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Are doctors overpaid?
That’s a tricky question for several reasons. Getting good data is hard and mostly based on surveys, there are variations across the country and among specialists plus few doctors work a 40 hour week.
If you are a patient and your doctor provides life saving care, I suspect what they earn doesn’t matter, it wouldn’t to me. In any case, chances are you aren’t paying the bill yourself.
After looking at the data from several sources, my opinion is that doctors are not overpaid even though U.S. physicians earn more than in other countries.
American doctors earn two to three times as much as in European countries, not adjusted for cost of living being higher in the U.S. And of course, the U.S has, shall we say, a unique market-based healthcare system.
Another big difference is the cost of medical education and training. In European countries physician education is highly tax-payer subsidized or fully paid or to use a misused word “free.” In the U.S. many new doctors graduate with a $200,000 to $250,000 in debt.
General the highest paid doctors are orthopedic surgeons they make an average $202 an hour. The lowest paid are pediatricians at $103 and hour, but even OB/GYNs only make $130 and hour. The key is the hours worked.
Looking at it another way Orthopedic surgeons earn on average $543,000 a year and pediatricians $258,000. In some surveys cardiologists are up there at $582,000, but others have them at $506,000. You can explore the data here.
There is a high cost in different ways as a result of the American view on paying for health care. I’m pretty sure we have it wrong.
Not a doc but have several in the family. The malpractice insurance is unreal. The ambulance chasers have their hands in our pockets indirectly.
Yeeesh. No wonder our friend, a retired orthopedic surgeon, drives a Porsche convertible!
US doctors need high salaries because it takes so long and so much money to become qualified. In contrast , these are the UK requirements: “Before you become a UK doctor you first have to obtain a degree in medicine from a medical school whose medical degrees we accept. Courses normally last five years, or four years for a graduate entry programme. [In other words, you don’t need a bachelor’s degree.] They involve basic medical sciences as well as clinical training on the wards.
After graduation, you’ll enter the two-year Foundation Programme. You’ll be provisionally registered with a licence to practise while completing the first year. Full registration is awarded when you’ve completed year one.” Presumably it takes longer for specialists, but my impression is that the UK has a lot more primary care doctors than specialists.
I’ve also read that there are artificial limits on the number of doctors in the US, which would also lead to higher salaries. See this, for instance.
This is an interesting topic, but after looking at your source, White Coat, the data seems funky. My son is a primary care doc in the Midwest. The big issue I see is that PC docs work a lot of hours. While many are on salary plus some kind of bonus, they must qualify for their salary based on what is billed and received under the current scheme. Everything that they do (which can be billed for) is quantified by converting it into Relative Value Units, or RVUs. Every billing code has a related RVU quantity. BUT, they do not get paid for time they spend answering email, returning phone calls, refilling Rxs, review test results, writing letters to patients with test results or anything else that happens outside of time spent with patients. So, if you see sicker patients, your time with them will generate more RVUs, but potentially more admin work as well. If as a doc you do not generate enough RVUs, you won’t get your bonus, and the next year your salary might be reduced. I think the system is a bit chaotic; if you see too many Medicare or Medicaid patients, you may still generate a lot of RVUs, but since your employer doesn’t get paid as much for those units as they do for younger insured patients your bonus will suffer. Of course, you have no control over who can sign up for an appointment.
My son sees his patients between 8am and 5pm but must do much of the admin work in the evenings and on weekends.
Specialists get more RVUs than do PC docs. Potentially, this is a reason that there is a current shortage of PC docs, and you might be seen by an NP or Physician’s Assistant. (Your AI will see you now.)
My grandson is starting medical school this fall. As an in-state student it will cost him around $80-90k per year for tuition and living expenses for each year. Many students borrow this much or more. Non-residents pay twice the tuition increasing their cost to $130k+ per year. I think the current loan interest rates are in the 8% and up range.
One factor nobody seems to have mentioned is malpractice insurance. A private-practice OB/GYN in a metro area can easily pay $200K a year. That puts a hell of a dent in yearly income. For them and neurosurgeons and ER doctors and the like, those premiums can make selling out to a hospital system more than tempting.
My skin guy is a W2 employee for a hospital system. He prefers being an employee for a number of reasons, not the least of which is that insurance.
🙂 skin guy? I assume you’re on a first-name basis with your dermatologist. Ha
Omar would probably get a chuckle from that…
In my state there a noticeable movement towards doctors joining larger healthcare systems or hospital networks, with a trend of independent practices being acquired or merged.
My primary care doctor retired a couple of years ago and his practice is now owned by a hospital system. I am ok with seeing a skilled family nurse practitioner (FNP) as my initial contact for routine medical issues. My FNP has been good at referring me to a specialist when appropriate and with traditional Medicare I do not have to get a referral for my insurance to work.
No, I do not think doctors and medical professionals are overpaid.
Here’s my wishywashy take on the question. I like all my doctors and don’t begrudge them their earnings. I have seen what a few of them earn, and the pay you quote actually seems low, as does the student loan debt some have accumulated.
Having said that, I still think healthcare costs too much. The system is opaque, and while we would be screwed without health insurance, insurance is a big reason for the non-transparency.
So you see, I want my highly competent and highly compensated doctors…. I just want to pay less for them. See? Wishywashy.
You conclude something that you spent 0 time supporting.
Doctors have 4 years of college plus 4 years of med school plus 2 years of residency. If they specialize, additional years are added for that. That is a lot of schooling and training and to some extent they should be compensated for that.
The internet and Dr Google and TV advertising have made their jobs somewhat more frustrating as patients think they know more than they do.
I have a lot of respect for doctors and I am thankful for what they do.
Noting that everyone is different- my journey:
Undergrad 4yrs
PhD 4 yrs,
post-doc 1 yr,
medical school 4 yrs,
residency 3 yrs,
followship 3 yrs.
Age at first “doctor” paycheck = 38.
Thats a lot of “compounding time” on earnings lost
Any answer to the question “Are doctors overpaid?” must involve a definition of value for doctors’ services – low value for healthy groups, high value for suffering patients. Ultimately, the more useful question is about insurance premium, since Americans do not pay doctors directly but mostly via an insurance mechanism.
Since the founding of the Kaiser Permanente in 1945, when Henry Kaiser hired and paid Dr Sidney Garfield a fixed amount of money per year to provide total medical care for shipyard workers and their families, this not-for-profit medical group has been owned and led by physicians. We fought frequently to keep doctors’ pay from rising in hope that the health plan could keep the premium low. Our previous CEO, Dr Robert Pearl, taught the physician members the hard economic fact that since the doctors get less than 15 dollars for every $100 of premium, cutting doctors pay by 1/3 would save patients only 5%, and the group could not attract young new physicians with high student loan debts, while the rate of physician retirement from burnout has been accelerating. The AMA report on the 2023 medical costs confirms the statistics that out of $100 healthcare spending, $31 spent on hospitals, $15 for doctors, $9 for drugs, $7 for acute care nursing home and home health, $7 for insurance / government administration, $5 goes to labs and clinical services, the remaining is distributed to ancillary services (rehab therapy, dental, durable medical equipment), and 4% reserved for capital expenditure.
Another statistic to be considered: US medical schools produce just below 24 thousand new MD graduates a year and there are 40 thousand slots of residency training each year. That would answer the common question from American patients: “doctor, where did you come from?”
Added:
Data from AMA below, which reported rates of increase for each spending category (prescription drugs had highest rate of increase, 11.4% from 2022 to 2023)
Trends in health care spending | Healthcare costs in the US | AMA
Back in the day when I was on the board of directors of an HMO we were negotiating a contract with a physician group.
Somewhere in the process I asked if they would consider a salary arrangement instead of FFS or per capita/per patient. There was a resounding no. This was back in the 1980s.
Medicare is the biggest payer, covering over 67 million Americans (compared to 4 million California residents covered by Northern California Kaiser, and 4 million covered by Southern California Kaiser, a separate legal entity despite the name). Half of Medicare beneficiaries belong to the HMO entities (Medicare Advantage), which are paid by capitation payments (fixed amount per patient per year, i.e. salary-equivalence) +/- bonuses / penalties for quality, cost efficiency, electronic health records, practice improvement.
Kaiser is noted for quality and being a leader in the HMO concept. I would not be quick to extend Kaiser standards and performance to the majority of MA plans that rely more on discount networks and patient care pre certification than quality measures.
I think the consensus is that health insurance companies and other administrative roles make too much money, not doctors. Of course we couldn’t have doctors without big health insurance companies like Aetna, UHC, Kaiser, BCBS, etc, so they need to get their cut of healthcare dollars too!
Well actually insurance companies have modest profit margins and by law are limited on overhead costs. Plus a large percentage of workers are in self funded plans not actually using insurance. Insurers are not the problem.
So why is health care so expensive in the US?
That is a complicated question with several components, among them the very existence of insurance as we perceive it. As insurance coverage expanded, patient concerns for the cost of care declined. We fail to realize premiums are the reflection of what we spend.
Patient expectations. Over-utilization and lack of coordination of care. Duplication of services, failure to manage facility availability which drives over utilization.
I spent 50 years trying to manage health care costs for a large group.
I’d fill up HD to cover it all, but let’s say in many ways we are our own worst enemy and a disjointed system like the US has will never be efficient for all citizens. Our various programs work against each other.
Maybe so but insurers are a primary reason for the accelerating rate of physician burnout mentioned by quan. Treatment options are dictated by insurers plus the endless paperwork required to get a claim paid.
So, no management of care, no oversight, no questions asked? Physicians themselves estimate 25% of care provided is unnecessary. Americans tend to see more as better.
Fraud prevention? 100% agree but that process differs from blatant stall tactics with rubber stamp denial of claims until it is refiled maybe two more times with accompanying letters for routine procedures. The doctor is eventually paid 4-6 months after the procedure but let the insured delay a single monthly premium payment and see how fast they are cancelled.
don’t believe everything you hear about that. Errors and screwups happened, but not a concerted effort to deny valid claims. That would not even a good business practice and would require physicians doing claim reviews to subvert their integrity. Keep in mind that a large percentage workers (79% with companies of 200 or more) are in self-insured plans and the insurance company processing claims does not have a financial stake in claim payments.
No!
All my Doctors are excellent and should probably be even paid more. I would be willing to pay higher insurance premiums to make sure they are satisfied with their pay.