Here is an interesting chart showing which occupations in the country have the highest cash compensation. Now it is very misleading in that it misses all the non-cash compensation that business people get–stock option awards and restricted stock grants that dramatically raise their compensation. But high cash compensation is real money that the ultimate consumers of any business end up paying in the price for services and goods produced by those receiving that high compensation. It ranks the top 30 occupations by average cash compensation. Twenty-four of the 30 are medical professionals, mostly specialty physicians. At the very top are pediatric surgeons, cardiologists, general surgeons, orthopedic surgeons, dental surgeons, radiologists and so on. The first time a non-physician shows up is pilots at number 13. (VC Chart)
High pay to these doctors means very high bills for their services. Now I have often said that I am conflicted about physician pay. It clearly is a factor in our high health care spending. But doctors have extremely hard jobs. They spent a fortune getting a medical degree. They work long hours. They literally have our health and our lives in their hands. They often deal with difficult patients. They deal with crazy regulations and burdensome administrative requirements, including medical software. So the job has many negatives. But the high compensation is a major reason for high spending.
You get what you pay for.
not always, research shows little correlation between what a doctor is paid and the outcomes of their patients
Also, these top specialists have to pay for extremely expensive personal insurance policies due to the risk of malpractice law suits in our “sue happy” culture, whether justified or not.
If there are one million doctors making $300K/yr, then that is a total of $300 billion per year. That is less than 10% of total health care spending. So I don’t think that doctor salaries are a big factor in medical care being so expensive.
Salaries aren’t the measure, it is the billings and the salaries drive the billings; total bills for physician services are around 30% of all health spending in the US
I agree, it is just awful that people who spend 4 years in college, 4 years in medical school, 4 years in residency and up to 4 years in fellowship (mostly without pay or, importantly, benefits) should be paid well.. after all, they should have the same pay as those who have been working after 4 years of college ( with pay and benefits)
Should everyone with a graduate degree be paid that much, many of whom have worked through equally difficult processes? My point is that whether they are entitled to it or not, this is clearly a factor in our high health spending and we compensate physicians at a far higher level than they are paid in other countries, other countries where outcomes are at least as good. If you think it is important to do something about health spending, which is killing taxpayers and working families, hard to do it without some reform to physician pay
As always, you make a good point. There are conflicting arguments, but it is true that doctors have a large burden to bear. My daughter-in-law is a primary care physician, makes excellent money, but has a life that is crowded with time spent on compliance. It is a daunting task to be an MD. But the real cause for high health care costs is the irresponsible way in which most people choose the health care system. There is massive overuse for minor things, and the choice of purveyors is also a major factor. E.g. Mark Cuban’s Online pharmacy makes a HUGE difference in the cost of generic medications. And Trump’s new pharmacy concept exhibits major savings on name bran cost of meds, as I understand it.
When I was young, a long time ago, we heard a lot about personal responsibility. Now you hear nothing, in fact, everyone is a victim. I completely agree that lack of personal responsibility for health and health care is a major driver of poor health and poor health care behaviors.
I don’t begrudge doctors a single cent of their compensation. The same goes for their professional medical helpers. Nurses, PA’s. technicians, etc. My gripe is the administrative costs of health care with INSURANCE costs being number 1. How much does a doctor or hospitals pay for administering insurance claims? Under a single payer system (I know you will scream “Socialized medicine) but calculate the amount we now spend administering the system.
I have two comments – first, as someone who has consulted on health insurance in many countries around the world, there is no such thing as “universal health care”. There are government run schemes that provide coverage which has been decreasing as budgets can no longer cover everything. Or the better quality care is limited to those who have the financial means to buy it, in essence a class system of healthcare. So universal healthcare is a slogan at best.
Secondly, early in my career when the doctor office copay would also apply to tests run in the office, we began tracking the percentage of office visits that were just that and those that had other tests included. No surprisingly, more than 3/4 of all dr office visits had other tests that were billed under the office visit. In my view, the office visit copay simultaneously encouraged utilization, some of it unnecessary, and detached the consumer from the true cost of care. So, yes, doctors drove more spending, but the office visit copay opened the door.
I am a physician who does primary care and doesn’t bill third parties. This gives me the freedom to practice as I see fit, which also means I can keep my office visits affordable for my patients who pay out of pocket for everything.
Folks with insurance, unless they have a high deductible, are frequently over-utilizers. They assume they aren’t paying for a test and get quite angry when told that they don’t need it or that it’s not appropriate.
The problem is, and has always been, third party payment. Add in corporate medicine and good luck shopping around and determining if you really need that procedure or if you’re just padding someone’s bank account.