US Doctor Salaries

Kevin Drum thinks he has found the smoking health care gun - US doctors are paid more than everyone else.  That is why we have too-expensive medical care!  A few quick thoughts

  • I am the last one to argue that doctors salaries are set anywhere like at a market clearing price.  Our certification system, crazy third-party payer systems, lack of price transparency, and absurd arguments over the "doc fix" and Medicare reimbursement rates all convince me that doctor salaries must be "wrong"
  • The charts he shows have absolutely no correction for productivity, at least as I read the methodology.  Per the text, they don't even have correction for hours worked.  A McKinsey report several years ago found that US doctors made more, but also saw a lot more patients in a day.  GP care cost more than expected vs. other country's experience, but is due mostly to number of visits, not cost per visit.
  • There is no correction for doctor expenses.  Malpractice insurance, anyone?  We have the most costly malpractice insurance in the world because we have the most broken system.  Doctors pay that out of their salary
  • US GP salaries in Drum's linked report are actually falling, unlike all the other countries studied.  Seem to have fallen 6% in 10 years (page 18), whereas France, for example, has increased more than 10%.

To the last point, I have a hypothesis.  When you first overlay a government health care / price control regime, you get an initial savings.  Doctors are forced to work for less and they still, out of habit and momentum, abide by past productivity standards.  But over time, productivity, like any government-captured function falls.  And over time, doctors, like other civil service groups, become better at organizing and lobbying and begin to get increasing pay packages.  After all, if teachers and fire-fighters can scare Californians into absurd pay and benefit packages, what do you think doctors will be able to do once they learn the game?

  • http://profiles.google.com/maruadventurer john mcginnis

    Couple of observations of my own --

    * Drum's missive made no distinction for those docs in private practice and those operated as a group practice. The former run as a subchapter S, the latter as W2 + Incentive.

    * Here is a key item that is going to throw PACA in disarray -- 40% of the practising physicians of all stripes are over 55. It would be conceivable that in 5 years we could lose 1/3 of the medical professionals. That is outright scary.

  • MingoV

    I've read complaints about physician pay many times. The writers all make the same mistakes. They never consider physician practice expenses. They never consider the costs of education: four years of college and four years of expensive medical school. They never consider the training years where physicians work in a hospital for 80-100 hours a week and earn about $45,000. They never consider that the average work week of practicing physicians is sixty hours. They never consider that, as a group, physicians are the second-smartest professionals (Ph.D. scientists are the smartest.) and deserve to be compensated for that just like the top actors, authors, athletes, music performers, etc. who earn lots of money. Finally, there is a shortage of physicians that creates high demand and therefore higher charges for medical services.

    The Obama administration recognizes that many physicians will stop practicing when ObamaCare if fully implemented next January. Two years ago the Obama administration authorized federal support for 18,000 new medical students. The previous level of 16,000 lasted for decades. This effort to create more physicians is too little, too late. By 2015 the physician shortage will create long waiting periods and reduced quality care. Welcome to socialization.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Malpractice insurance is a huge driver of costs, and can actually determine where doctors will and won't practice medicine.

    Of course, Obamascare fails entirely to address this, and actually makes the problem worse (by discouraging rural and small practices in favor of large hospital groups).

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Bingo, John, doc retirement/outright quitting could result in MORE than 1/3 loss of medical professionals.

  • andycleary

    Thanks AMA cartel...

  • SamWah

    Kevin Drum thinks he's smart. He is misinformed.

  • Will

    We don't let pilots, train engineers or bus drivers work for 24 hours straight at a time, but we permit doctors to work without any maximum length of duty day. I suppose that's one way to increase productivity and use ones malpractice insurance at the same time.

  • HenryBowman419

    Warren, you seem to like reading what Kevin Drum writes. I wonder why? He seems to be almost always wrong.He seems a bit like Paul Krugman, though perhaps not certifiably insane as Krugman surely is.

  • obloodyhell

    There are certainly aspects to the doctor system that resemble an otherwise illegal "professional guild", and unless a drug is
    "abusable", once a prescription for it has been made out for me I see no reason for why I have to continue to pay a doctor a regular fee to continue to prescribe it, esp. if the option is that i am only choosing between risks (the side effects of the drug vs. the problem it is out to deal with).

    But in these discussions it is rarely taken into account the fact that you pretty much have to bust your ass for over 10 years in order to become one. As in, MAJORLY bust your ass. I don't think any other profession has the same degree of hurdles to make it into the profession. Yes, some of those are self-implemented by the AMA as a part of that "guild" system I mentioned, but not all of them by a long shot.

  • obloodyhell

    Don't worry, Obama has a plan to deal with this. You just have to wait for it to find out how wonderful it is.

  • norse

    Actually: http://truecostofhealthcare.org/malpractice

    Guess how much the average doctors yearly malpractice insurance cost is?

    The author of the above blog makes a convincing argument that what inflates US healthcare costs is a combination of lack of a free market (instead we have lack of pricing information and monopolies) combined with a desire on behalf of the regulating agencies to inflate volume.

  • Mark Alger

    I would argue that the two primary factors driving the costs of medical products and services are A) the near-universality of third-party payors and 2) the utter opacity of pricing information. Just TRY to comparison shop a prescription drug, for one example. Please to note that BOTH of these are earmarks of the government's gratuitous meddling in the market for medical goods and services, which in turn does nothing positive for the consumer.

  • marque2

    Comparison shopping a drug is easy if you don't use insurance. I have done this for my own drugs many times. You just call up, tell them the usual drug/dose/amount (90 days of Simvistatin ,40mg) they look it up in the computer and give you a price. Note that I pay $9 for a 90 day supply. Many pharmacies give certain generic antibiotics away at cost ($4), etc

    What is harder is convincing doctors to give you a cut in rate. The doctor I was using charged $110, though his group, but gave discounts to the insurance so that only $75 was paid. When I lost my insurance, there was nothing I could do to get the price down to $75 they insisted on $110 - anyway I checked on the internet and found a doctor who gave me an exam for 50 bucks - she takes cash from everyone.

    What would be harder is if I had a heart attack, finding a good hospital and negotiating a discounted rate - I suppose some folks have some advice about this.

  • marque2

    Speaking of drugs, I hate the new electronic prescription systems. If you don't have insurance, or have a high deductible plan, it makes it difficult to shop the price. It was sent to Save-on, but CVS has the best deal - well it can be transferred, but that is a pain - it turns into one more barrier to free market prices, intended as a cost cutting measure. I guess most folk just go to their favorite pharmacy and don't give much credence to the actual cost.

  • marque2

    Except for the initial Internship (and I don't agree with the Intern policy) how often does this actually happen?

  • marque2

    I am not sure if it is a driver in all aspects, but it certainly is a problem for OBGYN who deliver babies. In some states like Texas, the insurance has priced baby delivering doctors out of the market - in Texas over the last few years the situation has improved with some tort reforms in medical malpractice laws.

  • Barbara S. Meyer

    I stopped questioning doctor's fees after my experience at my eye doctor's office. Just the equipment! He is upgrading all the time, probably 5 or 6 times in the six or seven years I've been treated for macular degeneration. Those machines are incredible. I'm only afraid he'll be able to read my mind next. I try very hard to hide the fact that this fat, 79 year old woman has a crush on him.

  • DanSmith

    I'm a retired family physician. When I would be on call for my group it was over night, typically followed by a regular work day in the morning. On weekends, 24 hour duty plus making hospital rounds both days. Call frequency was on the average once a week, but could be more. I think it's a pretty typical experience. And since I practiced OB, I was also on call for any of my patients who might be in labor. I've only been retired 9 months, by the way. With more and more hospitalists available for inpatient care, the hours spent working by primary care doctors in urban areas are fewer. On the other hand, the documentation requirements (electronic medical records) are more onerous and are not billable in the same way that an attorney's "think time" is. By the time people wake up to the awful reality of ObamaCare, it will be impossible to go back, and the only alternative will be government run medicine. In my opinion, that was always the agenda of the people who pushed the bill into law.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    That is the particular practice I was thinking of in that comment.

    Manhattan is an excellent example of $1,000,000+ malpractice insurance premiums driving out doctors.

  • MNHawk

    Let's see, major in Poli Sci with the rest of the morons on campus, get elected to congress, make $170kish per year.

    Buckle down, study and slave in an internship for 10 years and make...

    $146k? That's what I'm supposed to get excited about, according to the lowest of low information journalism, in Mother Jones? That's less than director level in a corporation.

  • obloodyhell

    Doctors make FAR more than their published salaries. That's one thing that came out back in the 90s -- they tap danced around the laws and agreed to some trivial BS, and in return the way their published salaries were described were reduced. It was just another example of the ridiculous power the Doctor's Guild (aka "AMA") is.

  • obloodyhell

    Yeah, but in Manhattan, $1,000,000 only buys you a one bedroom flat on the fourth floor of a walk up tenement...

    It's not like it's REAL money.

  • MNHawk

    Look up on the other website linked and it's $175k. You know. You've
    now hit Director level. I think my doctor is worth it., again,
    considering his 10 years of schooling and the slavery known as
    internship.

  • Corky Boyd

    How horrible the idea that doctors make a lot of money. I graduated fron a top university (actually the same one as yours) where top students competed for the opportunity to be accepted for med school. Med school acceptance was far more difficult than law. Why did the best and brightest pick medicine as a career? Healing yes, but financial rewards were a major factor. And I for one would rather have the brightest treating me than a C student.

    Canada has caps on physicians' earnings. And they found that bureacratic controls have a tough time finding the sweet spot of what is too much and what is too little. Caps generate their own problems. Many Canadian doctors reach their caps well before the end of the year with the obvious result it is often difficult to obtain care in December.

  • Ron H.

    What!?!? Are you trying to tell me price controls don't work as intended? Who would have thought.