Do Doctor’s Get Paid Too Much? Part 2

Stanley Feld M.D.,FACP,MACE

Alex Berenson’s article "Sending Back the Doctor's Bill" in the July 27,2007 NYTimes demonstrates the problems the mass media is having in a world of changing communication. Unfortunately, articles such as Mr. Berenson distort and misrepresent the facts.

Mr. Berenson says “Americans generally do not seem to mind the fact that doctors are well paid. In public opinion surveys, doctors usually rank as the most trusted professionals. Congress has repeatedly blocked Medicare’s efforts to reduce the amount it pays for each procedure doctors perform, even though overall Medicare payments to doctors are soaring and the cuts are legally required to keep the program’s budget balanced.”

It is important to study Mr. Berenson’s words carefully. He says “doctors usually rank as the most trusted professionals.” I believe that is true and is deserved. However, he and others are doing their best to destroy that public trust. The trust between a patient and physician (patient/physician relationship) is part of the therapeutic effect. Effective medical care is not a commodity. The therapeutic effect has a personal component that is being destroyed by our present environment.

Mr. Berenson implies that the government must “reduce the amount it pays for each procedure doctors perform.” He ignores the fact that the hospital charge for a procedure done in the hospital is greater than the physician charge to do the procedure. The hospital’s reimbursement is greater than the physician’s reimbursement for his skill and intellectual property. Recall the insurance company paid the hospital twice as much as they would have paid Dr. Westbrock if he was allowed to do the same x-ray.

Mr. Berenson’s last sentence is a warning. It should alert us to what we are in for with universal coverage, and single party payer system. It is socialized medicine.“Congress has repeatedly blocked Medicare’s efforts to reduce the amount it pays for each procedure doctors perform,” This is not true. Congress has decreased the percentage of reimbursement reductions sort by Medicare. Significant physician fee reductions have occurred yearly.

Mr. Berenson goes on to say “even though overall Medicare payments to doctors are soaring and the cuts are legally required to keep the program’s budget balanced.” Physician reimbursement has not been soaring. It has been declining. Hospital costs and administrative payments to the insurance industry have soared. The last phrase portends what we have in store for us with socialized medicine. We will see limitations to access of care, restriction of care and longer waits for care because it has to fit in a budget. We need only think of the examples of England and Canada.

The wonderful Surgeon's Blog by Sid Schwab touched on this the other day in a post called "Times Two."

Dr. Schwab is a general surgeon nearing retirement age who writes about the challenges in surgery. He has an excellent and informative blog.

He writes,
"Working hard for its own sake, striving for excellence without any tangible recognition will be seen in some -- but hardly most-- doctors if they go on a salary. Because, unsurprisingly (or maybe surprisingly, to pundits) that's not how it works in real life. I've been in the military, and I've worked at VA hospitals. Try getting a case on after three p.m. Try getting a lab test or Xray thenabouts. Work another patient into a crowded schedule? Stay through lunch, after hours, come in early? Sorry. That's what ERs are for. If Alex Berenson (the NYT editorialist) is ok with it, so am I. Sleep, I've discovered, can be a pleasant thing."

Princeton University economics professor, Dr. Uwe Reinhardt, pretty much the "go to guy" for health care economic theory responded with a letter that was published two days latter:

In “Sending Back the Doctor’s Bill” (Week in Review, July 29), you compare the incomes of American physicians with those earned by doctors in other countries and suggest that American doctors seem overpaid.A more relevant benchmark, however, would seem to be the earnings of the American talent pool from which American doctors must be recruited.

Any college graduate bright enough to get into medical school surely would be able to get a high-paying job on Wall Street. The obverse is not necessarily true. Against that benchmark, every American doctor can be said to be sorely underpaid.

Besides, cutting doctors’ take-home pay would not really solve the American cost crisis. The total amount Americans pay their physicians collectively represents only about 20 percent of total national health spending. Of this total, close to half is absorbed by the physicians’ practice expenses, including malpractice premiums, but excluding the amortization of college and medical-school debt.

This makes the physicians’ collective take-home pay only about 10 percent of total national health spending. If we somehow managed to cut that take-home pay by, say, 20 percent, we would reduce total national health spending by only 2 percent, in return for a wholly demoralized medical profession to which we so often look to save our lives. It strikes me as a poor strategy.

Physicians are the central decision makers in health care. A superior strategy might be to pay them very well for helping us reduce unwarranted health spending elsewhere.”

I believe you have heard that from me repeatedly. Someone should be paying attention.
I have followed Dr Reinhardt for years. He has finally figured it out. Bravo Dr Reinhardt! Maybe we have a chance. Maybe everyone will figure it out. Maybe a presidential candidate will figure it out.

Comments

[Eric]

Unfortunately your analysis, along with the previous comment are completely void of economic considerations. This is typical with Doctors who I have spoken with who tend to be short sighted and tunnel visioned. Sure, physicians in the U.S. make considerably more per hour than most other professions, but this is a capitalistic economy. Medical care must be analyzed in the same category as any other good and service, basic supply-demand economics.

The problem is, doctors are trained in medicine, and usually very narrowed areas of medicine. For this reason, they, including some in my own family, usually justify their salary based on the "price they had to pay" to become a Dr. through years of training. The fact is, many professions require years of training,long hours and great responsibilities. These are not reasons why doctors are paid high salaries.

Doctors are paid high salaries because the market allows them too. Of course, this is not limited to doctors, many professions in the medical industry, including insurance, have the potential to draw high salaries.

Whatever your "opinion" about the pay of medical providers, including doctors, it should stem from a economic analysis. I can not listen to another Dr. talk about how much training they had and how many hours they work. I am ending 11 years of high education, at the cost of med. school, for my profession this year and will not even graduate with a terminal degree. The average salary for my profession is under 50k a year.

One more thing. You say that "About 10% of people use up 90% of healthcare costs... distributing costs will only make the average person pay more out of their pocket for healthcare." We are have redistribution of health care cost, its called group insurance. On top of that, I know for a fact that med. provides over charge for services to make up for the drastic number of patients that can not or will not. pay.

[Richard]

I have an MD and a PhD degree, and I can tell you the PhD life was awesome– 40-50 hours a week, weekends off. Being a doctor is a completely different world. I work 90-110 hours a week (I’m a surgeon), and I don’t have a choice, I don’t get more than 2 weeks vacation a year, and when I am at work I am working 100 times harder than I ever did during my PhD years. 4 yrs college + 4 yrs med school + 4 yrs PhD + 7 yrs surgery residency + 2 yrs fellowship = TWENTY ONE YEARS. The most I’ve ever made is $65,000 per year. I went into medicine because I loved science and a challenge, and not for the money, and I can tell you if I had done it for the money, I would have quit this career long ago. My brother is in the marines (who make almost nothing), and he has a house and property, whereas I have trained for 20 years and I still rent, and I own a car that's 15 years old.

Secondly, the health care system is way overloaded (as evidenced by the number of hours I work). People should do their research before commenting on the pay of doctors and surgeons. First of all, physician pay is less than 5% of health care costs. Secondly, the reason physicians in the US get paid more than other countries is because doctors in the US work almost twice the hours on average than in other countries (which is part of the reason wait times in the US are miniscule compared to other countries). If pay is regulated for physicians, I can guarantee physicians will do more to regulate their lifestyles, and good health care will be in severely short supply.

Also, if you think socialized medicine will decrease how much you pay for healthcare, think again. If you are an average american making $40k a year, you will all of a sudden be paying not only for your care, but subsidizing the care of millions of people who sit on their butts all day with their diabetes, COPD, vascular disease, renal failure, obesity, etc. About 10% of people use up 90% of healthcare costs and resources. So distributing costs will only make the average person pay more out of their pocket for healthcare.

Also doctors in foreign countries go right into med school from high school, and tuition is paid for them! US doctors spend years more studying medicine and science, and go into extreme debt to do so, and by the time they finish training they have worked more hours than most people have worked by the time they retire.