Are American doctors paid too much or too little?

A version of column was published in USA Today on July 2, 2014.

There are some who think that I’m overpaid as a physician, and that my salary fuels rising health costs.  I can understand their point: A May 2014 survey released by the Medical Group Management Association found that internal medicine doctors like myself have a starting median annual salary of $190,000, while those of specialists like radiologists or anesthesiologists approach $300,000.  It seems like a lot of money.

Vox’s senior editor Sarah Kliff pointed out that U.S. physician salaries were twice as much as those in countries like France and concluded, “Doctor salaries are a pretty significant part of the reason why the United States spends more per person on health care than any other developed country.”

Author and economics writer Matthew Yglesias also wrote last year in Slate, “America has the highest-paid general practitioners in the world.  This doctor compensation gap is hardly the only issue in overpriced American health care, but it’s a huge deal.”

Not surprisingly, many doctors feel otherwise.  A 2014 Medscape poll found that only half of physicians felt that they were fairly compensated.

So, which is it: Are American doctors paid too much or too little? And would cutting their salaries appreciably reduce health spending?

While I’m certainly not complaining about how much I make, important context should be considered when analyzing doctors’ wages.

Rather than compare salary figures between the United States and countries with wholly dissimilar societies and economies, it’s more useful to compare physicians relative to others in the top 5% of the income bracket. The talent pool that supplies doctors also likely produces other high earners: business executives, lawyers and corporate bankers, for instance.  Harvard economist David Cutler did this comparison, and surprisingly found that U.S. physicians were actually paid less than non-U.S. doctors relative to other high earning professions by country.

Also, consider the significant human and financial capital it takes to become a doctor in the U.S.: The median 4-year tuition of a private American medical school is $286,806, and physicians must complete a three to seven-year residency after medical school and undergraduate studies before they can practice independently. Christopher Conover, a research scholar at Duke University, calculated whether physicians’ eventual pay was worth the exorbitant investment.  While this professional rate of return was certainly respectable for doctors, it paled in comparison to those who pursued degrees with shorter and less expensive training, such as business or law.

And let’s not forget the salaries of health insurance and hospital executives, which comprise 20 to 30% of all health care costs, more than twice as much as any other developed country.  The average health insurer CEO pay was $583,700; for a hospital administrator, $236,800.

Finally, slashing physician salaries won’t even move the needle much on health costs.  According to Princeton economist Uwe Reinhardt, doctor salaries comprise about 10% of total health costs.  If physician pay was cut in half, only a paltry 5% savings would be achieved, “in return for a wholly demoralized medical profession to which we so often look to save our lives.”

Proponents who want to bring the salaries of U.S. doctors in line with those from Europe must also offer government-subsidized medical education and nationally regulated medical malpractice systems that many European nations enjoy.  Doctors abroad don’t graduate with over $175,000 of medical education debt or pay tens of thousands of dollars in annual medical malpractice premiums as they do Stateside.  Such a proposal has yet to materialize in our health reform conversation.

Better yet, stop targeting physician salaries altogether. Let’s focus on other factors that have a much bigger impact on health costs: wasteful spending and administrative overhead, for instance.  Those comprise a much larger slice of the health cost pie, and dwarf the sliver that physician pay represents.

Kevin Pho, MD, is a practicing, board-certified internal medicine physician and the founder and editor of KevinMD, which he built from scratch in 2004 to give clinicians and patients a place to be heard. Over two decades, it has become one of the most recognizable physician-led publications in health care, drawing more than 7 million annual page views and over 500,000 followers across social media. He still sees patients in primary care in Nashua, New Hampshire, the practice he says keeps the platform honest.

He is the host of The Podcast by KevinMD, a daily, 15-minute show that has surpassed 2,000 episodes and 2.6 million IAB-certified downloads, featuring physicians, patients, caregivers, founders, and health care leaders in conversation about what they actually see and do. He is also a national media commentator and the coauthor of Establishing, Managing, and Protecting Your Online Reputation: A Social Media Guide for Physicians and Medical Practices.

An acclaimed keynote speaker, Kevin speaks nationwide to clinicians and non-clinicians on health care, digital media, physician leadership, and burnout. His signature keynote, “Connect and be heard: Make a difference in health care with social media,” traces his social media journey since 2004 and inspires audiences to strengthen the doctor-patient relationship, make their voices heard in health reform, and turn the tide against clinician burnout. He is the founder of Physician Speaking by KevinMD, a physician-run speakers bureau, and is available for speaking opportunities.

Kevin earned his medical degree from Boston University School of Medicine and completed his internal medicine residency at Boston University Medical Center. The New York Times called KevinMD “a highly-coveted publishing place for doctors and patients,” and Forbes called it a “must-read health blog.” He is an inductee of the Healthcare Internet Hall of Fame, a recipient of the American Medical Writers Association McGovern Award, and a New Hampshire Magazine Top Doctor.

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