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Tag: physician salaries

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.

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Doctors Going Broke

According to an article in CNN, some doctors in the U.S. are going broke. Read it here . I feel sorry for anyone who goes broke, but this is not unexpected.

According to the author, some doctors have unsustainable debt and are facing reimbursement reductions by insurers. A good question is why the unsustainable debt?  After all, many of our institutions have become bloated and can’t adapt to the economic downturn.

The article mentions a cardiologist who is going broke. According to a StudentDoc survey, the average cardiologist makes $403,000 per year. The average cardiovascular surgeon makes $558,719 per year. That’s not bad in either case.

My point is a lot of very highly paid people in every walk of life end up in bankruptcy. No matter how much you make, you can always spend more.  I believe the health care industry has been as guilty of over-optimism as the real estate and finance sectors.

People have been saying for years that many clinics and hospitals will face a solvency crisis brought on by excessive borrowing to fund sleek new facilities and excessive purchases of uber-costly medical equipment. Some doctors became wealthy during the good years, and some of them made purchases not easily retracted now that the economy has turned down.

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