Monday, November 9th 2009

Physician Pay In The Reform Era

There’s no doubt that American physicians earn more than the rest of the western world. Even when you factor in the cost of medical education in the United States (and it is substantial) a medical degree remains something of a better investment in this country than essentially anywhere else. This is largely because doctors has far more control over their earnings in this country than do those in other western countries. As physicians here in the U.S. we’re largely fee based and not salaried.

Now physician income, likely, tallies somewhere between 10 and 20% of all health care spending in America. Depending on who you talk to that’s either substantial or it’s not. But the fact is that even when physicians don’t earn directly they drive health care costs with incentives, even if not financial, to promote health care spending in the form of tests/procedures/referrals.

As you might imagine, health care reform likely foreshadows changes to physician reimbursement in this country…at least in the long term.

Both NPR and the NY Times have recent articles on physician earnings under the shadow of healthcare reform.

Doctors who choose to work in nonprofit clinics seem to view their professions more as a calling than as a job. There is evidence that when medicine was less adversarial than it is now, American doctors were both happier and more respected, even though their incomes were much lower. Doctors elsewhere also remain satisfied and respected, though they are paid less than their American counterparts.

In time, medical schools will be able to attract plenty of talented people willing to accept positions under the Mayo model, where they would spend more time healing patients and less time fighting insurers. Any of the current health reform bills would help start this transition.

I’m not saying that physicians earn too much in America. They don’t. Indeed most healthcare systems undervalue physician services. I know much economic work goes towards valuing human life, which is always questionable, but I have hard time believing anyone would truly value the life of a loved one when it comes to health care services. Especially acute care services where mortality or severe morbidity are on the line there is essentially topless value to the services provided by physicians and the rest of the healthcare professions.

Despite that healthcare reform MUST eventually level off physician reimbursement in order to control healthcare costs. It is coming, whether it is fair or not, so get ready for it.

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