Whenever there is a debate about making cuts to education, both parties zero right in on teachers. But when the debate is about making cuts to health care, nobody zeroes in on doctors. A curious thing, wouldn’t you say? In both professions, the primary practitioners of the profession are seen as being ultimately responsible for the product. Educators are constantly put under pressure. They must accept cuts in pay, cuts in benefits, cuts in job security, cuts in funding for their ability to do their job. They must do more with less, always. But in the case of health care, doctors seem to escape any scrutiny whatsoever. In fact, any cut to their income no matter how insignificant, is always portrayed as doing irreparable harm to the health care system.
I’m going on the record: Doctors make too much money and they need to start taking it in the chin if we are going to get control of health care costs.
In 2007, Alex Berenson writing in the New York Times hit the nail on the head of this subject in his seminal article “Sending Back the Doctor Bill.”
Easy, liberals say. If Washington would just force cuts in prescription drug prices and insurance company profits, plenty of money would be left over to cover the uninsured. Conservatives prefer to argue that the answer lies in forcing people to pay more of their own medical costs. But many health care economists say both sides are wrong. These economists, some of whom are also doctors, say the partisan fight over insurers and drug makers is a distraction from a bigger problem: the relatively high salaries paid to American doctors, and even more importantly, the way they are compensated.
Berenson goes on to make the point that doctors in the U.S. make two to three times what doctors in Europe make. While primary care general practitioners in the U.S. have earnings comparable with Europe, the specialists are making a killing. A 2006 study by the Congressional Research Service compared the pay of doctors by adjusting for purchasing power of the local currency and found that American medical specialists are paid an adjusted average of $230,000 a year. General practitioners? $161,000. Nurses, who actually do the lion’s share of the real work? $56,000. In Germany, specialists make an average of $77,000. In The UK, $151,000. In Canada, $161,000.
I think we all agree doctors should be well paid. After all, it is an important profession that requires quite a bit of training. But do they really need to make $230k and up? No. Especially considering that specialists in other industrial nations that have lower health care costs and better health care outcomes seem to get by all right by paying their doctors a lot less.
To be sure, the insurance companies have always blamed the doctors for rising health care costs. The doctors, of course, blame the medical device companies and the pharmaceutical companies. All of them both blame government, of course. The truth is there is plenty of blame to go around. But the one group that seems to keep escaping accountability is doctors.
In 2009, during the heat of the health care debate, The New York Times published an article about this subject:
Many studies have shown that patient care and spending vary enormously from community to community, depending on local practices, which are largely determined by doctors.
The health care system has long been accused of emphasizing the quantity — rather than the quality — of care, giving doctors and other health providers incentive to order extra tests and procedures when they don’t improve the outcome. “It is a model that has taken the pursuit of medicine from a profession — a calling — to a business,” President Obama said of the system.
A lucrative business. Especially if you are a specialist. While doctors always have to second guess a procedure when payment comes from an insurance company, they never have to do that with Medicare. Medicare will always pay because Medicare doesn’t review the costs of procedure. What Medicare does do, very well in fact, is just fix the price lower than what can be expected from private insurance. On the one side, Medicare pays, but pays low. On the other side, private insurers pay high, but doctors may or may not get paid in a timely manner. (It’s another reason why a single payer system like Medicare works better, but that’s another debate for another time.) Under this system, doctors have every incentive to milk the system for all it’s worth, ordering as many procedures as possible and shifting Medicare’s lower payments to private insurance. Since private insurance may or may not pay depending on their profit schedule, doctors have every incentive do either deny care or throw as much car as possible out there to see what sticks. And it is especially milky for those with specialties. As Berenson notes in the article, the way doctors are paid is as much a problem as how they are paid.
Let’s get the doctors in on this “shared sacrifice” business. Reforms in the health care law to encourage more doctors to simply get a job rather than trying to run a business should help. Let’s put doctors on a good salary, with good health benefits and a good pension. If we are going to get health care costs down, it seems to me a quarter-million dollar specialist should be the person who should take the hit first. They’ll be just fine suffering though the indignity of 20% more than general practitioner’s six figure pay rather than 50%.
Originally appeared in the Daily Kos, May 29, 2011. Re-posted with permission.
As a family physician, working 3 days a week because of a disability, I only make $30,000 a year!
This is a courageous and informative article. It is a good start on the problem of a major overlooked cost driver of the healthcare crisis: doctors incomes. Too long on a pedestal, held as role models by our society, doctors continue to be under the radar. While heroic doctors like Karen work in the trenches to make a living, others exploit the system to the point of piracy. It’s easy to do the numbers A dotor seeing 100 patients at $100 each will collect $40,000 a month. This holds true for primary care doctors. Not all of course, but it is not rare. Specialists can consistently make seven figures. How is it possible? It’s easy when an entrpreneurial doc establishes passive income streams (PT, durable goods, medications, etc). Two weeks ago a colleague boasted to me that he made 3.5 million in 2010. He’s not even a surgeon. Orthopedic surgeons in Japan make $200-350,000. Here, they start at $250-400K and earn $750 – $2M and up.
One source of medical provider incomes are prescription laws. Let me give an example here: You can purchase the medicine to control your blood pressure for $40 a year at Walmart. This would obviously be “affordable” for anyone. However, since this medicine is “prescription”, you are allowed to only purchase it with a doctor’s prescription. This is where the doctor has “control” over you. As you cannot legally purchase medicine without a prescription, the doctor thus can exploit your need for the medicine by charging you for his written “permission” to purchase the medicine. This will consist of an office visit ($100 or more) lab tests, and the prescription will only be good for one year. So you end up paying several hundred dollars for being allowed to purchase $40 worth of medicine, a medicine that is actually “as safe as aspirin” Not only does this take money out of people’s pockets for unnecessary and undesired service, it also wastes the doctor’s time. Which means someone who actually needs the doctor has to wait a longer time because the doctor’s time is being wasted on unnecessary office visits. This is likely “where” the so-called “shortage of primary care doctors” comes from. There isn’t a shortage, there is only time being wasted on unnecessary office visits thanks to our prescription laws…