How Much Should Doctors Really Make?

Harris Meyer

Disclosures

September 25, 2012

In This Article

Isn't Life-and-Death Responsibility Worth More?

But is what US physicians earn fair and adequate given the life-and-death responsibilities they bear? Economists say yes, noting that physician income is clearly sufficient to attract plenty of qualified applicants to US medical schools, which turn away 10 times as many people as they accept. Still, is what US doctors make a "just" income -- one that grants doctors, in the words of Adam Smith, "that rank in the society which so important a trust requires"?

Uwe Reinhardt, PhD, a Princeton University economics professor, has suggested that doctors should earn enough after expenses to place them at or above the 95th percentile of US income -- $200,000 in 2011, according to the Tax Policy Center's breakdown of U.S. income distribution. Indeed, the median primary care physician compensation of $212,840 last year met that standard, while the median specialist physician compensation level of $384,467 placed specialists above the 98th percentile, according to the latest Medical Group Management Association (MGMA) physician compensation survey.

"Doctors should be among the best-paid people in society because we give them a great deal of responsibility," says Joseph White, PhD, a public policy professor at Case Western Reserve University who studies international healthcare systems. "But we have great income inequality in the US, and doctors use the high-level group as their reference point. That means the 95th percentile is further from the average worker than in Germany or Holland. That bothers me."

He notes that other advanced countries deliberately consider how much physicians should earn when setting payment levels, which runs against American free-market ideology. "What they come out with has to be seen as fair in terms of the overall income of doctors relative to each other and to the rest of society," says Dr. White.

Of course, international comparisons are tricky because US practice costs, including overhead and liability premiums, are much higher, and educational expenses for US physicians are considerably greater than in other advanced countries where medical school tuition costs are heavily subsidized. But the income differential for US physicians significantly exceeds those higher costs. According to an article in the September 2011 issue of Health Affairs,[2] the income difference after practice expenses between US and British orthopedic surgeons in 2008 was nearly 5 times the difference in education repayment costs, meaning that US physicians are earning compensation in excess of what they’d need to pay back medical school debt.

Better Outcomes Should Earn More, Too

Medical leaders contend that physicians who provide better value in terms of outcomes should be paid more. Still others say that physician pay is a nonissue because other factors have far greater impact on total healthcare costs. Other health sector players, such as hospital, health plan, and pharmaceutical executives, make even more money.

"There's no objectively right answer about what a doctor should make," says Dr. White.

It's no secret that different types of US physicians make hugely different amounts of money. According to the latest MGMA physician compensation survey, in 2011, geneticists earned median pay of $142,234, geriatricians $195,000, general pediatricians $203,948, family physicians doing obstetrical work $204,411, general internists $215,689, invasive cardiologists $472,446, invasive radiologists $486,764, and general orthopedic surgeons $520,119. Certain subspecialists earned substantially more, with neurologic surgeons earning $704,170 and cardiovascular-pediatric surgeons making $725,704.

Physicians owning ancillary facilities such as diagnostic imaging may actually earn more than the MGMA figures because what they reported may not have included ancillary revenues, according to the MGMA.

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