watercress words by Dr Aletha

Most people have an opinion about physician income in the United States. Those outside the profession think  doctors are paid  a lot of money, maybe too much money, while most physicians feel our incomes are justified, or even not enough.

Parade magazine published it’s annual salary survey, “What People Earn”. Salaries range from nothing for a stay-at-home mom to millions earned by entertainers, pro athletes, CEOs, and even Harper Lee, author of To Kill a Mockingbird. The article listed only one physician, a plastic surgeon, who makes $450,000 per year. Wow, I thought, I went into the wrong specialty.(ha ha)  But neither I nor any physician I know went into medicine because we thought it was an easy way to make a lot of money (it isn’t).

If you want to see dollar amounts, browse the Medscape Physician Compensation Report. I’ll explain how that money gets to doctors, that is money earned from seeing patients, not  from investments, product sales, consulting, or outside business.

Physicians often graduate medical school with debt from school loans, which may be in the hundreds of thousands of dollars. So they don’t even break even until those are paid off, which can take years. Also, due to the many years of training required, doctors may start practice near or even past their 30th birthday.

Where the money goes

The payment  for an office visit or surgery is usually  fully out of pocket for the patient or some combination of insurance plus co-pay or  deductible. That charge covers all the expenses of running a medical practice, not just the doctor’s salary. So when you pay the “doctor”, you are also paying for the salary of every other person in the office, maybe even some you never see.  That includes the person on the phone who scheduled your appointment, the receptionist who checked you in, the insurance clerk who filed your claim, the medical records clerk who pulled your paper chart, or more likely now scans paper reports into the EHR (electronic health record.) If the office provides lab and xray services, add those salaries in also. There may be administrative staff- office manager, human resources personnel, financial manager and IT support. Then there are the office expenses- rent,utilities,  office and medical supplies, phone, computer, fax, insurance, postage, cleaning, maintenance, etc.

How doctors get paid

At one time, not that long ago, most doctors were self employed, either solo or in groups. Now, many are employees of large for-profit or not-for-profit  clinics and/or hospitals. According to the Medscape report, out of the 20,000 doctors surveyed, 63% are employed.

When doctors work for themselves, their salary is basically what is left over after paying all the other expenses. When a doctor is an employee, several different models for compensation are  used and the methods continue to evolve. Much of it is driven by how and how much insurance companies, especially Medicare, pay for physician services. According to JAMA (Journal of the American Medical Association) and Medical Economics, “payment reform is about to become a reality.”

Now, physician compensation is some combination of a base salary and/or productivity based, meaning a dollar amount per patient or procedure. But under a reformed system, doctors may get  bundled payments by episode and patient (so-called global payment). Department of Health and Human Services Secretary Sylvia Burwell, is proposing Medicare payment tied to quality or value by the end of 2016. ( what determines quality or value is yet to be decided).

Those patient satisfaction surveys you may be asked to complete-and I hope you do-may not be  just to improve service. Sometimes the results are used to calculate physician bonus payments and eventually may also affect base compensation.

So, what do you think? 

What does this mean for you the patient? If you are interested in dollar values for physician income, review the Medscape report. Because, ultimately, the patient decides what the doctor’s care is worth, and whether what you pay is fair. Depending on circumstances, such as your health, ability to pay, availability of medical services and quality of that service, healthcare is either not worth the money, or the biggest bargain you will ever find.

Comments welcome.