How Much Should Doctors Earn?
Were They Making Too Much Money Before? (They sure aren't now) Consider:
Most doctors are in training until they're at least 30 and don't even begin their private practices until after that. Even before the insurance conglomerates took over recently, a doctor might still have had to struggle until he was 35 or older before his practice actually built up to the point that he was taking home a significant paycheck. Most other people who graduated from college the same year the doctor did had begun their careers at age 22 and had been taking home steadily higher salaries all that time from age 22-35. Most doctors finish all that training with huge educational loans which they must somehow repay. The overhead (staff salaries, benefits, rent, malpractice insurance, etc.) in a typical one-doctor medical office averages perhaps $17,000 per month; so a doctor must earn at least that much just to break even without taking home anything. There is no significant gain in financial "efficiency" when a group of doctors share one office because all the same services must be provided to all their patients; and there are usually added costs for administrators, etc. In fact, a one- or two-doctor office is probably the most cost-effective way to "package" health care. Most doctors work at least 50-60 hour weeks plus nights and weekends. Doctors take on enormous responsibilities for the life and health of every patient they treat every time they treat them. Even a "little" mistake by the doctor or any member of his staff could cost a life or a limb (or a frivolous lawsuit). Doctors are, by their nature and their training, the kind of people who take those responsibilities very seriously with every single patient under their care. Most doctors have no employer who is contributing to a pension or retirement for them in addition to paying them their salary; so if a doctor cannot set aside a substantial portion of his current earnings for retirement, he will have no savings on which to retire in later years.
How much should a good doctor earn for working so hard, so conscientiously, for taking on all those responsibilities? Should he earn enough that he can afford to set something aside for his retirement? If you name a halfway reasonable income figure for having all that responsibility, the odds are that your Family Doctor is earning less than that now; and it's going to get worse unless something is done. If the income figures drop much lower than they are right now, it's almost guaranteed that the best doctors are going to begin leaving the profession in droves (those who can afford to retire). The ones who can't afford to quit because they've got debts or kids in college or other long-term commitments will find it increasingly difficult to avoid resenting their indentured servitude. It's just not worth it to work so hard, shoulder all that responsibility, then be paid peanuts.
MEDICAL OFFICE OVERHEAD
A Reality Check For New Primary Care Doctors Doctor, you've just finished all your residency training in Primary Care; and you're eager to begin building your private practice. Unfortunately no one has ever given you the hard facts about what it really costs to run a medical office. Well, just click here to see the real facts about medical office overhead. That's right, you must earn more than $17,000 per month before you can take home a dime. Welcome to REALITY. Managed Care Paperwork Means Extra Staff Expense Most doctors' offices have been forced to add an extra full-time employee just to handle all the new insurance paperwork required to process claims and patient referrals. Who pays for that? Of course the doctor does, out of his ever-shrinking reimbursements from the managed care plans whose paperwork the new employee is processing. This extra salary expense takes another major chunk out of the doctor's total take-home pay at the end of the year. MORE MALPRACTICE SUITS WITH MANAGED CARE Most Primary Care doctors have seen their Medical Malpractice Insurance premiums quadruple in the past several years (for less coverage) even though most of us have never had a malpractice suit filed against us. Why? Because the malpractice insurance companies fear a flood of new medical malpractice suits associated with "Managed Care". They are seeing many more malpractice suits being filed because:
Some patients have had a bad outcome because their managed care plan refused to allow their doctor to order some needed test or treatment. Some doctors are becoming too rushed and are making mistakes because they are not being as thorough as they should be. A growing number of doctors have begun taking on many more patients than they should in order to try to maintain a reasonable income in the face of shrinking reimbursements per patient. That becomes a vicious cycle for them because increased patient load means more practice overhead expense for more staff, etc.; and that means trying to juggle even more patients to cover the added overhead cost, etc.
The malpractice insurance companies, who understand the medical and legal systems very well, know that as insurance reimbursements continue to shrink, doctors will become ever more rushed and have less time for their traditionally meticulous attention to detail. The malpractice companies are raising their premiums because they know that patient care is going to deteriorate.
REDUCED LAB INCOME
Should A Medical Office Make a "Profit" From Lab Work? As managed care insurance plans are slashing the reimbursements they pay to doctors for office and hospital care, many are also insidiously stripping away the only other significant "profit center" in a Primary Care doctor's medical practice, the laboratory. Where do you suppose the money comes from to pay that nice nurse who draws your blood as well all the rest of the overhead cost of having your doctor's entire office operation there ready to serve you whenever you're ill? In the past, when a doctor ordered a lab test on a patient, he would charge a fee somewhat higher than the actual cost of having the test performed; and it was absolutely appropriate that he/she do so in order to cover the costs entailed. Suppose, for example, that a patient has a simple follow-up blood
test for cholesterol that doesn't require an office visit with the doctor. Here's what happens:
A skilled person in the doctor's office must draw the blood, check the patient's blood pressure, and perhaps take time to answer some question from the patient. A skilled person must either perform the test in the office or prepare the specimen for transport to an outside laboratory When the cholesterol result is obtained, someone must pull the patient's chart from the files, attach the lab paperwork, and transport it to the doctor. The doctor uses his professional training and judgment to evaluate the test result; then he either telephones the patient himself or writes a note to the nurse with instructions to be relayed to the patient; perhaps he writes a prescription refill; then he dictates the cholesterol result into the chart along with his recommendations. The nurse must take time to call the patient, chat a few minutes about the results and the doctor's instructions, then mail or phone out the prescription, etc. Another employee must type the doctor's dictation into the patient's chart, document the refill, and refile the chart.
The above procedure is repeated perhaps 20-30 times every day, taking up a great deal of staff and physician time. Every person involved in this entire process expects to be paid for his/her time, and where will the money come from? It is absolutely appropriate that the doctor should charge a "markup" on lab work to cover the actual (hidden) costs of providing these services to his patients, especially nowadays when insurance reimbursements for Office Visits are in the toilet. Traditionally lab work done through a doctor's office provided a small additional "profit center" that helped to underwrite some of the cost of having all those people on staff, ready to answer the phone and provide all the other little services for patients such as the time spent doing walk -in blood pressure checks, refilling prescriptions, fielding telephone questions, etc. Many of the managed care plans are either slashing the amount they pay doctors for lab tests or else refusing to pay doctors anything at all for lab work. Many plans have contracted with huge labs at deep discounts (click) and now require that all test specimens be sent directly to that particular lab. Sometimes the lab is even partially owned by the insurance company, thus shifting additional profits to the insurance company and away from the doctor who is actually interpreting the significance of the lab results and caring for the patients. The insurance companies know that doctors will keep right on doing the same lab tests because we need that information to take proper care of our patients. They know doctors' offices must still provide all the services mentioned above in connection with each test; yet some insurance plans now deny doctors any compensation whatsoever for these services. The doctor must still exercise his professional training and judgment to interpret what the tests mean, decide what's next for the patient, and then communicate and document those facts; yet he is now being paid absolutely nothing for the entire process. There is no other profession (lawyers, electricians, plumbers, veterinarians) that is required to give away its expertise for free. Each and every decision a doctor makes always carries with it the enormous responsibility of potential harm to a patient if the slightest error is made by him or his staff. It is manifestly unfair that doctors are being denied any compensation for shouldering such serious professional responsibilities while at the same time being required to have an office full of skilled and
well-paid staff to provide those very services. Even Wal-Mart must mark up its merchandise and services to stay in business; yet doctors are now not permitted to do so.
RURAL PRIMARY CARE DOCTORS BEWARE If you are a doctor practicing in a rural area, you may not yet have felt too much impact from managed care; since the insurance companies have been concentrating mostly on dividing and then devouring the easy prey in the cities. You'd better brace yourselves, thought; because you're next as soon as the insurance boys feel they've got most of the city docs and their patients "under control." I urge you to learn well the lessons on this web site, talk amongst yourselves "off the record", and agree what sort of fees you need to earn in order to keep your practice solvent and the joy of medicine foremost in your work. Hyenas in Africa hunt by cutting a few weaker animals out of the herd and then all setting upon those few at once. That's the lesson... Good luck!
SALARIED PRIMARY CARE DOCTORS BEWARE A small but growing number of Primary Care doctors have left their private fee-for for-service practices and have taken salaried positions with large HMO clinics, hospitals, and teaching institutions. This is a one-way trip that some have chosen when offered an "acceptable" salary at the same time they were watching their private practice incomes dwindling. In today's medico-economic climate it will be virtually impossible for these physicians ever to return to private practice. However, these salaried doctors should not become too comfortable and complacent about the future of their "acceptable" (not great, but OK) salaries, perhaps feeling they've "risen above the fray". Those new salaries probably won't last long. The only factor keeping these physicians' salaries at their current levels is the need for the insurance programs to pay enough to siphon doctors out of private practice, onto their payrolls, and thus under their direct control. Just as the insurance companies suckered doctors into contracting with their HMO and PPO programs and then cut physician reimbursements once they felt their position was strong enough to do so, in the same way will they begin to cut the incomes of their salaried physicians once they have lured enough doctors out of private practice and onto their direct payrolls. Some Primary Care physicians are comfortable practicing in very large groups and argue that this frees them from administrative headaches and allows them to concentrate on practicing medicine full time. Further, they argue that being a part of a large group gives them negotiating power with the managed care companies. Well maybe, but then why do I keep hearing horror stories about the Primary Care docs in the big groups taking it in the shorts under managed care? Now, guys, I'm going to venture some personal opinions here (I can do that, it's my web site - smile); but please don't anyone take offense because what I'm saying is just my own opinion and is not intended to offend anyone. In my view, in these days of managed care, "Bigness Equals Vulnerability". To me the liabilities of being on salary with a big group (or clinic or hospital) far outweigh any potential benefits.
For one thing, salaried doctors often end up taking orders from "quality control" nursing personnel and other staff who critique and even censure them if they're "not seeing enough patients" per day or are "ordering too many tests". To me, the mere idea of being forced to take orders from some administrative functionary about how to practice medicine is unthinkable.
It is argued that a big group is in a stronger position to negotiate with the managed care companies, but I disagree. I think that in the long run large groups are actually in a weaker position to negotiate than solo practitioners and small groups because large groups are high profile targets (like lumbering elephants) that cannot turn and maneuver quickly, and they have enormous fixed resources and operating expenses which must be serviced no matter what may ultimately happen to their doctors' salaries. The insurance corporations know how to play hardball when dealing with a lumbering elephant whose weaknesses they fully understand (ie., doctors won't strike, doctors need those steady paychecks to feed their families, the clinic staff and mortgage must be paid no matter what, groups of doctors can't agree on anything, etc.) Consensus is difficult to achieve even when you're only dealing with the concerns of only 2-3 doctors, let alone the individual concerns and fears of dozens or hundreds of doctors. I believe that a well-informed (and that's the key, well-informed) population of doctors in solo or small-group practice can stymie the managed care companies far more effectively than a few behemoth groups. Once doctors have easy, open, reliable access to all reimbursement information at their fingertips (as pioneered on this web site), they are likely to begin making similar, intelligent (but individual) decisions for the welfare of their practices and their patients, decisions that will likely carry large numbers of Primary Care doctors down parallel paths, much to the chagrin of the managed care companies who thrive on stealth, deception, division, and confusion. Individual doctors can turn the direction of their practices on a dime if moved to do so. They can drop a health plan or add a plan to their practice with one word to their office manager. They can selectively shift certain selected small groups of their long-time patients (those with the bad health plans) back to fee-for-service while exposing themselves to relatively small financial risk. If doctors are all armed with the same facts about the insurance companies, they are likely to behave like a swarm of bees, dodging and weaving, but all moving in the same general direction instinctively, biting only in self-defense when necessary, but never providing a big, easy, lumbering, vulnerable target that can be taken out with a single shot the way the elephant can be.
And to me, the final, biggest liability of giving up the independence of "small-time" private practice is that if you are a doctor working for a salary being paid by someone else, even if you are 50 years old and a superb physician, you can be FIRED... for any number of goofy reasons, : If someone in power (often not even another doctor) decides you're not working fast enough or not churning through enough patients in a day to justify your salary. If someone decides you're ordering too many tests on your patients. If someone decides you're writing too many prescriptions (click) for your patients. If someone decides they don't like your views on managed care. If someone in power doesn't like the way you part your hair. If you simply won't "toe the company line"
I feel strongly that any Primary Care physicians who think they can escape from the woes of managed care by joining a large group or hospital clinic are making a one-way jump from the frying pan into the fire. The grass is not greener on the other side, and you're probably going to be much better off staying with your private practice and fighting the insurance companies from familiar turf, backed up by your loyal patients. It is not my intention to criticize physicians who have elected to practice in large groups. A doctor should be free to select any type of practice arrangement he or she chooses, but any salaried physicians who look condescendingly at those of us still trying to make a go of it in solo or small-group private practice should instead be thanking their stars that we're still here. If the insurance industry every succeeds in its unspoken (but very real) goal of total control of all of medicine, everyone's income (and perhaps even their integrity for some people) will be going straight into the toilet together. ABOUT SURGICAL SPECIALISTS Like Primary Care physicians, surgeons are highly skilled and dedicated professionals with very special training that most of us will probably need from time to time in our lives. Unlike Primary Care physicians, most surgeons are almost totally dependent upon a constant stream of new patient referrals from elsewhere in the health care delivery system; so they have been particularly vulnerable to takeover of their practices by the managed care insurance programs who can and do control such referrals with an iron hand. Surgeons, like Primary Care physicians, have been devastated by reduced reimbursements from "managed care" and are being paid far less than their training and skill should be worth. Personally, if I ever need surgery, I'd want to have the freedom to hire the best surgeon on town; and I wouldn't want him starting my operation feeling he was going to be underpaid for his expertise.