How Much Should Doctors Really Make?

Harris Meyer


September 25, 2012

In This Article

Where Are the Complaints?

Looking at those numbers, "it's hard for any [US] doctor to complain about income," says Glen Stream, MD, president of the American Academy of Family Physicians. "But our grave concern is the disparity between primary care and subspecialty income. That's a huge driver in medical students choosing specialties other than primary care. Attracting more people to primary care would make our healthcare system higher-functioning and more cost-effective."

Still, even US primary care physicians generally receive higher fees and higher incomes than their counterparts in other advanced countries, while US orthopedic surgeons and other specialists earn far more than their international colleagues, according to the aforementioned Health Affairs article.[2] Adjusted for purchasing-power parity, US primary care physicians in 2008 earned an average of $186,582 before taxes and after expenses, compared with $159,532 in the United Kingdom, $131,809 in Germany, and $95,585 in France. US orthopedic surgeons earned $442,450, compared with $324,138 in the United Kingdom, $202,771 in Germany, and $154,380 in France.

US medical specialty groups don't see their relatively high compensation as an issue, though some leaders favor shifting away from the volume-based, fee-for-service system to performance-based global payments for managing patients' conditions. Indeed, some think that high-performing physicians might make more money under that new system. "I could see a world where doctors are paid more for fewer services," says Kevin Bozic, MD, chair of the American Academy of Orthopaedic Surgeons' Council on Research and Quality.

"US doctors feel entitled to substantially higher incomes because of that training debt," says Gerard Anderson, PhD, director of the Johns Hopkins University Center for Hospital Finance and Management. "The problem with that argument is they make a lot of money and can essentially pay off that debt in 5 or so years, then they have another 20 years at much higher salaries than in other countries."

Even so, Dr. Anderson notes that because physician pay is only a small part of US healthcare spending, if US physician pay were reduced to international levels, it would only cut per capita annual US healthcare spending from $9000 to $8700, compared with about $4500 in other advanced countries.

No one disputes that US physicians are a relatively well-compensated group. According to a New York Times analysis last January,[1] more physicians are in the top 1% of US income -- 192,268 -- than any other occupational group. Physicians were followed by managers and administrators (192,096), chief executives and public administrators (161,069), lawyers (145,564), and accountants and auditors (61,033).

Other Pay Adjustments

Many experts would like to see the Medicare Relative Value Scale Update Committee (RUC) confront part of the issue by adjusting fees substantially to reduce the large disparity between primary care and specialty incomes, making primary care practice more attractive to medical students. Although RUC, composed largely of representatives from various medical subspecialties, has made modest adjustments over the years, they haven't been nearly enough to level out the income differences. But RUC says that's not its job.

Primary care physician leaders place modest hopes on the Centers for Medicare & Medicaid Services (CMS) proposed physician payment schedule for 2013, which CMS estimates will boost Medicare payments to primary care physicians by 7%. Private payers would be expected to follow Medicare's example.

"If we could narrow the income gap so that primary care income is not less than 70%-80% of subspecialty income, compared with 55% now, that would overcome the barrier," Dr. Stream says. "Then we'd get maybe 40% of the physician workforce into primary care, up from 32%." If the workforce ratio eventually rose to 50% primary care, as in other advanced countries, he added, that would significantly improve US health.

But Money Isn't Everything

Experts agree that money is important but that other changes are needed to make primary care practice more attractive. They say that this requires building a team around primary care physicians so that they have more support and aren't on call 24/7. That's a big reason why more primary care doctors are going to work for hospital systems and large medical groups. "Primary care doctors have a crappy lifestyle," Dr. Weeks says. "If you could attack the lifestyle issues, you could attract more people to primary care. More money wouldn't hurt."

Although primary care and subspecialist groups disagree on rebalancing physician payments through the RUC, both camps want more focus on eliminating inappropriate care. That's in line with the Institute of Medicine's recent report[3] which found that nearly one third of total US healthcare spending is wasteful. A growing number of major physician groups are participating in the national Choosing Wisely® campaign to reduce unnecessary tests and other services.

But how will this burgeoning effort to eliminate waste affect physician income and total healthcare costs? Some researchers are skeptical that it will have any impact. "We might see a reduction in a particular service, but doctors will substitute something else," Dr. Anderson says. "They aren't going to put their MRI machine into mothballs. They'll keep working 50- or 60-hour weeks and maintain their income."

And that doesn't particularly bother him. "There isn't anything we can do about how much doctors make in total," Dr. Anderson says. "It would require too much government intervention in the free market. Americans pretty much like their doctors. I don't think there's a lot of resentment about how much they're paid."

For further details on physician compensation, see Medscape's complete Physician Compensation Report 2012.