Category: Physician Income

Guest column: End is near for independent oncology, cardiology practices | Green Bay Press Gazette | greenbaypressgazette.com

Guest column: End is near for independent oncology, cardiology practices | Green Bay Press Gazette | greenbaypressgazette.com:

Cardiologists and oncologists now struggle to generate enough medical revenue to cover their costs to run the practice and pay physician salaries. “Pay the physicians less,” you say? Well, the problem is that the shortage of physicians is so severe that the price to bring a cardiologist or oncologist in is set at a market rate. If you underpay your own physicians, they leave to go to someone who will pay them the market rate; then you have no one to treat your patients.

It is estimated that by the end of 2012, 80 percent of all cardiologists will be employed by or leased to hospitals. Yes, it’s the end of the small independent cardiology and oncology practice and it’s happening right before our eyes.

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High health care costs: It’s all in the pricing – The Washington Post

High health care costs: It’s all in the pricing – The Washington Post: Ezra Klein

…the International Federation of Health Plans — a global insurance trade association that includes more than 100 insurers in 25 countries — released more direct evidence. It surveyed its members on the prices paid for 23 medical services and products in different countries, asking after everything from a routine doctor’s visit to a dose of Lipitor to coronary bypass surgery. And in 22 of 23 cases, Americans are paying higher prices than residents of other developed countries. Usually, we’re paying quite a bit more. The exception is cataract surgery, which appears to be costlier in Switzerland, though cheaper everywhere else.

The PDF of the PowerPoint (of the trailer of the film…) from IFHP is here.

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Higher Fees Paid to U.S. Physicians Drive Higher Spending for Physician Services Compared to Other Countries – The Commonwealth Fund

Higher Fees Paid to U.S. Physicians Drive Higher Spending for Physician Services Compared to Other Countries – The Commonwealth Fund:

Key Findings

Public payer fees for an office visit ranged from $34 in Australia to $66 in the United Kingdom; private payer fees ranged from $34 in France to $133 in the United States.
U.S. primary care physicians were paid an average of 27 percent more by public payers for an office visit, and 70 percent more by private payers for an office visit, compared with the average amount paid in other countries.
Public program fees for hip replacements ranged from $652 in Canada to $1,634 in the U.S. In the U.S., private health insurance fees for hip replacements were nearly $4,000—twice as high as the private rates in the five other countries.
U.S. payers paid much higher fees to orthopedic physicians for hip replacements: public payers paid 70 percent more, while private payers paid 120 percent more.
U.S. primary care physicians earned an average $186,582, compared with a range of $92,844 (Australia) to $159,532 (U.K). U.S. orthopedic surgeons earned an average $442,450, compared with a range of $154,380 (France) to $324,138 (U.K.).

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Is Medical Student Choice of a Primary Care Residency Influenced by Debt?

Is Medical Student Choice of a Primary Care Residency Influenced by Debt?:

Mean total debt for the study population was $89,807 (SD = 54,925). Graduates entering PC did not have significantly less total debt than those entering NPC ($87,206 vs $91,430; P = .09). Further, total debt was not a predictor of a PC residency after adjusting for medical school, year of graduation, and years of training in residency (P = .64).

And another take, similarly suggests medical school costs as independent of specialty choice. I can imagine several reasons for this, and I think the grand experiment could be somewhat as suggested – try major reductions in specialty income and increases in PC income and see what happens. Only half joking here.

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What Is a ‘Just’ Physician’s Income? – NYTimes.com

What Is a ‘Just’ Physician’s Income? – NYTimes.com: “The payment of physician income has been the subject of a lively debate for centuries. In fact, one finds it addressed at length in the famous Code of Hammurabi, chiseled into stone tablets some 4,000 years ago by edict of the Babylonian King Hammurabi along, by the way, with a malpractice system that makes today’s look like a pussycat.

Adam Smith, who generally is regarded as the father of modern economics, mused at length on the compensation of physicians in his celebrated book “An Inquiry Into the Nature and Causes of the Wealth of Nations” (1776).

Chapter 10 of Book 1, titled “Wages and Profit in the different Employments of Labour and Stock,” is a gracefully written treatment of what we now call labor-market theory. It is well worth a read.

“Honour makes a great part of the reward of all honourable professions,” Smith wrote. “In point of pecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to show by and by. … Disgrace has the contrary effect. The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.” (Italics added.)

Today we teach students that seemingly mysterious differences in the pecuniary income of different occupations can be explained in part by what we call “compensating variations in the psychic income” associated with different occupations.

Remarkably, in his treatise on compensation, Smith then departed sharply from the traditional demand-and-supply framework he popularized and we economists usually employ to explore employment and wages. Instead, for physicians and lawyers he appeared to lean on the medieval doctrine of “just price.” Thus he wrote:

We trust our health to the physician: our fortune and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires. The long time and the great expense which must be laid out in their education, when combined with this circumstance, necessarily enhance still further the price of their labour.

Although I’m a card-carrying economist who normally is quite comfortable with our supply-demand framework for virtually anything, I do find Adam Smith’s perspective persuasive.

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Why Medical School Should Be Free – NYTimes.com

Why Medical School Should Be Free – NYTimes.com:

DOCTORS are among the most richly rewarded professionals in the country. The Bureau of Labor Statistics reports that of the 15 highest-paid professions in the United States, all but two are in medicine or dentistry.

Why, then, are we proposing to make medical school free?

Huge medical school debts — doctors now graduate owing more than $155,000 on average, and 86 percent have some debt — are why so many doctors shun primary care in favor of highly paid specialties, where there are incentives to give expensive treatments and order expensive tests, an important driver of rising health care costs.

I’ve certainly made this point here before, but now a more respectable pair of opinionators.

amednews: Bill seeks outside review of relative values in Medicare services :: April 11, 2011

amednews: Bill seeks outside review of relative values in Medicare services :: April 11, 2011:

A Democratic lawmaker has proposed changing the way the Medicare program identifies physician services for which it pays too little — or too much — by requiring independent contractors to review doctor fees annually.

Since 1992, a panel convened by the American Medical Association and representing a wide range of specialties has recommended thousands of pay changes to the individual services doctors provide to Medicare patients. The bill would add a layer of review on top of the 29-member AMA/Specialty Society Relative Value Scale Update Committee, known as the RUC.

Critics of the committee say it lacks transparency and is responsible for continuing payment discrepancies between primary care physicians and specialists. But supporters, including the AMA, disagree. They say the use of outside contractors would be duplicative and add an unnecessary layer of bureaucracy to the process.

The Centers for Medicare & Medicaid Services is required to consult with health professionals on adjusting relative values for services. Because the process is budget-neutral, any value change that results in Medicare paying more for a service means it will pay less for one or more other services. CMS routinely accepts the majority of the RUC’s recommendations, although it is not required to do so.

Rep. Jim McDermott, MD (D, Wash.), introduced the Medicare Physician Payment Transparency and Assessment Act of 2011 on March 30. The bill explicitly would require independent contractors to identify misvalued physician services on an annual basis and recommend adjustments. The national health system reform law already states that the Health and Human Services secretary ‘may use analytic contractors,’ but the new measure would make this mandatory.

‘For two decades now, this panel has been dominated by specialists who undervalue the essential and complex work of primary care providers and cognitive specialists, while often favoring unnecessarily complex, costly and excessive specialty medical services,’ Dr. McDermott said. ‘The result is clear — there is a shortage of family doctors, patients don’t necessarily get the services they need and medical costs are increasingly driven higher.’

Physician Incomes Internationale

Responding to my post about doctors stepping up for health reform over at FireDogLake, wigwam linked to a couple great pieces from the NY Times. ( I have a Google Alert on “physicians salaries incomes,” so I don’t know how I missed them, but, here they are now.)

In order, Uwe Reinhardt pointed out in a post about Rationing Doctors’ Pay

When Medicare reduces its payments to doctors, it rations money to them. It does not directly ration the health care the doctors might render patients.

If physicians refuse to treat patients at the lower fees, it is they who ration health care, even if the incentive to do so came from Medicare.

While I doubt that the payments to radiologists and cardiologists actually will be cut by 21 percent soon — more on that next time — let us suppose it were so. Would there then be “few radiologists and cardiologists working” after such a fee cut?

Presumably, the afflicted physicians would withhold their services only from Medicare and Medicaid patients, assuming that private insurers pay more. But
could most radiologists and cardiologists actually earn an adequate livelihood only from privately insured patients? I have my doubts.

Like everyone else, radiologists and cardiologists certainly can claim to be sorely underpaid relative to the extraordinarily high compensation of bankers and corporate executives, which appears to have little correlation with contributions to society. But relative to their colleagues in internal medicine, pediatrics and family practice, radiologists and cardiologists actually are very well paid.

…

So even if Medicare cut fees of radiologists and cardiologists by 21 percent, the income of these specialists would still exceed that of their colleagues in primary care by 60 percent or more.

…

The only question then is whether such fee increases [for primary care] will come at the expense of taxpayers or from other parts of the health care sector, perhaps even the more highly paid medical specialties, including radiology and cardiology. That is a political call.

Reading through just a few of the comments revealed this gem:

As someone who is training to be a radiologist, I have mixed feelings about what you’re saying. While you are correct that Radiologists and Cardiologists do make more than primary care physicians, there is also a reason for that. Specifically, it is that when primary care physicians can’t figure something out, who do they turn to? SPECIALISTS. We train for MUCH longer than primary care docs (often times greater than twice as long) and this is the reason that we are paid more per RVU. We also have more responsibility; in fact, the levels of responsibility are worlds apart. While a primary care doctor can always turn to a specialist for help, we have no one to turn to… The buck stops with us, we are the final authority.

Wow. Sounds like our friend suffering amongst us “less skilled physicians” from last year.

Subsequently, CATHERINE RAMPELL cracked open the Congressional Research Service’s analysis of the OECD database to find out “How Much Do Doctors in Other Countries Make?”

As a country’s wealth rises, so should doctors’ pay. But even accounting for this trend, the United States pays doctors more than its wealth would predict.

According to this model, the 2007 report says, “The U.S. position above the trendline indicates that specialists are paid approximately $50,000 more than would be predicted by the high U.S. GDP. General practitioners are paid roughly $30,000 more than the U.S. GDP would predict, and nurses are paid $8,000 more.”

But it’s important to keep in mind, the report notes, that health care professionals in other O.E.C.D. countries pay much less (if anything) for their medical educations than do their American counterparts. In other words, doctors and nurses in the rest of the industrialized world start their medical careers with much less student loan debt compared to medical graduates in the United States.

Rampell also links to the MGMA report on American physician income, which you may find either eye opening or eye popping.

Why doctors’ pay keeps on rising – Herald Scotland | News | Politics

Why doctors’ pay keeps on rising – Herald Scotland News Politics

“GPs, who earned an average of £80,959 in 2007, benefit from “aspiration” and “performance” payments under the Quality and Outcomes Framework (QOF).”

This is an article about bonus payments to GP’s in the NHS for a variety of things, including taking care of oncology patients, MRSA screening, practicing in underserved areas in the UK, among others. The grumbling is that they are getting paid pretty well, since a new contract from 2004, and they are out sourcing night call to other services.

They were doing this in London back in 1984 when I was there for some medical school electives, and they were grumbling about it then, too. My feeling is that, especially with the upcoming generations, that life style is important and it is important to bring in people to the profession who are bright and enthusiastic. A miserable life style makes that less likely.

For the record, the £80,959 average salary in US Dollars equals $125K at the current exchange rate, comfortably in the top quintile of earners. But it comes without hundreds of thousands of dollars in expense/debt to get through college and medical school.

The Cost of Living : Cardiologists’ Lament

The Cost of Living : CJR:

The Herald’s story, by John Dorschner, said the doctors were complaining that Medicare had reduced “reimbursement for cardiac services on average by 40 percent,” and that another 21-percent cut was coming March 1. The doctors’ letter warned that they “will be either forced out of business or forced to drastically increase the number of patients seen, most likely with physician assistants or nurse practitioners.” Oh, oh. The specter of rationing and inferior care—and from nurse practitioners no less!

Dorschner’s story described a new Medicare rule, which took effect January 1, that cut projected total revenues for cardiologists by 13 percent on average over four years while increasing the revenue of internists, family doctors, and general practitioners.

Think of it as income redistribution designed to make primary care more attractive to med students and increase the supply of those kind of docs. (At a minimum, the health-reform debate has illuminated payment disparities between the primary-care doctors and the high-priced specialists who have always commanded big bucks.)

Heart doctors across the country—not only in Miami—cried foul, and Jack Lewin, who heads their trade group, the American College of Cardiology, vowed “to do everything we can in the legislative, legal and regulatory arenas to stop these cuts.” Lewin could have added the media to that list of arenas, because the ACC pulled out all stops to sound the alarm with the nation’s press and public through its Campaign for Patient Access.

The Herald’s story was the best of a bunch of news articles that for the most part passed along the cardiologists’ complaints, threats, and warnings without any hint that there was another side to the story. Between the slanted newspaper articles and audio news releases from the ACC, millions of Americans learned that the incomes of heart doctors, which can be upwards of $400,000, could take a hit. As an example of the kinds of cuts Medicare envisioned under the new rule, the administrator of one Florida heart practice explained that the reimbursement for a nuclear stress test could drop from $850 to $600. Presumably he said it with a straight face.

We will need to have this very important discussion at some point, so I’m glad to see someone looking critically at the need for substantive analysis of complaints about reimbursement.