Recently I was asked to serve as a consultant on a medical matter.  Interestingly, they requested my hourly price for my services.  I thought about this and wondered, “What am I worth in per hour in the open market?”

It is an interesting question to ponder.

I have decided to ask the blog-o-sphere.  Call it a bit of “free market economics.”  For the record, 100% of my hourly wage for my services will be sent to our cardiovascular research fund at our hospital to avoid any conflict of interest.  I will not see ANY of the money the blog-o-sphere decides personally, but I really want to know what people think.

So where to begin?

Should I compare my hourly wage to MGMA standards for the annual physician salary of a physician of my subspecialty?  If so, do I pick the 50% percentile, 25th percentile, 75th percentile, or 95th percentile?  On what basis do I have to assure this is a fair price?  Who sets this price?  Are these data accurate or based on earlier years’ hospital data and physician surveys?  Can I verify that their hourly price is justified?  If so, how?  Or are their data proprietary?

Or maybe I should set my price based on the 2013 Physician Fee Schedule Proposed Rule? (I have no idea how to calculate it, but I’m sure there’s a per-hour number in there somewhere).

Or should I compare my hourly wage to other advanced medical professionals like cardiothoracic surgeons or neurosurgeons?

Or maybe, since primary care doctors are the most numerous physicians out there and I want to be fair, I should calculate my price based on their salaries?  Again, do I base my price on where I live and what I guess primary care doctors are making these days?  Should I base my price on their estimated gross salary or net salary?

Or what about other well-paid advanced degree professions, like lawyers?  Should I charge a price similar to a corporate law firm partner?  Or maybe just his junior partner?

Or maybe I should consider setting the price relative to some really smart hospital CEOs or COOs?  Should I compare my hourly price to theirs?  After all, they carry some pretty big responsibilities managing all those lives, too.

Or maybe I should take it a step further.  Maybe I should set my hourly price to others in the pharmaceutical, insurance, or medical device industry.  Wow, I wonder what their hourly price is if one considers not only their salaries, but benefits, stock options, and the like?  Our research fund might rock, then!  But at the same time, maybe this number will be too high and result in me losing the opportunity to consult.  Should I worry about this?

Or (what the heck), maybe I should I compare my hourly wage to a pro baseball player or a pro basketball player?   We’re professionals too, right?

Or maybe I should ask a patient who received a pacer from me at two in the morning and got through it fine, without an infection or other complication and lived to see another day what they think I should be paid.

Then again, maybe I should factor in not just what my price should be now, but what my price will be in 2014 when 30 million more people are added to our health care system and doctors are in short supply.

Seriously.  What do YOU think a doctor who is board certified in cardiac electrophysiology, cardiology and internal medicine with almost twenty years of medical experience charge to consult on a per-hour basis?

Think about it but be sure to justify your price per hour.  Then put it in the comments.  I’ll try to post your thoughts as fast as I can, given today’s clinical constraints.

If nothing else, this should be interesting.

Westby G. Fisher, MD, (aka Dr. Wes) is a board certified internist, cardiologist and cardiac electrophysiologist practicing at NorthShore University HealthSystem in Evanston, IL. He is also a Clinical Associate Professor of Medicine at the University of Chicago’s Pritzker School of Medicine. He blogs at Dr.Wes, where this post originally appeared.

Share on Twitter

12 Responses for “What Am I Worth?”

  1. Alan Crowther says:

    Dr. Fisher -

    As always, price is a communication of value between you and the customer. It is an exchange of information.

    While obvious, its worth reiterating …

    1) how much is your advice worth to them? You can’t charge more than it is worth to them.

    2) And how much do you value your own time? Your time is a precious commodity, and represents an opportunity cost e.g you could be doing something else with your time.

    The answer to these questions, even for the same problem, does not have to be the same for all customers and suppliers. E.g., a doctor down the street who is less busy but equally qualified might be willing to do it for less.

    That’s why every surgeon doesn’t get paid the same, not just on qualifications, but other factors (e.g., “I am willing to get paid less to work in Indianapolis, but the cost of living is lower and my family lives there, and that makes up for it – even though I am just as good as the guy at Presbyterian in NYC”)

    So, you could look at the baseline — your annual salary at an annual rate, and say that’s the minimum opportunity cost.

    But from there, you can add and subtract anything you want to it based on what you value.

    a) is this a really cool opportunity? Maybe then you can figure out how much less you are willing to be paid because its a really fun opportunity.

    b) do I want to maximize what I want to get regardless of how fun it is, even at the risk of losing the opportunity? Then figure out the value to the buyer and sell why you are the best to do it.

    c) etc.

    In other words, you hold the answer for you. And if the customer won’t bear what you want, you may get the chance to reset your expectations. And the customer may bear more than you ask. Does that bother you?

    Welcome to pricing, what everybody everywhere in markets much freer than the healthcare system do everyday.

    All that being said, I will make up an answer for you that isn’t right for you, but might be right for me. If its a very short effort (vs longer duration), I would add 50% to 100% to my normal hourly rate (e.g., the one that annualized equals my salary). It should be higher than normal to accomodate the inconvenience of “doing something different”, which includes billing and collecting after the fact (there is always a collections risk), and the fact that since you aren’t directly benefiting, you want it to be big enough to be worth your time, e.g. I would value the time I give on a charitable basis very highly to be worth it.

    The patient that received life-saving surgery may put very different value on your services :-) and maybe you put very different value on the time you spend with that patient then you do spending time with someone who wants your opinion for other reasons.

    That’s the beauty of markets. You decide what you are willing to do it for. And the market decides if it likes the offer. And only if both parties willingly agree, does a transaction take place.

  2. tomd39 says:

    Market value assumes that you are practicing within a market environment. You are not. It is an insurance driven market. If you truly practiced within a market environment, your skill level would be so rare and valuable, most patients that would need your service could not afford you. I don’t think health care can humanely operate within the standard confines of capitalism. I would prefer to see doctors at all levels work on salary while they care for anyone and everyone.

  3. Lynn in SC says:

    Consulting is different than practicing medicine, in other words you’re not being paid to make someone better. Clients pay for your advice and not to take it. Consulting is borrowing the client’s watch, telling the client what time it is, and then billing for it. I recommend you ask another health care consultant with 20 years experience what is their fee either hourly or daily. Plus don’t forget direct expenses. Without a project/client portfolio, my suggestion is $1,500 to $2,500 a day. The more you charge the better you are perceived to be.
    An alternative is to double or triple the hourly rate you’re paid for a legal deposition.
    One last way is what would you pay you for your services as a consultant, what would you pay for your advice?

  4. steve says:

    Charge enough to make up for your opportunity costs. If it is something you really want to do, you can charge less. If something you dont really want to do, charge more. If you think your advice will be seen as a Veblen good, as alluded to above, charge a lot.

    Steve

  5. Dr Fisher,

    I recently went through a similar exercise with a physician colleague to determine a ‘reasonable’ and ‘market based’ per diem or hourly rate for consulting purposes.

    We started with his net income over 4 years, then backed into a per diem and hourly rate equivalent, assuming an average work week. Then we compared those numbers to publically available benchmarks, i.e., MGMA, as well as known rates for expert witness testimony, etc.

    As noted above, this is an art and not science and the supply demand factors can not be ignored. Yet, here is two dated pieces (one life sciences and the other pharma) that may be of interest as the develop the ‘fair market valuation’ question:

    http://www.healthcareappraisers.com/Publicationpdf/AHLA_LifeSciences_0409.pdf

    http://www.polarismanagement.com/Publications/15%20-%20Demystifying%20Fair%20Market%20Value%20Determination%20-%20A%20Proposed%20Methodology%20For%20Determining%20FMV%20of%20Physician%20Honoraria%20-%20RXComp%20July%2004.pdf

    Thanks for bringing the question forward to the community. I will be interested in seeing the knowledge based develop, including any go to resources shared.

  6. SJ Motew, MD says:

    Echoing Tomd39, medicine and provider pay characteristics operate in an imperfect (non-Pareto) economic system, throwing conventional supply-demand factors and competition out the window.

    Where we are now represents a conglomerate of factors including demand relating to service needs (ie hospital needs neurosurgeons) and volume-based revenue (for both primary care and specialists).

    Unless there is a total reinvention of compensation models across the board, our current system will prevail in some form. The growing trend toward blended comp models including wRVU (still volume-based but ‘better’) and quality helps, but still falls short of a translatable ‘hourly rate’ for physicians.

    I have commented before that perhaps the most equitable system takes into account hard factors of time-based activity costing, risk and investment. Once again, assuming all physicians contribute to the well-being of the community and intellectual worth equally; hours worked, financial risk (ie malpractice), and time invested in training could be used to determine a conversion (hourly?) rate.

    To the original post’s point, where to set this and who will set this is the real issue. There would need to be a ‘switch-on’ perhaps mirroring a current 50%th percentile across the board. Such a system might improve economic market adherence and then settle-in to fair compensation.

    • rbaer says:

      I agree with Dr. Motew. And one should not forget that pay is heavily skewed towards procedures – why should the radiologist make substantially more than a pediatrician or neuroophtalmologist?

      It would be interesting to discuss that there are probably more examples of wages/pay representing market failures:
      -as always cited, executives earning 200 times of what a mechanic in his own company makes
      -the wages of staff flying regional air planes

  7. What is a soldier in Afghanistan (before he gets killed or maimed) worth?

  8. Deeter Prater says:

    Very interesting concept. I don’t care how you come up with your value and how or what your worth. For the consumer – and especially the ones with large per claim deductibles or no insurance I wish care professionals would openly list their pricing before care was given. To me it seems just and fair for both parties?

    Great questions but none of it makes sense since there is no pricing openly given. You take different reimbursements from Medicare, Aetna, BCBS, Workers Compensation and self-pays. What is fair? Maybe all of them should just pay the same? I have the same delima when I have my brakes done on my car. Dude tells me it’s $500 and all I know is I need it done. I have no clue what the job is actually worth.

  9. Ruth says:

    Charge enough so that you can charge again. Poll your consulting friends. Consider the demand, how well you satisfy it and how replaceable you are.

  10. Charge enough like ruth said. you have to think of replaceable you are.

  11. Gary Oftedahl says:

    Dr.Wes,

    As per usual, you’ve hit the nail on the head. While I’m looking at this from 2014, today, I have recently been approached about participating in a major planning effort on collaborative care for the complex elderly. Because of my 26+ year history as an internist, and a 12+ year experience at ICSI (Institute for Clinical System Improvement) in convening collaborative conversations, and creative ideas, I have an opportunity to be a “catalyst” in this planning process.

    But as I think you alluded in this excellent post, what is my worth? What can I charge that will acknowledge my 38+ years of experience, yet not drive the client from the door? What should I value myself at–as I’m personally likely to lowball myself.

    Because I have a conversation coming up tomorrow, and this falls outside my ICSI role, I suddenly have to move into an entrepreneurial role in selling myself–not easy to do. This piece articulates well some of the issues which I’ve felt emotionally, and while you may not realize it, is of value–as there is no PERFECT method.

    Thanks and I suspect you’re surprised that almost 2 years later, someone is visiting your blog’s comment section.

    Gary

Leave a Reply

Masthead

Matthew Holt
Founder & Publisher

John Irvine
Executive Editor

Jonathan Halvorson
Editor

Alex Epstein
Director of Digital Media

Munia Mitra, MD
Chief Medical Officer

Vikram Khanna
Editor-At-Large, Wellness

Joe Flower
Contributing Editor

Michael Millenson
Contributing Editor

We're looking for bloggers. Send us your posts.

If you've had a recent experience with the U.S. health care system, either for good or bad, that you want the world to know about, tell us.

Have a good health care story you think we should know about? Send story ideas and tips to editor@thehealthcareblog.com.

ADVERTISE

Want to reach an insider audience of healthcare insiders and industry observers? THCB reaches 500,000 movers and shakers. Find out about advertising options here.

Questions on reprints, permissions and syndication to ad_sales@thehealthcareblog.com.

THCB CLASSIFIEDS

Reach a super targeted healthcare audience with your text ad. Target physicians, health plan execs, health IT and other groups with your message.
ad_sales@thehealthcareblog.com

ADVERTISEMENT

Log in - Powered by WordPress.