Reforming Not Only How We Pay Physicians, but How Much We Pay Them

Any sensible plan to reform the U.S. health care system must reform the way we pay physicians. Currently, we reward doctors for doing more "stuff" for their patients -- for performing tests and procedures whether or not these interventions are necessary. Because of this strange reimbursement system, many primary care physicians receive more money performing a five-minute skin biopsy than they do conducting an hour-long history and physical.

Yet as important as it is to reform how we pay physicians, it is even more important for us to have an honest national discussion about how much we pay physicians. In the U.S., the median anesthesiologist makes more than $350,000 per year. That doesn't mean these people feel overpaid, however, for on the other end of the operating table their neurosurgeon colleagues make more than $600,000 per year, while down the street in the outpatient clinic, their dermatology colleagues pull in close to $400,000 per year. According to data collected by the American Medical Group Association, over two dozen medical specialties earn a median income of more than $300,000 per year.

In part, these physicians make lots of money because they perform lots of procedures. That means that if we reform the way we pay doctors for procedures, we might chip away at these astronomical incomes. But if we plan to reform our payment system, to discourage doctors from performing questionable procedures, we still need to decide how much money we want doctors to make. Obama has spoken fondly of the Mayo model of health care, in which physicians receive salaries, thereby reducing their incentive to perform unnecessary procedures. But Obama hasn't said what physicians' salaries ought to be, should the government make efforts to encourage a salaried medical system.

Health care reform ought to be forcing us to take a hard look at just how wealthy U.S. physicians have become in the last few decades, far wealthier in fact in their colleagues in other developed countries. Yet this topic of doctors' incomes has been largely ignored in the public debate that has surrounded health care reform.

Doctors need to take the lead in making this issue public, and developing a solution to the problem. Politicians certainly aren't going to tackle the issue of physician salaries. Republicans have committed themselves, sadly, to fighting whatever health care plan the Democrats put together, in hopes of weakening the Obama administration. And the Democrats are too afraid of medical organizations, like the AMA, to honestly address the issue of physician incomes.

Leading medical organizations should work with Congress to broker a deal. Perhaps a 10% cut in physician income (with smaller cuts, perhaps, for specialties that bring in less than $300,000 per year), in exchange for rigorous reform of medical malpractice law.

Rising health care costs threaten U.S. industry, which cannot compete with foreign companies that face lower costs; rising costs also threaten federal and state budgets, which are buckling under the strain of Medicare and Medicaid expenditures. Doctors need to do their part to lower health-care costs, by giving back some of their very generous income. And politicians need to work more closely with doctors, to make such a loss of income worth their while.

Peter Ubel is a primary care physician at the University of Michigan, who does not make even close to $300,000 per year, but who'd gladly take a pay cut to help move this country toward a more sensible health care system. He is also author of Free Market Madness: Why Economics is at Odds with Human Nature -- and Why it Matters. Read more about this overpaid doctor at http://www.peterubel.com/ .

Comments

[cfinhollywood]

I think you're completely on the money. Everyone should be able to make as much money as possible to have the life they want and to pay their bills, including doctors. But shouldn't providing healthcare be more than about profit? I paid my gynecologist $200 for a regular visit/check-up a couple of weeks ago, and then she wanted to charge another $175 to go over my test results. After I bitched, she came down to $75, which I still thought was unwarranted. The cost of seeing doctors is just too damn high.

[pachychromia]

Wonder how much Dr. Pete owes in student loans.

[rebsu]

"the median" ...."makes more than" isn't a correct phrasing. You can say the median income is x /year for whoever. But "more than" doesn't make sense.

Also, did you know that a lot of Canadian anesthesiologists make 300,000/yr? I'm sure it's not the median, but I know that Canada has somewhat competitive wages to the US in anesthesia.

That is beside the point. Regulating pay to all doctors seems a bit draconian. Should we also do the same for attorneys? Many make more than most doctors. And then regulate pay for engineers and anyone else you think is paid too much for the service they provide? Also, I don't think you'll get anesthesiologists to work the 60-70 hour work days that I know they do. Or do the extra years of residencies (4-5 for anesthesiologists and more for surgeons). Or take the many weekend calls, or code blue over night calls, or the weekly overnight calls, or the OB calls or work most holidays or pay for their medical school debt or pay the >30000/yr medical malpractice they have to pay.

I do think most doctors wouldn't mind taking a 10% paycut if it would mean real reform. But unfortunately, Congress and the administration have largely left doctors out of the reform process.

[Pharmacist96]

Right on, Rebsu. This doctor is at the University of Michigan. An academic who probably does not have to pay any overhead operating expenses. These incomes he mentions do not consider take home pay after taxes and operating expenses. My doctor works like a dog for the income he makes. Recently, he had a doctor want to join his practice. This doctor worked long hours for a hospital and had zero overhead expense. He almost had a heart attack when he saw the books and realized just how much it costs to run a practice. He decided not to join our clinic. If I get my brain operated on, I want the very best neurosurgeon to do it. In addition to medical school, they train for 7 extra years. Extremely dedicated people. Cutting doctor's fees is not a solution; its exacerbates the problem and will definitely limit access. My lawyer and accountant are extremely wealthy. I do not fault them for that; they also both work like dogs, pay high taxes and do excellent work. I would never presume to tell them what they are worth.