Are Doctors Paid Too Much? Behind Medicine’s Nasty Little PR Problem

Screen Shot 2014-06-20 at 11.28.40 AMOn the front page of last Tuesday’s Wall Street Journal was this headline:  “Taxpayers Foot Big Bills from Handful of Doctors.” It is a two-page story about a clinician whose practice drew attention from the WSJ research team that combed through the recently released Medicare Utilization and Payment database released in April. They wrote:

“Ronald S. Weaver isn’t a cardiologist. Yet 98% of the $2.3 million that the Los Angeles doctor’s practice received from Medicare in 2012 was for a cardiac procedure, according to recently released government data…The government data show that out of the thousands of cardiology providers who treated Medicare patients in 2012, just 239 billed for the procedure, and they used it on fewer than 5% of their patients. The 141 cardiologists at the Cleveland Clinic, renowned for its heart care, performed it on only 6 patients last year. Dr. Weaver’s clinic administered it to 99.5% of his Medicare patients…”

Lets face it: curiosity about what other people earn is a national pastime. Pro golfers qualify for their tournaments based on their publicly accessible official winnings. NFL agents bargain for their clients based on position-specific compensation comparables. We are frequently reminded that members of Congress “officially” earn $174,000 plus attractive perks, and of late, executive compensation for most of America’s public companies has become a major focus for Board Compensation Committee’s who are being pushed by shareholders to reign in their generous comp packages. So it’s understandable that physicians bristle at stories like this one. We would as well if in their shoes.

Here’s why the story is particularly challenging for the medical profession:

1-Physician income is high relative to what most American’s earn. Though wide-ranging across the various specialties in medical practice, the ratio of physician income to the median income in the U.S. ($51,324) is from a low of 3.6:1 for family practice to 13.9:1 for the highest earning clinicians in radiology, orthopedics and others (and that does not include their income from ownership in surgery centers, testing facilities and other services). Physicians think they deserve to be paid more than any other profession, reasoning theirs is a higher calling, their debt higher (averaging $170,000 for the 86% that borrow for medical school) and their training and expertise more valuable to society than others. Stories like this draw attention to how much physicians “might” earn and lend to suspicions that belly-aching by some in their ranks claiming they earn too little is more about greed than the greater good. Income potential is important to everyone: physicians want to earn as much as they can, and keep score against their peers and other high-earning professions. Many feel underpaid; some indeed are. But relative to what’s made in the vast majority of households, they are well paid.

2- Physicians practice in a high profile industry and the spotlight is getting brighter. It’s 17% of our GDP, 28% of the federal budget, 34% of a state’s budget, and 9% of household discretionary spending. It impacts every one every day—in the costs of what we buy, in the ways our wages are set and in the intense political debate about health reforms to keep Medicare solvent, increase access to affordable insurance and holding down costs. The release of the Medicare Utilization and Payment Database represents another layer of transparency about physician behavior that’s accelerating at warp speed. Aptly, the Wall Street Journal’s story about Dr. Weaver’s practice is part of its series “Secrets of the System” dating back 3 years. USA Today calls its current series “Medication Generation” and Elizabeth Rosenthal’s New York Times series “Healthcare’s Road to Ruin” are prominent in top tier coverage, not to mention the blogosphere and social media fascination with healthcare’s complexities, conflicts, deals and personalities. What physicians do and how much they earn is part of the new normal in healthcare wherein transparency is an end in itself.

3-Physicians and other stakeholders in the system have inadequately addressed the issue of medical necessity in the profession. Medical necessity is a tricky issue. It presumes a binary assessment about a possible treatment: either it works or not. But it’s not that simple: the signs, symptoms, risk factors and co-morbidities that factor into a diagnosis or treatment recommendation are complex. Evidence is scant for some treatments. And the data upon which the determination of “what works best and how much” is rarely accessible to a practicing physician for two reasons: 1-most physicians don’t have hard data about their practice patterns, outcomes and alignment with evidence-based practices due to the costs of these systems and 2-they believe outsiders—especially health insurers– have no legitimate standing in the important discussion of medical necessity. If adherence to evidence-based healthcare was the focal point for the profession, disclosures about each physician’s adherence to evidence-based practices, outcomes, and patient experiences would be readily accessible today. Disciplinary actions against physicians who abuse would be higher and hospital privileges yanked faster. And for sure, insurers would be quicker to drop them. But that’s not the case.  If unnecessary tests, surgery and medications represent 30% of unnecessary health spending in the U.S. per Dartmouth, attention to a remedy by the profession and by the rest of the stakeholders is not readily evident: for sure, it needs to involve liability reform, but much more. For many clinicians, fear of being sued is merely an excuse to practice medicine as they choose with limited accountability to their patients, payers and peers for medically necessary care. It’s an issue the profession must face head-on.

The bottom line: The presumption that a physician might practice with unfettered autonomy and protected privacy is a legacy of a by-gone era. Modern medical professionals understand the profession’s changing. They acknowledge they practice in the spotlight and know their reputation is increasingly dependent on  “hard data” about their clinical practice patterns and outcomes preferred by health insurers, employers and individuals.

Schools of Medicine face a daunting task of implementing reforms that equip their grads to practice in the new normal. Teaching hospitals face incredible responsibility to immerse residents in clinical practice that’s consistent with technology-enabled, team-based care management. Medical groups and health systems face responsibility and risk to measure the performance of their affiliated physicians and weed out bad actors prone to unnecessary care.

Most physicians love the practice of medicine. They resent intrusion by outsiders of any stripe—media, insurers, administrators, and even their peers. Physicians are understandably frustrated by stories that paint the profession unfavorably. Like any profession, there are bad apples. But medicine, whether they like it or not, is in a uniquely sensitive spotlight that’s likely to grow brighter.


20 replies »

  1. The one argument that I continue to find flawed is that a physician pay has to be high or the best and brightest will figure out other ways to pursue high earning jobs. I don’t think that’s actually true, and those who excel at medicine may not necessary be built to attain success in other fields.

    In other sectors, the attributes and skills that make a physician valuable (such as memorizing facts/figures, pattern recognition, getting high grades on a multiple choice test, etc.) aren’t necessarily to correlated to getting jobs in other high value professions. In things like finance and law networking is crucial; being able to advise and persuade clients. In programming, being able build projects and to solve coding problems are different than diagnosing problems. I once worked at a health tech company who had a non-coding MD as a founder; he said he would have failed out of school if he went into comp sci since he just didn’t understand it and couldn’t get the hang of it.

    I think MDs over-estimate how much better they would fit in different fields without actually trying to do those other jobs. MD’s benefit from a workplace where they have a huge power and salary differential between other staff and patients. Such a power differential does not exist in other fields, where other professionals actually have to persuade their clients. MD’s also say that their job is a calling; if that’s the case then working in a field that has less direct impact on people may be less satisfying and more gruelling.

  2. I don’t understand why this continues to be an argument that a physician deserves to be paid more for longer training time compared to the average American citizen.. If that’s the case, PhD’s with a post-doc should earn the same type of pay. They may have to do a Master’s (1-2 years), PhD (5-7 years) and a Post-doc (2-3 years, maybe longer) which could take longer then a physician’s training. Certainly, most PhD’s don’t earn more than physician. What about people with multiple degrees?

    I also find it jarring that on one hand physician’s claim it’s a higher calling and altruistic satisfaction, but also need to be paid well (at least 4 times more than the population they serve). On the one hand physician groups’ often point out how they help others. It would be far more refreshing and honest if a physician just admitted that money and earning potential, while not being the most important factor for their job, is certainly a major factor when entering the profession.

  3. So if we just paid doctors more, they wouldn’t overtreat with dubious therapies that don’t optimally address the root causes of the ills of their patients? Perhaps you are on to something Dr. R.

  4. What we make is controlled by fee schedules that others have created. Those of us who make the most can’t control volume ( radiologists,radiation oncologists, ophthalmologists) as they are referred to, not referrers, and pretty much have to work with patients who are sent to them. It’s the design of the RVSs and the poor screens by the payers, along with some physician corruption–more or less than other occupations?–that allows some of us to make a lot. Everyone in this health care culture makes a lot….from the housekeepers to the nurses to the administrators., insurers and investors.
    We all want it to grow and cause more money to flow through the sector. The only time we feel cost conscious is when a patient is paying for something all by himself.

  5. Hmmm. What has price fixing done in UK? The proportion of foreign nationals increases for professionally qualified clinical staff (14%) and even more so for doctors (26%), prompting the British Medical Association (BMA) to observe that without the contribution of non-British staff, “many NHS services would struggle to provide effective care to their patients”.

    We have a free market and save the economic uncertainty of the last decade, we would see the same erosion of US healthcare.

  6. The perception, and in many cases reality is that physicians unfortunately too frequently fail to visibly deliver on the value proposition to their patients. Hence, if the public fails to clearly identify the value of the services being purchased, then physician compensation will seem mismatched.

    The principle “consumers” of healthcare, being both patients and payers, are noticing that the assumed quality, access, service and outcomes are not delivered on a consistent basis. Recent measurements such as international rankings of cost and health outcomes as well as patients’ actual experience further reinforce the value gap.

    If we as healthcare providers can consistently deliver on the professionalism that is expected, few will remark that the services are overvalued and that physicians are overpaid….most will note, that healthcare indeed is priceless.

  7. Most national health plans still rely on some version of fee for service.

    But the fees are much lower to begin with for most cardiac procedures.

    And if there is a “run” on certain procedures, the fees ratchet down very quickly.

    If CMS were to simply slash all cardiac fees down to $5,000 or $10,000 per procedure, leaving out transplants and multi-vessel repair, I doubt that America would be worse off.

  8. A Medicare patient with a trimalleolar ankle fracture needing surgery is NOT seen by two different orthopedic surgeons at two different hospitals as an opportunity to: a. practice medicine and take care of the patient, and, b. an opportunity to bill and get paid for the service.

    This tells me there is not enough profit motive in the specialty of orthopedics. Right or wrong, the market rate for the service must be higher than that offered by Medicare, at least for after hours emergency coverage when it is not your hospital calling and not your EMTALA obligation.

    Short version: docs not paid enough (for this).

  9. Uwe Reinhardt Princeton’s Madison professor of economics who I don’t believe to be a friend of fee for service medicine said it best when he responded to a NYTimes article.

    What Doctors Make, and Why
    Published: August 5, 2007
    To the Editor:

    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.

    Uwe E. Reinhardt

    Princeton, N.J., July 30, 2007″

  10. Aneurin Bevan, the founder of NHS, that great bastion of collectivism, altruism and self sacrifice, when asked how he persuaded the British Medical Association on board, he is reported to have said “I stuffed their mouths full of goal.”

    Doctors pay does not reflect their greater calling, otherwise priests ought to be millionaires, or some bizarre idea of fairness. It’s a reflection of opportunity costs.

    The fact that many physicians would advise others not to go in to medicine, or perhaps would not go through the whole process again if they knew then what they know now, means that we are already treading on the very thin edge of the “worth it factor.”

    Bevan, the archetypal socialist understood this. It amazes me that this simple fact is so incomprehensible to many in one of the most capitalistic countries ever.

  11. Right. The big story is how does a huge organization like CMS get hood winked so easily? They have tons of admin and auditors. Are they inept, stupid, aloof? Why do they need the “public’s help” understanding their own data? Why are they the largest purchaser of fraud in all the payer systems?

  12. I believe that you have mistitled your article “Medicine’s Nasty Little PR problem” as the evidence you presented suggests a better title: “Medicare’s Nasty Huge Data Review and Billing Problems.” The fact that a non-cardiologist could bill and get paid over and over again for a little-used cardiac procedure shows the flaws in a billing system. When the overall payment system is constructed as fee-for-service, reasonable people expect others to try to cheat the system and build in technology to assist to identifier outliers. There does not appear to be enough reasonable people at Medicare billing based on the stories coming out about physician payments for 2012.
    As to physician income being high relative to what most Americans earn, well, I like to think that the market pays what the market believes physicians are worth. As many physicians are now employees of a health system, the physician’s worth is either described as a profit center or a cost-center, depending on their role and what can be negotiated with the system. Independent practices are going out of business on a regular basis, so I doubt that physician income will continue to be high. Given that creating a practicing physician takes anywhere between 11-16+ years of constant higher education after high schoool graduation, along with ongoing maintenance of certification education requirements with repetitive board exams, more rules and laws that I care to count, and the constant interruptions to my personal life, a physician’s salary should reward the effort expected and given. Otherwise, if the rewards are insufficient to the effort, the very ambitious and educated person (lazy people do not go to medical school) will figure out a better place to take their talents.
    While you are right that most physicians love the practice of medicine, you are wrong about resenting the intrusion. Most physicians train as a group, work best in groups, and want to do the right thing for their patients, so they welcome those who can help improve their patient’s lives while working with the group. What anyone resents is someone else coming in, claiming the high ground, and demanding that you do this or else, like some of the consultants hired by hospital senior management to optimize practice returns on service lines instead of quality.

  13. Physicians are generally very well paid and should be — for obvious reasons. My concern is that in spite of high rates of compensation many physicians say they feel burned out and have low levels of professional satisfaction. How can we as a nation achieve the kind of access, quality, equity and affordability to which we aspire with so many doctors feeling a sense of alienation about their professional lives? One of the most patient-centered things we can do is to recognize the root causes of the doctor crisis and take steps to fix it. This is not rocket science. Look at some of the clear anc relatively simple recommendations from the Joy in Practice team — Sinsky, Bodenheimer, et al — and you see very specific and doable steps that help improve job satisfaction among primary care docs. The same with the flow in ambulatory care work pioneered at Virginia Mason. If health care stakeholders recognize the reality of the doctor crisis and act to mitigate its causes, I believe we will make significant strides in improving primary care in particular. I am not saying doctors are victims. I am saying that they need our help right now — help from all stakeholders. Let’s recognize the issue and act upon it.

  14. You reveal your bias with statements …

    Physicians think they deserve to be paid more than any other profession, reasoning theirs is a higher calling, their debt higher (averaging $170,000 for the 86% that borrow for medical school) and their training and expertise more valuable to society than others.

    You present no evidence for this assertion, nor does any exist. I assume you are auditioning for a spot on Fox News. Physicians want to be paid a fair wage. Some are greedy. Others are less avarious.

    For many clinicians, fear of being sued is merely an excuse to practice medicine as they choose with limited accountability to their patients, payers and peers for medically necessary care.

    Yep. Some of my best friends are doctors …-