The salaries of health executives: What can doctors do?

Health care reform is a reality.  The ACA and its associated mandates have forever changed the landscape of medicine in the U.S. today.  The Obama administration touts the goals of reform as providing affordable, cost effective, high quality care for all Americans.  Certainly these are noble and lofty goals: But have we completely missed the mark?

Today, many remain uninsured and the majority that have signed up for the exchanges are simply those who have lost their health care coverage from other providers.  Health care costs in the U.S. remain above those of all other industrialized countries while physician salaries continue to fall.  Even though the U.S. spends more dollars per capita on health care than any other country on earth, our outcomes, when compared to other nations, remain mediocre at best.

What about cost?  Who is actually delivering care?

Over the last 30 years, hospital administrators and CEOs have grown by 2500% while physicians have grown by only a modest amount.  In fact, according to the American Academy of Family Practice, there must be a 25% increase in primary care doctors over the next 10 years in order to keep pace with demand.  Multiple independent surveys (published by the AAMC) indicate a significant shortfall of all types of physicians nationally by the year 2020.  As administrators and insurance company executives grow, hospital staff and services continue to be cut: Nurses and doctors are asked to care for more patients with fewer resources.  Executives continue to tout savings within their organizations and boards award these administrators with enormous financial bonuses.

The salaries of health executives: What can doctors do?

Where are the doctors in all of this?

The short answer is that physicians are caring for patients and managing the piles of paperwork that the government and other health care organizations and executives have created for them.  Doctors are now consumed with checking boxes, implementing EMRs and transitioning to a new coding system for billing — all while seeing increasing patient loads and meeting increasingly steep clinical demands.

Recently in the New York Times, Elisabeth Rosenthal penned an article that spells out what many physicians have known for a very long time: The administrators and hospitals are the high wage earners — not the doctors.  As the numbers of administrators continues to rise exponentially, many independent physicians and physician groups are being driven to integrate with or leave practice altogether in order to remain fiscally viable.  According the the Times, the salaries of many administrators and CEOs (in both the hospitals and the insurance industry) are outpacing salaries of both general practice physicians, surgeons and even most specialists.

Astronomical wages such as those earned by Aetna’s CEO (total package over 36 million dollars) and others are a big contributing factor to the trillions of dollars that we spend on health care each year.  According to the Times, health care administrative costs make up nearly 30% of the total U.S. health care bill.  Obviously, large corporations and CEOs will argue that these wages are necessary to attract the best and brightest executives to the health care industry.  What is there to attract the best and brightest scientists to medicine?  Certainly altruism is a big part of what physicians are about but economic realities must still come into play when bright young students are choosing careers (while accumulating graduate and professional school debt at record paces).

Why then does it seem as though physicians are the only target for reform?

That answer is simple: Hospital administrators and insurance company CEOs are well trained businessmen (and women) with MBAs from prestigious schools.  They understand politics and how to effectively lobby.  They have been actively involved in reform and have participated in discussions on Capitol Hill rather than watch the change happen around them.  When costs are cut from the health care expenditures, they have made erudite moves: They have worked effectively to isolate themselves and their institutions from the cuts that are affecting the rest of the industry.   While reimbursement for office visits and procedures falls to less than 50% through many of the exchanges and other government based programs such as Medicare and Medicaid, CEOs and hospital administrators continue to financially outpace their colleagues in other sectors of business.

As physicians, we must continue to focus on our patients and their well being.  Individually, we must continue to provide outstanding, efficient, quality care to those who depend on us every single day.  As a group, however, doctors must begin to work harder to influence those in Washington for change.  While health care reform is essential and must be accomplished in a fiscally responsible way, it is my hope that those in a position to effect change will recognize that we must begin to better regulate and limit those in CEO and administrative positions in both the insurance and hospital industries.

Just as we reduce the numbers of nurses on the floor to care for patients in order to save health care dollars, maybe we should eliminate a few VPs with fancy offices on the top floors of our hospitals.  Which one do you think will positively impact patients more: fewer nurses or fewer dark suits?

Kevin R. Campbell is a cardiac electrophysiologist who blogs at his self-titled site, Dr. Kevin R. Campbell, MD.

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  • BullDogLizzy

    Maybe a university or other organization should study health care and insurance models throughout this country and others to see how dollars are allocated in the system and where they are used most efficiently for patient care. The costs for education for health care professionals should be included.

    • Patient Kit

      I think we have plenty of info about where the money goes. Both publicly-traded companies and nonprofit organizations must report regular financial statements to the SEC and IRS, respectively. Those statements include pay for key executives, including salary, bonuses, expenses, perks and, in the case of public companies, stock options.

      We have lots of info. The question is: Where is the will to do something with that info?

  • NewMexicoRam

    What’s even worse is that a number of these executives ARE physicians.
    Sickening. I may lean Republican and free market, but there’s reasons why Red Revolts occur.

  • Lisa

    We should eliminate more than a few health executives.

    • rbthe4th2

      Are we talking eliminate business wise or by the Corleone “leave the gun, take the cannolis” eliminate? I think the choice would be very interesting given how some docs and patients have been treated by HC execs. LOL TIC.

      • Lisa

        Oh dear, I meant business wise.,.

        • rbthe4th2

          That was TIC Lisa.

          • Lisa

            I don’t text, so my acronym vocabulary is lacking . . .

          • rbthe4th2

            Tongue In Cheek. You don’t need to text to google “internet acronyms” and the first website http://www.gaarde.org/acronyms/, explains it.

          • Lisa

            Good reference for me…

          • rbthe4th2

            :) Nothing like Dr. Google.

      • Patient Kit

        If things get much worse, by any means necessary could apply. It would be best to start turning things around before we reach that point.

  • Dr. Drake Ramoray

    Unionize (won’t work at least for salary look at automobile CEOs) or go direct pay en masse (until the government mandates seeing medicare/Medicaid as a condition of licensure. The red tape and bloat is making it near impossible to take insurance and remain independent with a few specialty exceptions.

    There is no long term solution for the CEO problem you describe short of single payer but that has its own set of issues and wouldn’t remove the need for physicians to unionize. And before there are VA comments the VA is akin to the British NHS where Medicare is more akin to single payer. (Medicare is marginally better to work with as a physician and at least doesn’t have that whole dying on a waiting list thing going for it).

    The short story is corp med has congress in their pocket and docs by the balls. We are moving to an area of medicine where we will have the only healthcare system in te world where corporations are in charge of the care, doctors are penalized for bad outcomes through pay for performance, and it is illegal for doctors to collectively bargain against the government payor.

    If you are a doc make plans to exit the system now (direct pay if possible, overseas if you have to) before it’s too late.

    • DeceasedMD1

      “The short story is corp med has congress in their pocket and docs by the balls.”

      got quite a chuckle out of that one but sadly it is true. It is horrific to look at these numbers and see what medicine has become. Leaving the system does not really help since at some point even doctors will need hospital and medical care. That is even more frightening given we seem to be the few that know how corrupted the system is.

      • Dr. Drake Ramoray

        I actually consider being a physician as one of the helpful benefits under our current system and seeking care at the hospital (in a sick and twisted sort of way). The system sucks, and is only going to get worse, but at least at this point I have my weight to throw around when things aren’t going as well as they should. Won’t make a lot of friends that way but requests for appropriate care are harder to ignore when they come from a patient who is a physician.

        • DeceasedMD1

          You have a point but not sure how things will go in this ‘brave new world”of HC.

        • rbthe4th2

          Try having a patient who has medical research behind them. Then you are a patient who can grandstand a doctor. That is something they hate even worse – at least you are part of their “brotherhood”.

      • buzzkillerjsmith

        There’s not much funnier in an uncomfortable sort of way that jokes about guys suffering injuries to the genitals. About a third of vignettes in America’s Funniest Home Videos. I hear women think it’s funny, too. I don’t blame ‘em.

        • DeceasedMD1

          yeah I just heard Jon Stewart yell out “Balls!” when referring to the VA Health system lying about waiting times. I thought it was actually a more effective way of getting across the point then any other. His swear jar -when he opened it had his voice cursing. Very effective.

    • Patient Kit

      It is no coincidence that the current highly exploitive strategy of many employers, including healthcare employers, is a direct result of the decline of unions in this country. We are seeing and experiencing the result of labor’s loss of power everywhere in our economy right now. In the past, even just a very real threat of their employees organizing and unionizing kept many employers from the shameless exploitation that we see today. Unions aren’t perfect but they did help balance the power between employers and employees.

      Likewise, I believe that a credible threat of converting to a single payer system could help rein in the unprecedented power of corporate healthcare. If health insurance companies weren’t so damn sure that they are the only game in town — if they actually believed that there is a possibility that their whole industry could be replaced — that would be a step toward reining in their power and building on such improvements as the elimination of their very recent past pre-existing conditions discrimination.

      We really need to get past thinking of the exploitation and abuse of Corp Med, Big Pharma and health insurance companies as inevitable — and start fighting back.

  • http://onhealthtech.blogspot.com Margalit Gur-Arie

    What we actually pay these administrators pales by comparison to the value squandered by their sheer existence.
    Where we once paid doctors X amount of dollars to spend, say, 90% of their workday on direct patient care, we now pay X+delta amount of dollars for about 50% of a doctor’s workday, while the lost 40% is devoted to grunt work created by these highly paid executives, simply to justify their compensation.
    So after devolving direct medical care to a part-time endeavor, for full time pay, why are we surprised that our outcomes are mediocre, or that we need so many more physicians, or that one unit of care is so expensive?

    • NewMexicoRam

      Very good analysis.

      • http://onhealthtech.blogspot.com Margalit Gur-Arie

        Thanks…. now, we need to solve the equation :-)

    • Arby

      Yep, and in single payer we can continue to squander money paying administrators plus more bureaucrats.

      • Patient Kit

        Yes, someone will need to administer any healthcare system we have. But I don’t think government officials and administrators get paid nearly as much as the top dogs do in the corporate world. And if our system was primarily tax-funded, it would no longer be controlled by CEOs whose main incentive is to increase their company’s profit margin for themselves and for their investors. A huge chunk of Aetna CEO’s annual $36 million income came from stock options. That would no longer be the driver in a single payer system.

        • Arby

          They’ll make up for it in waste.

          • Michael

            This is not proven in anyway, you’re making assumptions. Waste may be more common but there is less marketing and no dividends to be paid. The focus isn’t on cutting costs to make profit.

    • buzzkillerjsmith

      Yep. Also using delta gets you some big-time style points. Please try to work epsilon in somewhere one of these days. I’d be very appreciative.

      • Arby

        Your sense of humor slays me every time. And, no, I am not trying to be your friend.

        • buzzkillerjsmith

          Thank you and not trying to be my friend indicates great wisdom. I am pretty much always on the verge of blowing a gasket for no readily apparent reason. I blame society.

          • Patient Kit

            Is your “real” name Gregory House, MD? I picture Hugh Laurie playing you. ;-)

          • buzzkillerjsmith

            Don’t have cable so I’ve actually never seen that show but they tell me it’s good.

          • Patient Kit

            I don’t have cable either but I’ve seen random episodes at friends’ homes. It is a very good show and Hugh Laurie is an excellent actor. Watch a short clip of Gregory House on YouTube sometime and you will see why I think of you as him. It’s a compliment. Sort of. ;-)

          • buzzkillerjsmith

            I can’t see episodes at friends’ homes because I don’t have any friends. Kit, you really pitched me a softball that time.

            “I mingle with my peers or no one, and since I have no peers, I mingle with no one.” – Ignatius J. Reilly

          • Patient Kit

            Oops! Thankfully, the bases were empty. ;-)

    • SteveCaley

      Margalit and Kevin – America is in terrible trouble. We have developed a permanent managerial class, and they are choking the life out of many things. They are choking the life out of healthcare. People, do not be fooled by the Liberal/Conservative argument. When one side is in power, the managers go into Government and strangle healthcare with regulations; when the other is in power, they go into Industry and strangle healthcare with rules.
      Medicine is simple and primitive – it needs little more than a tribal level of culture to thrive. A person who has knowledge of illness cares for a person who is sick. Without that human contact, nothing else can work. We build contraptions that cost billions of dollars to mimic that simple provision of care by a human to a human. They fail. That is the root of the problem. I fear that it cannot be remedied.

      • Arby

        “…a permanent managerial class,,,:”

        You said this very well. I have had a real issue with the way businesses and government (no matter what side is in power) have been running. I knew it was the manner of the way they operated, but I didn’t have words to describe it. Now I do. Thanks.

  • rbthe4th2

    YAY someone finally wrote about something I’ve been saying for a while. The other is how come NO physicians are getting behind asking the insurance & health care company execs, these doctors running the MOC scams (to the tune of an $800K a year paycheck from what I hear) and the for profit/not for profit hospitals to footing the bill for extra residencies? Why should the taxpayers have to pay for it? There are millions that could be spent to train these people.

  • southerndoc1

    It would be very easy for the medical societies to design devastating publicity campaigns contrasting the pay of the top insurance execs with payments made to physicians for life-saving interventions. I was told by the AAFP that this would be “too confrontational.” Pathetic.

    • guest

      The fact is that a lot of medical societies are “sponsored” by insurance companies. Those sponsorships are an integral part of the organization’s budget, as they could not survive on membership dues alone.

      • Patient Kit

        Wow. I did not know that. Unbelievable, yet explains a lot.

  • buzzkillerjsmith

    What can docs do about execs’ salaries?

    What can the sheep do about the wolves?

    • http://onhealthtech.blogspot.com Margalit Gur-Arie

      You are not a sheep… They keep telling you that you are, and now you believe that you are… which is really sad….

      • buzzkillerjsmith

        Then why do I keep waking up to that bleating noise?

  • Patient Kit

    If the likes of Aetna’s CEO “earning” $36 million in a year (a big portion of which came from stock options) can’t light a fire under doctors and the American people (aka patients) to DO something about it, what can? CEO salaries like that are growing at the same time that our healthcare system has become so expensive and unsustainable that many Americans are going without needed medical care!

    Where is the massive outrage? Or are Americans just too impressed with anyone who can manage to make that much money to oppose them?

    • Dorothygreen

      The outrage? – it’s been around for a long time. Goes way back but I doubt if most physicians know or care how this mess started way back when the AMA – their only organization – fought hard against universal health care with docs fearing they would always be paid poorly with such a system. The only model they used of course was the NHS of UK. I don’t know how they could have thought they would be making less than they were then but the AMA did a good job with Medicare getting “reasonable and customary” compensation. That is – what the docs got from their good paying patients. Also,no limits on visits, hospital stays or procedures)- in other words – a bonanza. Then private insurance (employer based – a good way to keep wages low) and then private hospitals dedicated to changing the horrible conditions of non profits – those that developed them benefited from the bonanza as well.

      So here we are some 50 years later with a heck of mess in unsustainable costs for taxpayers and so many sick people because of the Standard American Diet, the belief that cholesterol causes atherosclerosis, statins should be put in drinking water and folks can still go bankrupt from medical bills – insured or not. I hope the salary the author quoted for the Aetna CEO was from the 2006 film Sicko. That should not be possible now as insurance for pre-existing conditions – be they self inflicted or through no fault of the victim – cannot be denied.

      Steve Lauhoff has a really good point. Physicians are not united. Maybe Physicians for National Health Care will soon be the biggest and most united group and we can have some real talks about what a US health care system should be. It doesn’t have to be government based single payer. The Swiss have worked out an insurance model that satisfies most of monetary issues with negotiations between government and players and at half the cost/capita of the US. There is grumbling of course, and still problems to resolve, but I do not believe that physicians, hospital and insurance CEOs expect to become multi- millionaires at the expense of taxpayers or the poor. Just doesn’t happen anywhere but the USA.

  • http://onhealthtech.blogspot.com Margalit Gur-Arie

    Resolve to be Elaine…. she won… in reply to the sheep bleating phenomena….

  • Dub

    In my area the largest hospital organization is Carolinas HealthCare System, they are headquartered in Charlotte and own several hospitals in surrounding counties. The CEO for the year 2013 was compensated almost 4.9 million. Salary of $1.2 million, bonuses of $2.8 million, retirement and other benefits of $864,000. There are at least 10 others compensated over $1 million per year.
    About 3 years ago I set a family member up in a membership (concierge) practice. He now can practice medicine and give the patient the time required for good medicine, has more free time, and importantly has a greater income. He is in another State.
    Don’t understand why more docs don’t pursue this. Incidentally the hospital, they own almost all the PCPs in my area, terminated his contract and he went with another hospital owned practice. Different hospital.
    I know how to set up the practice and fail to understand why more docs don’t pursue this.

    • Lisa

      Have you read the discussions on this site about Direct Patient Care (DPC) on this web site?

      I think the demand for concierge practices is limited due to the cost. I see them as something for the wealthy, not the ordinary person.

      Regarding DPC, I think they could work in combination with high deductible insurance, but there are many variables.

      • Dub

        Lisa, I have followed the discussions about DPC on this and other websites and blogs and disagree about the costs for a concierge practice.
        A concierge practice can still collect insurance, Medicare and other reimbursements. But the quality of medicine increases with longer appointment times.
        If you need a lawyer one of the first things they demand is a retainer fee. Would a doc value his profession less than a lawyer?
        The cost of the fee will be dictated by the demographics of the doc’s patients

        • Dub

          By the way, thought it was interesting you commented on concierge medicine rather than the focal point of my post which is the exorbitant pay for some health execs.

          • Lisa

            Oh I agree with you about the pay of health care executives. But you offered concierge medicine as a alternative, perhaps. I am not sure how conceirge medicine effects the pay of health care executives, especially as some large medical groups/corporations are starting to offer concierge care. Maybe it is is another profit center for them.

          • Chloesbrother

            Lisa, you are right. You don’t understand how “concierge” or DPM works. It is a rare win for docs and patients and largely cuts out the parasitic, meddling, useless middlemen, who WANT you to believe that it is elitist.

          • Lisa

            I am replying to this late because I was on vacation.

            I do understand how concierge medicine in my area works (one private concierge practice and one that appears to be run by a medical foundation). The private practice charges a monthly retainer, in addition to billing insurance. I do not know how the concierge practice run by the medical foundation works because they require an application – no information beyond advertising glossy, shiney is available on line. In my area concierge practices are not cutting out middlemen.

            I also understand the concept of DPC, even if I question if it is workable in all circumstances.

        • Lisa

          I find the idea of concierge practices very elitist and wouldn’t suscrbribe to one even if I could afford one.

          I don’t think your comparison of doctors and lawyers hold up that well. I’ve never been sued, but my husband has been sued three times. Two times his employer wound up covering his legal costs because the suit involved trade secrets, the other time we paid for the lawyer. The lawyer in that case didn’t demand a retainer for the initial consulation, but started billing for work done after that point. Furthermore, many lawsuits are taken on contigency and do not involve retainers. Many people use public defenders for criminal matters because they can’t afford private lawyers. People use divorce services and low cost services for things like wills, small estates, etc., because lawyers are too expensive.

  • Patient Kit

    As far as I’m concerned, this, in a nutshell, is at the core of what is wrong with our healthcare system in the US: that it is, first and foremost, a big business — one of our biggest businesses, in fact. That has corrupted healthcare’s main reason for existing into making money instead of providing needed medical care. I’m not saying that people working in healthcare shouldn’t make fair salaries, proportionate to their responsibilities. But it has gotten to the point where the profits of the top dogs always seem to trump the well-being of us average bears.

  • buzzkillerjsmith

    Thanks for the kind words. One small comment though. I think some folks here might overestimate my anger and depression, although not my cynicism. Most of my comments are typed with a smile–a grim one–but a smile nonetheless.

    I actually have worked for CorpMed. They wore me down pretty quick but now I’m back!

    • Arby

      I’m very glad you are back! For you personally, and for me. It does give me hope.

  • Steve Lauhoff

    Points all well taken, Dr. Campbell. Thanks to you and all of your colleagues who have dedicated themselves to this noble calling. As one of the administrative crowd, I have personally witnessed (and protested against) the expansion of administrative personnel as I don’t see that doing so increases value. But the thing I would offer as my diagnosis of the problem is that simply “Nature abhors a vacuum”. Since there are no cohesive organizations of physicians to provide leadership within the industry (the AMA seems near universally disregarded by physician groups with whom I have worked), it is the administrators and their nasty (distant) cousins, the regulators, that are filling that gap.

    Wherever there is a lot of money, there will always be people milling about trying to get some of it – justifying their presence in any way possible. Physicians own the most valuable element of the healthcare system – your brains – and no one can emulate it or take it away from you. Unfortunately for the system, because you have been unable to find effective ways to leverage it as a group, that resource remains uncoordinated and the vacuum is being filled by people who clearly are not designing an effective system. Do you think there would be 30% administrative expense in a system that was #1 in the world in BOTH per capita expense AND outcomes? I think not.

    Politicians are opportunists; the discrepancy between these two gives them all the reason they need to continue meddling in the system. Plus, they hold a lot of the money (and the power to take more if they need it) and as the old saw says “He who has the gold makes the rules”. They want to be perceived as heroes by their constituencies – the ones who fixed the system when no one else could – and the voters feel that they have no one to turn to because there is no unified voice of doctors.

    It is insane to hear of health system CEOs making millions of dollars in salary (with huge golden parachutes prepared for their departure) while supervising an army of administrative minions that certainly make them a big economic concern but which has failed to give the healthcare system what it need most – leadership in innovation. Unless and until an alternative is identified that will deliver said innovation, the current insanity will continue. I don’t believe that ACOs and PCMHs are the answer. Neither of those programs will substantially change the outcomes or the cost; physicians would be well served to look for more effective ways to innovate.

    I believe that physician groups 1) must organize better, and 2) must start to apply contemporary business theories and start to view innovation like a big corporation who invests in Research and Development – physicians are simply going to have to budget time and money dedicated to the cause. As Ben Franklin said, “We must all hang together – or we most certainly will hang separately.” Physicians and their allies (of which I count myself one) have to pay heed to this warning. Nothing less than the future of the medical profession is at stake. I don’t want to see what the system will be in 20-30 years when I need it the most. It already is showing great cracks under the strain.

    Keep sounding the alarm!

  • fporch

    As a former hospital administrator (COO & CEO) my main job was to: 1- Be sure that up to 1,000 employees felt inspired to come to work every day; 2- Make sure my hospital was a good place for physicians to practice medicine; 3 – With the help of physician champions, make sure the hospital was meeting or exceeding measurable clinical, quality and safety standards to ensure good care and outcomes for patients. When a hospital administrator takes care of these three goals, everything else takes care of itself.

    I left hospital management when these goals no longer seemed to matter any more to the Boards or corporate offices to which I reported. i was good at my job and there are days I miss it.