Physicians are frustrated, and rightfully so, by the number of individuals and companies that do not provide direct medical care to patients yet profit off our services. Salary suppression is one of the many reasons physicians are leaving traditional medicine and seeking alternative careers. Although physicians have seen an increase in pay over the past 20 years, it has not matched the inflation rate. For example, Medicare reimbursement lags over 20 percent behind inflation. The reality is that physicians are being asked to work harder without seeing salaries rise accordingly. This has got us thinking: Is there a collusive effort in health care to keep physician salaries low while still requiring us to take on the liability of practicing medicine?
Insurance companies, government entities, and other health care stakeholders may be working together to limit physicians from earning competitive salaries that align with our education, training, and expertise.
Is there wage-fixing in health care?
Colluding against physicians to pay them less would be a serious charge against all parties involved in our health care system. Wage-fixing is a violation of the Federal Trade Commission (FTC) Act and is a felony offense. Shall we consider an indictment against those working to limit and suppress physician compensation? It’s unlikely that investigators would find binding agreements between entities to support an indictment, but let’s expose some of the elements we might consider in our prosecution of the health care industry in this hypothetical case.
Hypothetical case #1: Physicians (plaintiff) vs. health care industry (defendant)
In this hypothetical case, U.S. physicians accuse the health care industry of wage-fixing to prioritize financial gains over appropriate compensation, which violates antitrust laws and the FTC Act and is subject to penalties and fines. Wage fixing in health care has been used to artificially suppress the labor market, reduce competition amongst employers, and potentially increase employer profits at the expense of physicians.
The arguments against the health care industry
Argument #1: Physician compensation is unique in that it is limited by the federal government based on fair market value (FMV) to prevent fraudulent behavior as a part of Stark Laws. Health care organizations determine FMV through market analysis and benchmarking, comparing physicians’ compensation in the same specialty and region. However, this approach can be flawed as it allows facilities to work indirectly with each other to limit salary increases in response to demand, workload, and inflation.
Argument #2: Physician compensation is limited by the State legislatures and courtrooms that continue to allow health care facilities to enforce “non-compete” clauses. Physician contracts that include non-compete clauses are an unjust practice by medical facilities that have been shown to limit compensation. Non-compete clauses for physicians reduce job opportunities, lessen mobility, and lower negotiating power to limit compensation.
Argument #3: National physician compensation surveys from MGMA, SullivanCotter, AMGA, and Gallagher rely solely on data submitted by health care facilities without physician input. This lack of physician involvement raises concerns about the authenticity of the data obtained. It allows facilities to potentially collude and limit physician compensation without considering actual pay, work environment, hours, and workload.
Argument #4: Anti-trust laws prevent physician-run compensation surveys that share salary information among physicians, as it may be considered wage fixing. However, medical facilities can share data about physician salaries to establish benchmark data for compensation purposes, raising questions as to why physicians cannot host their own surveys.
Argument #5: Health care facilities continue collaborating with staffing agencies to avoid increasing physician compensation, despite the Stark Law revisions of 2020. The revised laws defined “commercial reasonability,” which allows medical facilities to contract directly with physicians if it serves a legitimate business purpose, even if it does not yield a profit. However, medical facilities continue to rely on costly management companies and staffing agencies to avoid paying physicians more for working directly with them.
Argument #6: Physician compensation is being limited by state legislatures that are allowing NP and PA role expansion and autonomy. As the number of NPs and PAs grows, they will compete with physicians for certain job opportunities and patient care responsibilities. This will create more competition for physicians, reducing their bargaining power and limiting their ability to negotiate higher compensation. Furthermore, physicians are consistently expected to supervise NPs and PAs without receiving commensurate compensation, which is unprecedented in most other industries.
Argument #7: Medicare is reducing physician reimbursement rates, with a 2 percent decrease in 2023 and a projected 1.25 percent decrease in 2024. Furthermore, a significant portion of Medicare funds is funneled through large, for-profit insurance companies, such as United Healthcare, Molina, and Humana, rather than directly to physicians.
Argument #8: RVUs as a reimbursement method to limit physician compensation by Medicare and insurance companies is flawed, as it does not always correspond to the complexity of patient care and time spent with patients. Additionally, Medicare and insurance companies can decrease the value assigned to an RVU annually, resulting in lower reimbursement for physician services.
Argument #9: Reimbursement rates from insurance companies for physician services favor health care facilities rather than the physician that provide those services. Facility fees to the patients are much more than the physician fees for outpatient examinations and procedures.
Argument #10: The quantity of work physicians do without compensation would be deemed unacceptable in most other professions. They attend numerous meetings throughout the day and work outside regular hours to fulfill their documentation obligations, but their compensation does not rise accordingly.
Argument #11: In some instances, physicians are forced by legal and ethical obligations to provide free patient care without reimbursement. What other industries require businesses to provide services without reimbursement?
Post-COVID, physicians are expected to see more complex patients and work longer hours, but the health care industry fails to compensate them appropriately, in contrast to other industries and inflation. Our hypothetical collusion case against the health care industry demonstrates how physician compensation is being limited and suppressed for the benefit of others. Such collusion could have serious consequences for patient care quality, as it may exacerbate the physician shortage resulting from health care leaders’ lack of respect for the profession.
Aaron Morgenstein is a board-certified orthopedic surgeon and founder, FlexMedStaff.com, a fully transparent and free marketplace for physicians to find new clinical and non-clinical opportunities to improve work-life balance. Contact Aaron here.
Corinne Sundar Rao is a board-certified internal medicine physician and founder, Legacy Physicians, which helps hospitals find well-qualified physicians at a much lower overhead than they would pay staffing agencies. She can be reached on LinkedIn and Facebook.
Allison Nazinitsky is an infectious disease physician.