Respectful Insolence

A new study suggests that, adjusted for inflation, physicians’ incomes are, by and large, falling:

Doctors may be well off compared with the bulk oftheir patients, but a new study says fees physicians get from the government and private insurers aren’t keeping up with inflation.
Last week, the Center for Studying Health System Change said net incomes for physicians fell from an average of $180,930 in 1995 to $168,122 in 2003, a decline of about 7 percent, when adjusted for inflation.

Medicalspecialists fared better, the study said. Their in comes slip ped an average of 2.1 percent, from $178,840 to $175,011 over the period.


The news is even worse if you happen to be in primary care:

But primary-care physicians — the doctors most people see most often — saw their incomes drop an average of 10.2 percent, from $135,036 to $121,262 a year.

The reason, of course, is obvious: Declining reimbursements from third party payors, with Medicare leading the way. Unlike most businesses, the majority of medical practices can’t raise their rates when expenses climb because they are locked into contracts with managed care providers, and these contracts, once signed, are notoriously difficult to get out of. Expenses, employee salaries, and malpractice insurance keep going up, up, up, but reimbursement remains flat or even goes down, down, down. To some extent, it’s possible to make it up by working longer hours, seeing more patients, doing more procedures. But sooner or later, something has to give.

Yes, I know that doctors make more than the vast majority of their patients, but these days rare is the newly minted doctor who doesn’t finish with a six-figure debt. Academics also accept lower pay in return for not having to deal with the business side of things and for the freedom to pursue our research. Even we are starting to feel the pinch. I’m sure a lot of folks out there will say: So what? It’s just a bunch of greedy doctors. So what if they make less money? The problem is that more and more of our best and brightest are looking at medicine and deciding it’s not as attractive a profession as it once was. True, virtually none of us went into medicine to make a lot of money. (A famous saying among doctors is, “If you want to make a lot of money, go to business school.”) But if I were finishing college right around now and saw declining income and increasing hours to make the same income, I don’t know if I’d have gone through the years of pain and toil necessary to become a surgeon.

Comments

  1. #1 drcharles
    June 29, 2006

    true. very true.

  2. #2 Sid Schwab
    June 29, 2006

    I think one of the reasons is that doctors, for the most part, have at some level a measure of discomfort that they make money off people’s ills. And payers know this. So for the past many years, payments to doctors have decreased, and doctors raise only the mildest of complaints; the payers count on this. Meanwhile, it becomes a perverse situation: medicine is one of the only professions in which reimbursement has nothing to do with quality. As a surgeon, for example, you get paid X amount for colon resection; it makes no difference if you do a better job than others, as measured by complication rate, length of hospitalization, overall cost for a given process. So the effect is that people who have the ethic of hard work and some sort of commensurate reward are beginning to find a career in medicine less appealing. It’s not just about money per se. It’s about feeling valued. I realize such a comment will elicit not much sympathy, because it’s still true that doctors make more money than most of their patients. But it’s a consideration; if people who are committed to hard work and high quality are seeing medicine as a less attractive profession, well, that’s a problem. I already worry for whom I’d be willing to open MY belly.

  3. #3 Mark Paris
    June 29, 2006

    Not everything in the report of that study makes a tremendous amount of sense to me. Could reimbursements have dropped that much? The study also says that doctors’ hours have declined; how does that figure into the apparent decrease in income? What other factors are there in this decrease? Changes in demographics? Health insurance cost certainly has not decreased in that period. Are the health insurance companies making huge profits?

  4. #4 Hank Barnes
    June 29, 2006

    But if I were finishing college right around now and saw declining income and increasing hours to make the same income, I don’t know if I’d have gone through the years of pain and toil necessary to become a surgeon.

    Hey, its not too late!

    Hank Barnes

    p.s. Just kidding, Orac, but, please, this whining about low pay is tedious to the extreme. Buy some property or invest somewhere, for chrissake.

  5. #5 Ali
    June 29, 2006

    As someone applying to med schools right now, believe me, this is on my mind. Part of me wishes I had taken the LSAT or GMAT instead of the MCAT, like so many of my friends. If the looming burden of debt wasn’t so huge, I wouldn’t have any reservations. Maybe more subsidized education or more debt forgiveness programs could help.

  6. #6 epador
    June 29, 2006

    I graduated from Med School the last year of Federal Subsidies, so I had no debt burden of significance. I practiced solo sub specialty for about 17 years, and had a few good years financially, but nothing a divorce lawyer and an economic downturn couldn’t erase easily.

    Well, my income dropped more than 50% when I entered military service 9 years ago, and now as I enter the private sector as a Primary Care (vs my old sub-specialist designation) I am not expecting any increase in pay, just a loss of benefits (insurance on life and health care, disability, retirement, etc.) that is indeed painful financially.

    Overhead for physicians, as it has for other proprietors, continues upward in labor costs, insurance costs, and basic materials/energy, while taxes are relatively flat or slightly less than I experienced a decade ago. The promise of improvement for PCM pay with Relative Values had not really seen the light of day – procedures still keep those that perform them well above the median income of physicians who use their heads, hearts and tongues more than their hands.

    Pediatricians, those we trust with our most valuable assets, our children, have the worst pay of PCMs.

    If I was interested in money, I would have considered Dermatology or Radiology, perhaps Rheumatology – I’m great with a needle and superficial surgical skills. You can practice the first and last without a lot of mid-level providers (who are expensive) and even avoid participating in insurance “programs,” which also helps with the overhead. And the on call coverage for Derm and Rheum are not particularly brutal.

    But my heart and my head ore filled with years of caring, and seeing the results. Hopefully there’s still a decade or two of that left in me. If that isn’t what keeps you in medicine, then you belong in Law or on Wall Street.

  7. #7 Radagast
    June 29, 2006

    I tried to leave a trackback ping (via Haloscan), but got an error. So, here’s my ping.

    Those poor doctors: “Now, I know that doctors have to go through an incredible amount of training, and most work extremely hard, but I have a hard time feeling sympathy for someone complaining about their salary when they make more than $100,000 a year. Why? Well, let’s take a look at some US income statistics from 2005 …

  8. #8 beefwad
    June 29, 2006

    Coming at this from a slightly different angle – I’m a vet student entering my final year. I’ve spent just as much time in vet school as my friends graduating from med school, vet school is just as competitive to enter and the course material is just as challenging, and I have to be able to treat a lot of different species with drastically different physiologies. And I love it, and I know that I am so, so lucky to be in this profession, but I’ll be lucky to clear $40,000 (Canadian!) my first 3-5 years out. I will never clear $100,000.

    One of the best things about being in vet school is that if your patient is unruly, you’re allowed to (for the most part) sit on them to subdue them, although this becomes progressively less effective as the size of the animal increases.

    Ok, and Orac, don’t glare at me for this but on my first day of vet school, the dean said, “Veterinary medicine is not a profession to enter if you want to make a lot of money. If you want to make money, be a doctor.”

  9. #9 Shygetz
    June 30, 2006

    Veterinary medicine is not a profession to enter if you want to make a lot of money. If you want to make money, be a doctor.”

    I’m a PhD biochemist, and we were told a similar thing–if you want to make money, impress members of the opposite sex, be a hit at parties, make your parents happy, and have your customers be truly appreciative of your work, be an MD. If you want to be highly underpaid, a social hermit, and have “customers” that routinely take joy in ripping your work to shreds, along with your tattered ego, be a scientist.

  10. #10 Gary
    June 30, 2006

    The movement of doctors from the upper middle class to the lower upper class was a temporary post World War II phenomenon. Physicians are returning, as a class, to where they always have been.

  11. #11 SV
    June 30, 2006

    Doctors work very very hard and only make $121,000 per year? Only?

    OK, I’ll try to avoid the sarcasm and address this seriously. I do understand that it’s a very tough job (tell that to workers in a meat processing plant – who average less than $11,000). I understand that they graduate with huge debt (tell that to service sector workers who will never own a home, who average $22,000). And I understand that it requires a great investment just to get started (tell that to farmers, $21,000).

    However, doctors do a job that as a society we need to have the very best doing. A more valid point isn’t that doctors don’t make a lot of money – trust me, dude, they do – but that comparatively, at the level of intelligence, talent and energy that being a doctor requires, they could be making a helluva lot more in a different profession, and society needs to increase the monetary reward from more than $121 K to continue to attract the very best.

    And it’s a valid point. But tell that to teachers ($46K).

  12. #12 Robert
    June 30, 2006

    Orac wrote:

    But if I were finishing college right around now and saw declining income and increasing hours to make the same income

    Actually, that report showed decreasing hours. For an extreme example, medical specialists’ real income dropped 2.1% from 1995 to 2003, but their work hours dropped 5.8%.

  13. #13 anonimouse
    June 30, 2006

    $120,000 sounds like a lot, but the average IT manager is probably pulling pretty close to the same amount. And the last I checked, most IT managers aren’t responsible for the life and death of their customers.

  14. #14 Hyperion
    June 30, 2006

    It gets even worse for you guys than that. I don’t know if you accept Medicare, ut CMS is going to add insult to injury…actually, injury to injury:

    http://www.amda.com/publications/hpa/june2006/Physician_Payment.cfm

    Our guys oviously accept more Medicare/Medicaid patients, so it’ll affect them more, ut this is going to affect everyone.

  15. #15 J Bean
    June 30, 2006

    My husband has a Ph.D. in biochemistry and so has about the same number of years of training that I have. Since he works in industry rather than academia he makes substantially (~$40K) more than I do, but doesn’t take call, doesn’t worry about making a mistake and killing someone, doesn’t have to call a nice person and tell them they have mets, etc. I currently make only slightly more per hour than I made as an engineer although I get to work a lot more hours.

  16. #16 Frank
    June 30, 2006

    Welcome to the rest of the world.
    Most all professions are under the same pressure to produce more with less. We are all working harder to earn the same standard of living than our peers of less than a generation ago. This is mostly driven by the innovation that we have produced…from a more efficient way to manufacture everything from auto bumpers to medicine that today mostly replaces the need for certian types of surgery. The pace of this innovation seems to be increasing….a kind of quickening effect….causing the innovations of the recent past to become routine and almost commodity like. In general, I think we all expect better and better service for less $$.

  17. #17 michael
    July 2, 2006

    The biggest issue is ‘the payor mix.’ At hospitals because of EMTALA, people who show up and need to be in the hospital are admitted even with no resources to pay. Institutions then need to pay people to do things on a blanket basis and the institution doesn’t make money like it used to (either). We do like to see patients cared for and, on a reward basis for the doctor, it is like the pigeon who taps at an object and irregularly gets a reward. That turned out to be the cheapest way to keep the pigeon pecking. This probably is most easily transferable to surgeons.