Physician Pay: A Big Driver of Health Care Costs?

January 19 01:00 2012 by ushadmin

With all the discussion in this country about the 1% versus the 99%, it is a good time to address a reader’s question about physician pay and how this affects health care costs.

A recent McKinsey study states that in other developed countries, generalists earn double the income of the average worker, while specialists earn 2.7 times the average worker. In the U.S., primary care physicians earn five times more than the average worker and specialists earn ten times more than the average worker.

According to the study, based on these statistics, “The United States would have spent $120 billion less in 2008 if U.S. physicians were compensated in the same proportion to the national average worker as their counterparts in other developed countries.” This is about 5% of the total money spent on health care in the U.S. that year. That is big money.

There are a couple of significant differences in how physicians train and pay for training in the U.S. compared with other developed countries. In many countries, medical education is free. In the U.S., medical students graduate with an average of $161,290 in medical school loans that need to be paid back. One of my “doctor couple” clients graduated with a total of $500,000 of student loan debt between the two of them for both undergraduate and medical school.

Doctors in the U.S. also train longer – four years of college, four years of medical school, three to seven years residency where they are paid decent wages (though not the “big bucks”) and up to three years in fellowships where again they are paid decent wages. They go a long time with “deferred gratification” – they may not start earning top tier wages until well in their 30′s. In some other countries, undergraduate and medical school are combined into six years. There is not as much specialty orientation so a higher percentage of doctors enter their peak earning years much sooner than in the U.S. This builds strong primary care systems, and populations with strong primary care systems are much healthier than the U.S.

One other component of physician pay I rarely see addressed: The psychological angst of our litigious society and the demands for perfection in a field where perfection is not possible. Should this count for something?

We have the most litigious society on the planet. Contrary to popular belief, studies state that malpractice issues in the U.S. add only 1% to health care costs. This may be true from a dollar perspective, but from the psychological perspective of the physician, the costs are much higher. I will do an extended article on this in the future. Suffice it to say, it is stressful to try and be perfect and to document how perfect you tried to be in case something bad happens. No other country expects the perfection in medicine like we do in this country.

One time while practicing in the emergency department, I had a patient with continuous grand mal seizures who was likely to die if I did not get him paralyzed and hooked to life support. Just as I had given the nurse orders to administer the paralytic drugs so I could intubate the patient, there was a scream from a patient across the hall. I stepped out the door just to take a look. I was the only doctor in the department. The screaming patient rushed me, threw me over his shoulder, and started running toward the door. Though I think I am a giant, I weighed slightly over 100 pounds at the time. The security guard and nurses pushed us both down, I ran back to the now paralyzed patient, intubated him and saved his life. Not quite as bad as what our soldiers at war have to deal with, but still pretty stressful.

Imagine if the patient had died. I made a mistake. I had a nurse administer paralytic drugs and didn’t stay at the bedside, although I was only about four feet away. Thank goodness the nurse was with it enough to continue giving him oxygen through a bag and mask while I was being assaulted. If the patient had died, that could have been a huge lawsuit. Although most stories are not this dramatic, doctors in this country are held to an impossible standard that other countries deal with much more compassionately. How should that be compensated?

So are physicians in the U.S. paid too much? Some are, some aren’t. If we could correct the disparities physicians face in the cost of their education, and the angst of being required to practice perfect medicine in an imperfect world, I bet more physicians would be open to a decrease in compensation. For that to happen, change will need to occur from all sides.