Skip to main content

Physician Fees and National Health Spending

By September 13, 2011Commentary

A number of researchers have linked higher per capita health spending in the US with higher provider unit costs.  A new article in Health Affairs explores differences in income for primary care physicians and orthopedic surgeons in the United States, France, Germany, the United Kingdom, Australia and Canada.   (HA Article) At a macro level, in 2008 per capita spending for physician services in the United States was about $1600 but the average in the other OECD countries was $310 per person.   To understand this difference better, the researchers looked at fees, incomes and spending for the two groups of doctors in the six countries.

While there are some comparability issues, such as scope of practice and length of visit, overall the characteristics of physician services are very similar in all the countries.  In terms of fees, for primary care visits the range was $34 in Australia to $66 in the UK.  Medicare fees are in the mid to high level of this range.  While private insurance is much rarer in all the other countries, payments from private health plans to primary care physicians are higher in the US than those by private insurers in other countries and are estimated to be about a third higher than payments by Medicare, although figuring out what private insurers pay physicians in the US is very difficult.  For orthopedic surgeons, the range for hip replacements was $652 in Canada to $1634 by Medicare in the United States.  Private insurer payments are again higher and in the US are around $4000, more than twice the rate of private payments in any other of the comparison countries.  So the large fee gap in the US appears more prevalent on the specialty side.

In terms of service volume, the US actually is low in the range of per capita primary care visits at 3.8 compared to the average of almost 6.  Hip replacement rates range from 120 per hundred thousand in Canada to 270 in Germany and the US is in the middle.  In terms of net income after consideration of practice expenses, US primary care doctors make more than those in any other country, but orthopedic surgeons have a much larger gap compared their peers in other countries and the US has the largest ratio of orthopedic surgeon to primary care pay.  If the cost of medical education is also factored in, US physicians are still more highly paid.    Not surprising, while the US is in the middle on the ratio of primary care doctors for its population, it is at the high end for ratio of orthopedic surgeons.   Finally, the overall skewing of income in the US toward the top appears to be correlated with the higher pay for its doctors.  Physicians presumably expect to be paid more.  Another factor not considered in the research is the relative cost of living, but all these countries are on the high end of that scale.

Leave a comment