let’s use hatchet, axe and saw to make everybody equal … all wages the same.

    Market forces will still slip through and adapt to such fairness doctrines anyway.

    First, there would likely be fewer people interested in pursuing a medical career, affecting the applicant pool and physician supply.

    Second, since docs wouldn’t factor pay into specialty choice any longer; they would more heavily factor in work hours instead.  Good luck finding a neurosurgeon.

  • http://twitter.com/flyingelvisky Kathryn Reed

    Rich doctors?  I hardly think so. Doctors and hopsitals have become easy targets for politicians and insurance companies who support those politicians. Most doctors these days have to be staff physicians, in order to be able to practice. The high cost of haveing  private practice is just out of the question. The US government has made it almost impossible to become “rich” in our country, unless you are a politician.
    It is a shame, that the media buys right into this BS.
    Go ahead and make it more difficult for doctors to live on their salaries. The crisis will no longer be the cost of healthcare, it will be the availability of healthcare.
     

  • aaron willen

    I am a 2nd year medical student in Philadelphia.  I will be $380,000 in educational debt when I graduate in 2 years.  Assuming I take 15 years (half of the typical 30 year term), my monthly payment will be $3370.  I will pay around $227,000 in interest over the term of the loan, with a total repayment amount of close to $610,000.  I will have spent 4 years in undergrad 2 years getting my MS before medical school, 4 years in medical school, 3 years in an IM residency and another 3 in a fellowship program.  My 20s are gone, I havent made a single cent.  My life is devoted to my career and my patients.  But I guess a bunch of largely uneducated college dropouts deserve to be paid hundreds of times more than me a year to take a ball and run it over an imaginary line on a field.  Gimme a break America, get your priorities straight.  

  • Anonymous

    This is an absolute crock.  Doctors (especially specialists) are RIDICULOUSLY overpaid for the amount of work they do and the job security they have.  20 percent of national health spending is a HUGE amount of money.  Medicare is a monster that is devouring the US, and it is fueled primarily by DOCTOR GREED.  The amount of money doctors are making from short, routine procedures is ridiculous.  Medicare reimbursement rates are set by medical lobbying groups who are trying to make doctors as rich as possible.  Meanwhile other medical lobbying groups actively try to limit the amount of doctors in the US to further prevent competition and keep doctor salaries high.  These days everyone else in the US is taking home less money, but some reason they doctors just keep financially raping the public and keep the endless Medicare faucet running. (Remember, private insurance reimbursements are based off of Medicare rates)

    We need to cut all medical specialist salaries in half, for starters.  It is absolutely obscene how much money they are making.  Absolutely criminal.  Once we cut the doctor salaries, then the medical school costs will come down.  They only reason they are so high right now is because doctor salaries are ridiculously inflated, and even paying down 300k loans is nothing compared to the insane salaries.

    The entire medical industry in this country is a corrupt cartel that puts money ahead of health.  Surgeons perform tons of unnecessary surgeries just to pad their pockets, all the while putting a patient’s health at risk.  Do no harm? Yeah right. We are BANKRUPTING our country with out of control Medicare costs, fueled entirely by doctor greed.  The public is beginning to wake up and see what a scam our medical system is, and that the doctors we once respected are just trying to squeeze as much money out of patients as possible.  It is absolutely disgusting.

  • http://www.facebook.com/jartiago Joy Artiago

    Thanks for opening my eyes to something I did not know.

  • http://www.facebook.com/profile.php?id=558041620 Vikas Desai

    People need to realize one thing, if you don’t pay a physician a good salary where is the motivation to go through that much training. A police officer in a rich suburb makes over 100,000 a year. Pharmacists make 120,000 a year, if you own 2 dunkin donuts you can make 200,000 a year, a IT support specialists makes 90K . The point is the amount the amount of training required to do these specialities is COMBINED is less that of a regular primary care doctor who makes about 170,000 a year.  You make very little money as a physiician in your twenties, about 120,000 over 10 years which amounts to about 12,000/ year or welfare levels, when i was 25 i shared a room with 4 other students in a 70 dollar a week house in a bad neighborhood in queens, nyc. I could have just as easily have been in finance making 75K a year driving a BMW instead of buying used tires to keep my jalopy running.  Physicians are generally very highly educated and hard working/so they can go and some other job and get paid well. I can understand why someone who makes 30K a year is upset over someone who makes 150K a year, but you have to understand the type of person who becomes a physician is going to make this type of salary in another field as well. The fact is that physicians are among the few higher paid specialities that deal directly with the general population so it makes them an easy target for being “overpaid”. Snookie gets 10,000 bucks for showing up to vegas nightclub, let me please keep my 57 bucks for treating your mom’s depression. 

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