2010 October 27 Wednesday
Physician Income Levels

Curious about how much doctors make? Wondering how much of rising health care costs are due to high incomes of doctors? These numbers do not strike me as radically high.

Using data from a representative sample of 6,381 physicians providing patient care in 2004 to 2005, J. Paul Leigh, Ph.D., and colleagues at the University of California Davis School of Medicine, Davis, compared wages across four broad specialty categories: primary care, surgery, internal medicine and pediatric subspecialties, and other. They also assessed wages among 41 specific specialties along with differences based on demographic, geographic and market variables.

Overall, clinicians earned an average annual income of $187,857 and worked an average of 53.1 hours per week. When compared with those of primary care specialists, wages were 48 percent higher among surgeons, 36 percent higher among internal medicine and pediatric subspecialists and 45 percent higher among clinicians in other specialties.

In the analysis of 41 specific specialties, neurologic surgeons ($132 per hour) and radiation oncologists ($126 per hour) earned the highest wages. The specialists who earned the least per hour were those in internal medicine and pediatrics ($50) and other pediatric subspecialists ($52).

Though I wonder: How much of a physician's income gets caught by a study like this one? Do hourly rates only capture fees paid for visits and consultations? Or are profit margins on tests also captured?

Substantial differences exist by specialty.

When compared with the reference group of general surgeons, whose hourly earnings were close to the median or midpoint at $86, wages were significantly lower for internal medicine and pediatrics combined ($24 less), internal medicine ($24 less), family medicine ($24 less) and other pediatric subspecialties ($23 less). Physicians in neurologic surgery, radiation and medical oncology, dermatology, orthopedic surgery and ophthalmology all earned $17 to $50 more per hour than general surgeons.

I'd like to know how much of total health care costs go to physicians. I've read that drugs are about 10% of total costs. Okay, where does the other 90% go? Anyone got a good source? Also, what are the trends? Which slices are rising or falling?

Also see my post Physician Income Up In Recession.

Share |      By Randall Parker at 2010 October 27 12:34 AM  Economics Health


Comments
Sgt. Joe Friday said at October 27, 2010 6:18 AM:

My dermatologist once expressed the opinion that he is a small businessman, and the product he offers happens to be medicine. The overhead to run an office with clerical staff, maybe a physician's assistant, and all the equipment that patients expect (especially in an upper middle class area), not to mention office rent makes this an expensive business to be in.

Typically a small business owner will take a modest salary (say, $60K a year) so as not to attract the wrong kind of attention from the IRS, and the remainder of his/her compensation is in the form of dividends on the business' profits. $132/hour works out to a little more than $270K a year. That's a pretty good living, unless you're in a place like LA or NYC, where it's adequate, but nothing to get excited about. Hell, the owner of a successful contracting business probably makes as much, and if it's a sizeable construction business makes a lot more than that.

Black Death said at October 27, 2010 8:56 AM:

Physicians' compensation typically makes up about 20% of US health expenditures. I think this has been stable for a long time. Drugs are about 10%. (http://politifact.com/truth-o-meter/statements/2010/mar/12/americas-health-insurance-plans/health-insurers-get-small-percentage-overall-healt/).

Physicians' assistants average $87,614, or about $42/hour, assuming a 40 hour week. (http://www1.salary.com/Physician-Assistant-Medical-salary.html)

Here are some good data on physician compensation (which take no account of hours worked):

PHYSICIAN SPECIALTY MEDIAN SALARY
Allergy & Immunology $249,674
Anesthesiology $370,500
Cardiac & Thoracic Surgery $533,084
Cardiology $402,000
Colon & Rectal Surgery $394,723
Critical Care Medicine $264,750
Dermatology $375,176
Diagnostic Radiology - Interventional $478,000
Diagnostic Radiology - Non-Interventional $454,205
Emergency Care $267,293
Endocrinology $218,855
Family Medicine $208,861
Family Medicine - with Obstetrics $209,565
Gastroenterology $405,000
General Surgery $357,091
Geriatrics $187,602
Gynecological Oncology $413,500
Gynecology $232,075
Gynecology & Obstetrics $275,152
Hematology & Medical Oncology $320,907
Hospitalist $215,716
Hypertension & Nephrology $259,677
Infectious Disease $227,750
Intensivist $313,152
Internal Medicine $214,307
Neonatology $280,771
Neurological Surgery $592,811
Neurology $236,500
Nuclear Medicine (M.D. only) $331,000
Obstetrics $275,152
Occupational / Environmental Medicine $223,750
Ophthalmology $238,200
Oral Surgery $380,500
Orthopedic Surgery $500,672
Orthopedic-Medical $297,348
Orthopedic Surgery - Joint Replacement $605,953
Orthopedic Surgery - Hand $476,039
Orthopedic Surgery - Pediatrics $425,000
Orthopedic Surgery - Spine $688,503
Otolaryngology $368,777
Pathology (M.D. only) $354,750
Pediatric Allergy $198,458
Pediatric Cardiology $233,958
Pediatric Endocrinology $187,957
Pediatric Gastroenterology $240,895
Pediatric Hematology / Oncology $212,577
Pediatric Intensive Care $272,000
Pediatric Nephrology $198,686
Pediatric Neurology $219,561
Pediatric Pulmonary Disease $201,841
Pediatric Surgery $419,783
Pediatrics & Adolescent $209,873
Pediatric Infectious Disease $209,680
Perinatology $394,121
Physical Medicine & Rehabilitation $237,628
Plastic & Reconstructive Surgery $390,142
Psychiatry $214,740
Psychiatry - Child $216,360
Pulmonary Disease $306,829
Radiation Therapy (M.D. only) $447,250
Reproductive Endocrinology $317,312
Rheumatologic Disease $224,000
Sports Medicine $231,540
Transplant Surgery - Kidney $365,125
Transplant Surgery - Liver $454,287
Trauma Surgery $424,555
Urgent Care $222,920
Urology $413,941
Vascular Surgery $413,629

http://www.cejkasearch.com/compensation/amga_physician_compensation_survey.htm

....

Primary care doctors make a lot less than procedure-oriented subspecialists. To some extent, this is due to different levels of reimbursement (our society generally rewards doers better than thinkers). However, what many people fail to realize is that there are lots of primary care doctors but relatively few subspecialists. Consider a medium-sized town in a fairly isolated area. It will have many primary care practices but maybe only one cardiology, gastroenterology, neurosurgical or urology group. If a primary care practice turns down a poor contract from an insurance company or HMO, there are many other practices to choose from. Not so for the subspecialists, and the unavailability of a particular medical specialty in a given town will be a big negative for the insurer. So the subspecialists use their niche positions to drive hard bargains, which means they make lots of money. A urologist makes twice as much as a family doctor, for example.

Is this right or wrong? You be the judge, but it's how things work.

Medical students are aware of these facts and also that different areas of medicine offer vastly different lifestyles. For example, if you want fairly regular hours, a good income and not much night call, consider radiology, pathology, dermatology or ENT surgery. This is reflected in how senior medical students choose their specialties through the NRMP, the National Resident matching Program (http://www.nrmp.org/data/index.html). In 2010, there were 2608 first-year positions in family medicine offered through the NRMP, but only only 2384 were filled, and only 1254 with graduates of US medical schools. The rest were filled with graduates of osteopathic schools (292) or IMG's (international medical graduates), who may or may not be US citizens (it's about half and half). The latter are generally considered less desirable and are usually taken after graduates of US medical schools because they may have language and cultural issues (non-citizens) or because the only reason they went to a foreign medical school was that they couldn't get into a US one (US citizens).

Neurological surgery offered 191 positions and filled 188, 180 with US graduates. Dermatology offered 31 positions and filled 29, 26 with US graduates. Diagnostic radiology offered 141 positions and filled 139, 122 with US graduates.

Kent Gatewood said at October 27, 2010 9:12 AM:

Whilst having a couple a root canals done over ten years ago, I calculated how much the dentist was making. He worked on my mouth and another patient at the same time with a nurse/tech present when he went to the other room. $2.5 million was the revenue number.

My regular dentist keeps four rooms going. For him $800,000 seems a low estimate.

Not sure how to adjust for expenses, but I think their liability insurance has to be lower than for physicians.

In college I thought the smart ones went medical then dental. Is there more money in dentistry?

Black Death said at October 27, 2010 10:02 AM:

Kent -

"According to the American Dental Association, the average general dentist made $185,000 in 2004, the average dental specialist made $315,000. The average hygienist made $62000 in 2004. So in reality dentist make about 3 times what hygienists make. [I am a practicing dentist with 20 years experience. These numbers are the most accurate that I have seen posted]"

http://wiki.answers.com/Q/How_much_money_does_a_dentist_earn

....

So dental specialists (oral surgeons, endodontists, etc.) make about 70% more than general dentists. In an office-based practice such as dentistry, expenses are usually at least 50% of gross revenue, so it may not be as good as it seems.

M Moore said at October 28, 2010 5:03 PM:

I'm not really sure how the idea that a business's costs (the price of the inputs) are what determines the prices that people are willing to pay for the goods and/or services produced by that business (the price of the outputs). By that reasoning, it would be perfectly logical for businesses to ignore their costs, but we know that's not what happens in the real world. Rather, it is the price of the outputs (which is determined by the willingness of people to trade their dollars for goods and services) that determines the price of the inputs, i.e. if patients were unwilling to pay doctors high amounts for their services, doctors would be unwilling to pay such high amounts for rent, staff, etc. All other things equal, would you pay more for a 42" Samsung HDTV at Joe's TV Shop that the same TV at Wal-Mart simply because Joe's expenses are higher? The success of Wal-Mart indicates that the vast majority of Americans are unwilling to subsidize Joe.

But to put things in perspective, do you really want some $15/hour rube working on your heart or brain? Who's to say whether a family practice doc should make more or less than a neurosurgeon? Why not let individuals decide for themselves rather than some government official determine the worth of a group of doctors? Medical costs have gotten out of wack simply because people aren't having to make hard decisions between keeping more of their own dollars and getting better medical care (otherwise known as rationing). When they pay (or think they are paying) with other people's money, price is no concern and they are willing to pay as much of Other People's Money as is asked of them. This has created a viscous cycle over the past 50 years of increasing prices and increasing reliance on the masquerade of other people's money (employer health plans, Medicare, Medicaid).

Ben Brown said at October 30, 2010 5:37 AM:

Physicians are underpaid because society does not understand the time and money one invests to become a physician.

Per hour, internal medicine physicians earn about the same wage as high school teachers.

Accounting for time spent training, student loan debt, years worked, hours worked per year and disproportionate income taxes the adjusted net hourly wage of an internist is $34.46 per hour, while that of a high school teacher is $30.47 per hour.

Go to www.benjaminbrownmd.com to read the full article.

Jehu said at October 30, 2010 9:26 AM:

Doctors also have a big, big negative that most other high IQ professions don't have.

They have to deal with a lot of profoundly stupid people. Whereas, say, an engineer, might work in an environment where he never has any contact with anyone below +1 standard deviations from the mean of intelligence, and not much with those less than +2, a doctor, if anything, has a population he comes into professional contact with regularly that is below the mean. Some of the stories some of my friends in the medical profession have told me are pretty out there.

Randall Parker said at October 30, 2010 11:09 AM:

Black Death, Kent,

One thing not widely understood: Dentists are hit hard by recessions. My dentist told me back in late 2008 that his business was off by more than a third. Well, his costs did not go down nearly as much as his revenue. So he probably suffered a halving of income.

Jehu,

Yes, having to deal with the masses must be no fun at all. In my day job I rarely have a conversation with someone of less than 115 IQ and some of the people I work with are at 130+. One consultant I work with has got to be well north of 140 (and our conversations are much faster). Though some medical specialties involve little contact with patients.

Ben Brown,

Interesting article. Internal medicine seems like an especially bad deal because it does not increase income by much over a family practitioner and yet it takes more years of training.

One group that is much more lowly paid: scientists. They do a Ph.D. at very low income. They become post-docs for low income and low job security. Then they try to get an assistant professorship and earn a low starting income. Long hours.

Mike M said at November 2, 2010 12:17 PM:

Ben,

I disagree with your economic analysis. It is my premise that people are, and should be paid based on the demand for their goods and services, i.e. on the willingness for consumers to pay for their output, rather than on their training/education/experience (the inputs). According to your premise, people should be paid based on the cost (time and money) of their training/education/experience. If this is the case, it would follow that someone who takes 6 years to complete college (because they are dumb) should be paid more than someone who breezed through in 3 years and someone who educates and trains themselves in some arcane field - such as the manufacturing of buggy whips - whose goods and services are not in demand, should be paid based on the time he spent learning his trade rather than the demand for his goods and services. Fortunately, that's not how the world works. Otherwise, businesses would have no concerns regarding the cost of their inputs with the result that the prices we pay would skyrocket. Of course, people would not and could not pay exorbitant prices for trivial items. That is why the price of the output (the willingness of people to purchase an item or service) determines the price of the inputs and not the other way around.

Randall,

The years of training for Internal Medicine and Family Practice are identical - 3 years. The difference - some would argue - is that internal medicine training programs are more demanding. Also, interesting point about medical specialties that have less contact with patients - many of these tend to be the higher paying specialties - perhaps "wasting" time spinning one's wheels is not too productive. Good point regarding PhD's - it reinforces my statement that the price of the output determines the price of the input and not vice versa, i.e. people don't pay Mr/Dr X based on his years or cost of training. Rather, Mr/Dr X is willing to spend his time/money getting that training because people value the output (his goods or services) so highly.

SustainableEconomics said at November 20, 2010 9:54 PM:

Please don't break human value into current market value. History repeatedly shows that the smartest people are rarely compensated for their contributions to humanity. Likewise, some scientists create great things for mankind without thought of economic reward, such as medical advancements, knowledge in math and physics. In such a setting the market value of the day may be very small due to the small number of people able to understand and/or utilize their achievement/knowledge. Breaking out the well worn 'market value' argument not only reflects lack of insight, but also shows that you are not thinking in terms of sustainable systems. For instance, waiting until a plague breaks out to invest in research for the cure, because then the cure will have market value...would imply that the men working on the cure before the plague breaks out must be doing so at less than true market value, since the true market value for their wares will not be realized until said plague breaks out. Thus, if the epidemiologists working to head off the plague are successful, they will never be paid their worth to society because, A. there never was a market for their product (as their labor eliminated the mass market need for the product) and B. Very few people ever understood what they did. While some people may hold Ayn Rand as the ultimate achievement in human consciousness, I lean toward those who have joyfully served mankind without thought of financial reward understanding that truelove great accomplishments are by their nature ahead of their time and therefore not fiscally rewarding. The fact that the inventor of the Beanie Baby, H Ty Warner, is worth $6B says it all.


Post a comment
Comments:
Name (not anon or anonymous):
Email Address:
URL:
Remember info?

      
 
Web parapundit.com
Go Read More Posts On ParaPundit
Site Traffic Info
The contents of this site are copyright