• Doctors struggle to make ends meet?

    I’m already preparing for hate mail.

    So I open up my email this morning to find a gem from the WSJ, entitled, “Doctors struggle to make ends meet.” Usually, when I hear that phrase used, it’s describing the plight of the poor, unable to figure out how to make a mortgage payment, pay off medical bills, and still find enough left over to put some food on the table for the family. That’s what “struggling to make ends meet” means. This? Not so much.

    To be fair to the author, I’m sure she didn’t choose the title. In my experience, editors do that, and they sometimes choose catchy titles that are inflammatory and don’t, perhaps, truly capture the flavor of the piece. That is sort of the case here. It’s not really an article about a doctor struggling personally, it’s an article on how a doctor is struggling to keep his practice profitable. That practice sounds like a very nice place to be cared for:

    His family practice uses electronic health records, calls up patients at home to check on their progress, and coordinates with other specialists and hospitals—all the things that policy makers and insurers say should be done to improve patient care.

    Recently, the practice has been upgraded to attempt to qualify for anticipated future incentives for a “medical home”. In essence, we’re talking about more accountable care and paying for “quality”, not “quantity”. But there’s a problem. Getting ready for those new incentives ain’t cheap:

    For a five-doctor practice, the Advisory Board Co., a health-care research firm, projects the total first-year cost at between $126,000 and $346,500, including two added nurses.

    The upshot: Doctors fear a squeeze as they try to ramp up changes in tandem with evolving reimbursement schemes. “You’re asking a practice that may be only marginally viable as a business to invest in significant infrastructure,” says Glen Stream, president of the American Academy of Family Physicians. “Is the payment model going to be there to support that?”

    I’m sympathetic to this argument. I often offer the following thought experiment when I’m giving talks: Imagine you see 20 patients a day. Now the insurance companies comes along and tell you that if you improve “quality”, you can receive a 5% bonus in your salary. But it will be very hard, and very expensive, to set up a new system to do this. You’ll need to buy a better EHR, hire another nurse, pay for more office staff to do documentation, etc. Then, maybe, you’ll qualify for that 5% bonus. OR, you could just squeeze in one more patient towards the end of the day.  That will also increase your salary by 5%, and you won’t have to change anything about your office at all.

    Which do you think a doctor would choose? And, when he squeezes in that patient, all other visits get shortened by a  minute, and everything gets worse. This, by the way, is one of the reasons I think sticks are as necessary as carrots.

    But back to the article. It reports that some doctors are choosing to go work for hospitals or large groups, with the necessary infrastructure in place. That’s sad for those who like to be in private practice, but again – that’s not “struggling to make ends meet”. It’s a changing marketplace altering the way medicine is practiced. It happens in lots of fields. At least the doctors aren’t losing their jobs. But this misses the main point I want to make:

    With the money from the nonprofit’s medical-home pilot project, Westminster roughly broke even last year, with a profit of $29,261. The practice distributes its profit as bonuses to staff; the result is adjusted to account for the effect of splitting off Westminster from another practice with which it was once merged.

    Time to get real. The clinic still turned a profit last year, in one of the worst economies anyone currently alive has ever seen. That’s… pretty good. It’s certainly not something to go gripe about. It’s certainly not “struggling to make ends meet”.

    But, again, we’re missing the larger picture. Every time I see a piece in the media about doctors complaining about money, I cringe. What the article fails to mention is that the clinic is “struggling” because it’s also likely paying its physicians a nice six-figure salary. There seems to be this feeling that many (not all) doctors share that they are “entitled” to large salaries. Yes, they have a high cost of education, and yes, the years of training they had to go through is extreme. But still, when your nice six-figure salary becomes a slightly lower six-figure salary, you don’t get to go around complaining that you’re “struggling to make ends meet”. It’s sad for you. It’s going to make your lifestyle a little less awesome, likely. I’m not unsympathetic. But consider your audience.

    Unemployment is really high. Many have lost their jobs, or have not seen raises in years. People are hurting. While it’s a fact of life that this is a capitalistic society, and people are going to make more than others, it’s somewhat unseemly for those still doing pretty ok to complain so vocally. Moreover, it’s not something you’d want to do in public, in a high profile media outlet.

    Doctors not only make more in this country than in any other country, they make far more than our wealth would predict. One in five physicians is in the top 1% of incomes, making doctors more likely than any other profession to make it there. It’s possible to explain how this incentive may be not only tolerable, but also desirable in attempting to achieve a high quality health care system. But it’s time for us to find a way to do so without crying poor and telling sob stories to others who literally are “struggling to make ends meet”.

    @aaronecarroll

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    • At the higher end of the income distribution (maybe anywhere in the distribution, but for some reason it seems more prevalent at the higher end), people compare their economic position almost exclusively to those above them. The top 1% mainly compare their situation to the top 0.1% (the college roommate who went to Wall St. without having to suffer through a medical residency).

    • The WSJ article fails to mention if the physicians profiled have “taken a hair cut” in salaries so we don’t know. But salary/income data from a variety of sources continue to show that primary care providers are among the lowest compensated physicians in America. PCPs employed by the British NHS earn more than the typical American PCP. I;m willing to bet the staff of these physicians hasn’t had a raise in three or four years and may not have health insurance, which is typical for many small independent practices.

      What the WSJ article does demonstrate is the perverse economic incentives in American health care structure…do the right things e.g. improve your information and practice more conservatively with higher value and be economically penalized. We certainly don’t expect our auto mechanic to work under these circumstances.

      The changes in revenue flows required to sustain a more affordable rate of increase in our healthcare expenditures are NOT yet in place to encourage changes in provider behavior. We are still rewarding sick care and not health care. Is this the penalty for anticipating the future?

      • So much to respond to. Let me start with the end of your comment. I think that we have not yet created the policies and infrastructure that will reward this kind of forward thinking. I think we need to change that. I don’t think ACOs will do that, and I’ve explained why in this blog a number of times.

        I also agree that primary care docs are rewarded less well than specialty docs. Please do remember I’m a pediatrician (and an academic one at that) so I know where I am on the food chain. Real raises have not happened for many physicians I know for some time. But still, almost everyone I know earns comfortably into the six-figures.

        Do they have loans? Yes. Are things harder than they used to be for some? Yes. But the health care industry has fared this recession better than most. And it’s far too tempting to keep comparing physicians to the very few people who make more than they do, than to the vast majority who make less.

        I am NOT calling for physicians to make less. I’m asking them to consider that they stop complaining about how much they make so publicly. It is not going to fare well for them in the long run. That’s my opinion, at least.

    • Your post all but drips of bitterness. This is a classic, “I couldn’t do it, so lets criticize those who could” tirade. The fact of the matter is that Americans who are poor and struggling right now are those that made a decision not to prioritize education or who foolishly expected that a Bachelor’s Degree means anything at all. Those with professional, Masters, or even Bachelor’s Degrees in the STEM fields are having a field day. Life is great for us, because we are living in a knowledge economy. The average specialist MD has a training pipeline of no less than 12-14 years. Turn that number over in your head a few times. 12-14 years of 90+ hour work weeks which are rewarded ultimately with a further lifetime of “merely” 60 hour work weeks spent dealing with a litigation happy, compensation light work environment bracketed by sky high licensure costs and malpractice insurance payments. Now lets talk about tuition. It runs about $25,000/yr at state schools. Add in $10,000 for room and board in case you have a Taxi Driver for a father like me, who can’t afford to pay for his own rent much less yours. $35,000 * 8 years = $280,000 in debt by age 25. Now add 7.8% interest to that tacked on annually for the 6 year post graduate residency period during which you make about $30,000/yr and can barely afford to buy baby food. Yeah, we have children too. Because you know, we are still in training in our late twenties and early thirties.

      So that is an extra $120,000 or so in deferred interest payments.

      Now tell me again how much money we make? Because I’m 31 and I have $400,000 in debt. And my wife has $350,000 which I also have to pay off because she works part time and takes care of the children.

      Lets compare that to the friends I went to engineering school with. We graduated from Grad School together w/Masters in Biomedical Engineering. They got jobs and I went to medical school. In the nine years since then they have earned $900,000 each. Most of them now have MBAs paid for by their employers and are now mid level managers in the fastest expanding tech sector this side of cell phones. They all make between $150-250,000/yr, have no debt, mortgages half paid off, the nice BMW company car, the pleasant 40 hr/work week and the 401Ks.

      That’s who you compare doctors to. Not Tom, Dick, and Harry High School dropout. People make a decision not to pursue education. My father is a cab driver, my mother a waittress. I went to school in a Dropout Factory in the Bronx. Didn’t hold me back much.

      I have no sympathy for poor down on their luck americans. I was that poor down on my luck American until I did something about it.

      Now after decades of work, you think I feel entitled to a 6 figure compensation? You are damn right I do. What would you expect if you had put in all the work I have?

      And as for Market Forces? I got my Medical License in India a month ago. I am writing this from New Dehli. Guess what? I make a $1000/cataract surgery here in cash and there is no income tax. I am doing 90 surgeries a week, 18 are probono. That’s 20% pro-bone procedure rate, unheard of in USA. At $72,000/week I am doing much better than I could have in America.

      Here is the thing about that. About 30-35% of medical students in American Medical Schools are Asian. At least another 5% are from other foreign countries. What happens when 40% of new American medical graduate realize they can make >5X as much money in other countries like India, China, and Brazil, where an American Medical Degree is like a platter of pure platinum? We already have a shortage of physicians in the US, its about to get much worse.

      You are the economist, you do the math. Supply and Demand. There is a lot of Demand in the emerging markets. And there is money here too. Once American Medical Grads start looking out…then you are going to realize the folly of thinking you can dictate terms to some of the smartest, best educated, and most adaptable members of Society.

      There is no such thing as putting an educated man into a corner. We always have options. Not even Hitler could get a hold of the truly wealth Jews he was after. They all fled long before he could do anything about it and they watched WWII from safety. So too it is with Doctors like me. If you think you are going to put me in a corner and decide what I can and cannot make, I got news for you. I speak 5 Languages and can use them to communicate with at least 2 Billion people. If don’t want me around, I got plenty of places I can go.

      • Are you talking to me? Cause I think you have me confused with someone else. I’m a pediatrician, not an economist. I went to medical school, I did a residency, and I did a fellowship. And I’m perfectly happy where I am. I’ve written extensively about my thoughts on training and practice here on the blog.

        My father is retired. He was a general and thoracic surgeon, who was triple boarded in critical care, and ran a trauma unit. He made way more than I do, and I don’t begrudge him it at all. You will never, ever hear me complain about the fact that I make less. In fact, you will never, ever hear me complain that I make less than other specialties today.

        You know why? I chose this job. This is what I wanted to do. And yes, there are still times that I feel under-appreciated, or when I feel like I still deserve more. But I make those arguments to my superiors, or to my close friends and family. I don’t complain to my patients, I don’t complain to the public, and I don’t write editorials about it. Physicians are still doing pretty well. We seem to be one of the few professions where people who make six-figures keep threatening to quit.

        • Well if your main argument is that doctors shouldn’t complain to the public, and shouldn’t write editorials about it then I suppose I agree with that. It does seem to be in bad taste to complain to the public. On the other hand If you are saying that what is happening with dropping physician compensation is OK, then I have an issue with that.

          But just to say that we shouldn’t complain so loudly in public is probably right. I’ve read the WSJ article just now….maybe that is not the most constructive use of a WSJ editorial…

      • “Now after decades of work, you think I feel entitled to a 6 figure compensation? You are damn right I do.”

        You’re not entitled to anything. You feel entitled, but you’re not.

        If you have a stroke tonight and can never work again are you entitled to earn 6 figures because you already spent 6 years in a post graduate residency? You think people should just fork over whatever you say you’re worth and shouldn’t walk away if they think it’s too much? How could those other, lesser people possibly judge what you’re worth? They should just defer to your judgement.

        I suppose I should invoke Godwin’s law as well for your foolish and truly stupid claims involving Hitler, but I’ll stop here.

        • Actually I am entitled to that compensation. For the simple reason that I provide a service which is highly valued and which others cannot provide. That is really simple economics. If you could convince people to let you do eye surgery on them, you could command the same prices I do. Are you also going to tell me that Rocket Scientists and Aeronautical Engineers aren’t truly entitled to their compensation? Can anybody do what they do? Sure anybody can, but I’m not flying in that airplane.

          The assumption of value is based on the delivery of quality. I worked very hard to gain competency and skills. Skills which you do not have. Thus, in exchange for my services you provide me with equivalent compensation. That’s how life works since Cavemen walked around.

          As for people not paying me what I am worth, you are right. I felt I wasn’t getting fairly compensated in the US, so I left. Guess what, there is a whole world out here full of people deprived of access to the solid high quality American grade medical care that I provide. So I went to where I was wanted. Simple as that.

          As for the Hitler thing, listen, those are just the facts. I didn’t write history, I just learned from it.

          So yeah, I do feel entitled to a 6 figure compensation and if I had a stroke tomorrow I would continue to make that amount of money because I have a Physicians Disability Policy which guarantees my income indefinitely. I find nothing in these statements that I would need to apologize for. Work Hard. Get Ahead. That’s just the American Dream. You got a gripe with me about that? Read some american history.

          • Doctors in India don’t make that much. $72k/week.

            Doctors in America are paid more than they are worth because artificial scarcity is created. It’s a political game.

            If doctors were so valuable how come they don’t earn as much in other countries?

            Doctors are not the only ones who work hard. While doctors might study hard, others work hard, at their place of work.

      • Maybe there’s a solution: get rid of fee for service. I’m not suggesting going back to the bad old days of capitation (the dreaded C word of the ’90s), but there are ways to structure payment that make it feasible for primary care practices to get off the gerbil wheel of running patients through exam rooms in order to make ends meet and begin providing excellent care. There are plenty of models out there: Group Health Cooperative of Puget Sound medical home is just one.

    • 1) One reason doctors make as much as they do is lack of competition. The government places severe limits on who can practice medicine. As in any market, restricting competition raises prices for patients and raises doctor’s incomes.

      As far as I can tell, few if any doctors believe themselves to be the beneficiaries of government largess.

      2) The WSJ has a consistent policy when writing about income and benefits. In summary, there are two general paradigms: unionized public employees making $50,000/year are sitting in the lap of luxury and any benefits they receive are a gift rather than bargained for compensation, while professionals making over $200,000 are struggling to make ends meet and therefore we must lower their taxes. The article you link is yet another in this long series.

    • As Dean Baker writes, being a doctor is a protected field in America. That is, we could, in theory, relax the entrance requirements for foreign doctors and thus get more here. This would expand the supply and increase price competition. You know, like we did with manufacturing in America. The assumption that docs HAVE to be paid x dollars has always baffled me. Why? Especially when you consider that out of the top 20 paying professions in America, subsets of doctors occupy 14 spaces; with docs taking the top 7 spaces (Dept. of Labor). If docs and the medical field costs too much, why do we not cut those costs? We seem quite okay with cutting pensions and wages of other workers- what makes docs so special?

      As far as the Galtian doc above: fine, live in India. India is great if you are able to rise into the elite but for the rest of the population? Not so much. No income tax? great. Potable water? If you are lucky. Sewer system? Harhar. Does one really need to be reminded of the truly horrid living conditions for most of India? If you feel so deserving of all your money while your fellow human being suffers unspeakable living conditions, well, as they say in the south, bless your heart. If you have one.

      • Firstly, the India you describe certainly existed, about 20 years ago. Now there is 4G here and Ferraris up the Yin Yang. The place is really coming up, like America in the 1940s. What was once true is true no longer. There is healthcare, electricity, sewage, etc. etc.

        Still there is incredible poverty in India. Unspeakable, indescribable poverty. The poorest Americans are richer than many Indians.

        It is true that there is a lot of poverty here. It is also true that that’s not really my problem. Finally it is true that as a member of the human race I do have some obligation to help my fellow man.

        That’s why I do what I can. From Monday to Thursday I take cash from those privileged few who can afford to and who choose of their own free will to pay me. On Fridays I do all my surgeries for free. 20% of all my work is charity work. You think I could afford to do that in America?

        • Maybe you could. I don’t know how much you feel you need to live; that is, what kind of lifestyle you wish: McMansions, private schools for kids, Ferrari, etc., etc…From what I have read, things have improved for the elite in India but for the vast, vast majority of Indians their country is a living hell of poverty and filth. That world is the choice of the Indian government; which in theory is the voice of the Indian people. In a Randian world view, yes, another person’s station in life is not your problem. If that is your world-view there is nothing I can say that would persuade you that we have a responsibility towards each other and that society exists because we cooperate.

          • I think you missed the part where I do 20% of my work for free. Do you spend one day a week working for nothing? How much more am I reasonably expected to do? Give all my possessions away and live in a Sewer? It is not within my power to fix all the wrongs that exist in India. So I do a little bit that I can and leave the rest in God’s hands. That does not make me an Ayn Rand Fanatic. That make me a pragmatist–actually an idealistic pragmatist, because I know a lot of Indian Doctors who haven’t done a pro-bono case in their whole lives.

      • How can you have price competition when prices are effectively fixed by the RUC? Price competition can only occur in a market, and there is no real market in health care. Every country in the world pays its doctors less than we do, but it’s not because more doctors but rather because prices are generally either set by government, or highly regulated.

        Like David R. I see the trend towards salaried physicians as a positive one, though I worry about market consolidation that’s going on as hospitals merge and buy up physician practices. They may be doing so in large measure to capture market share so they can turn around and charge private insurance higher prices. (Many salaried group practices are paid fee for service, but then distribute revenue in the form of salaries. That means the individual physician is less likely to want to maximize volume of services, but the institution as a whole still does, and it also wants to charge high prices per unit of service.)

        • Essentially the problem we are all grappling with here is the fundamental nature of the customer and the service provider or the employer and the employee. Both of these relationships are inherently adversarial. It is indeed a zero sum game. Either I am going to make less money or you are going to pay me more. Your loss financially is my gain, and vice versa. The question as in all things is not what is right and wrong, but who is the stronger, dominant party? For many years the stronger party have been physicians. We dictated terms and demanded compensation. Now the gravy train is ending and we don’t like that. We are losing control and becoming the submissive partner in the dance.

          For the consumer, this is certainly a victory. For the physician this is certainly a loss. So whether this is a good thing or not can be described only in subjective terms. It is good for you, but bad for me.

          For society as a whole? Declining physician compensation may be a good thing, an effective measure of cost containment. As an impartial outside observer I would agree that many trends happening with physician pay are good for society.

          That being said, I am not an impartial observer. I have a big stake in this race. So what is in my personal interest runs against the common good. Instead of trying to cut my pay, my focus is on making more money. That’s just human nature. And this is what I think most people don’t realize. You can come up with rules and regulations and on and on all you like. You cannot change human nature. And you can only push people as skilled as doctors so far.

          Very quickly, as I realized several years ago, many, many, many US trained physicians are realized more lucrative opportunities abroad. Their transition is further facilitated by the following 8 facts:

          (1) all the developing countries have major physician shortages.
          (2) there are ever increasing numbers of people in these countries who can afford to pay American medical going rates.
          (3) The existing medical education and standard of care in these countries is very low and the public is extremely dissatisfied with their homegrown physicians.
          (4) An american medical degree brings with it a gold plated assurance of quality and reliability. This is as true for doctors as it is for american goods. All Things American are Expensive…and the Best. I cannot tell you how many people have told me this, in how many countries.
          (5) Because people don’t like their homegrown doctors and are impressed by american doctors they are willing to pay a premium to see them…happily and without preconditions or threats of litigation.
          (6) The regulatory environment in the US is nearly peerless in the world for being a Pain in the Ass. Everywhere else you go (except some European countries) there is less paperwork, headache, and threat of lawsuits (I can’t find a malpractice attorney in Mumbai).
          (7) By definition, huge numbers of American doctors speak one or more foreign languages either out of curiousity or because they are recent first or 2nd gen immigrants.
          (8) The whole world is learning to speak English, the language which is becoming universal.

          When you put these eight factors together, you set the stage for what I am firmly convinced will grow to be a tsunami of doctors fleeing the states for other countries. This has been happening in reverse for many decades, to think it couldn’t go the other way is madness.

          99% of doctors who come up through the American Medical System would at one point have said, “I’m not in it for the money”. I said that too. I spent two years with Fight For Sight working for nothing. And I spent a year after that on the USS Comfort, again, essentially working for nothing. I got into medicine just because I saw a video of a cataract surgery and the patient said afterward that he was so glad he could see again. I had three job offers for biomedical engineer at the time time, each paying >100K for a 35 hr work week.

          I forgot that all and I went to med school after watching that10 minute documentary on cataracts. That’s how much I believe in what I do. That’s how idealistic of a person I am.

          But you know what? Age has a way of flattening a man. Life beats the Goody-Two-Shoes out of you and sooner rather then later you realize that although you may not be in it for the money, although you are just trying to help people, nobody else has gotten that memo. If you are playing by one set of rules and everybody else is playing by a different set, that’s not Idealism, that’s Self-Delusion.

          So sooner or later, every physician forgets their youthful exuberance and gets with the Program. It is about money, pure and simple. What we think is not important. What matters is that is how the world works.

          Thus I said to myself after ObamaCare passed, “the hell with it, everybody is looking after themselves, why am I making a fool of myself working for pennies in an Academic Hospital?” “what’s in it for me?”

          Turns out, nothing.

          So I left. I consider myself to be a little faster on the uptake then most. But you better believe me when I tell you, that there are thousands of physicians across this country who are having this same discussion in their heads. And when they make a decision, all this talk about cutting pay and “reigning in Doctors”, it is going to be exposed for the nonsense it is, once people find themselves waiting 6 months to see a primary care physician.

          Oh wait…that is already happening.

          • “But you know what? Age has a way of flattening a man. Life beats the Goody-Two-Shoes out of you and sooner rather then later you realize that although you may not be in it for the money, although you are just trying to help people, nobody else has gotten that memo. If you are playing by one set of rules and everybody else is playing by a different set, that’s not Idealism, that’s Self-Delusion.”

          • Here, here !! This may be the best-expressed paragraph I’ve read.

            It’s pretty darn simple. I’ve worked progressively harder each year over the past 8 years, trying to make up for lower reimbursement rates with increased volume, yet my bottom line has drifted lower EACH of those years.

            In NO OTHER line of work would someone work harder for progressively LESS. Why are we held to a different standard than everyone else insofar as payment expectation ?

            But you know what? Age has a way of flattening a man. Life beats the Goody-Two-Shoes out of you and sooner rather then later you realize that although you may not be in it for the money, although you are just trying to help people, nobody else has gotten that memo. If you are playing by one set of rules and everybody else is playing by a different set, that’s not Idealism, that’s Self-Delusion.

    • When I left the US Army for private practice in 1986 (in neonatology) one of my new partners (a very wise sage) told me “Don’t go in there (the Doctor’s Dining area) unless you are prepared to talk of nothing but time off and money”. Years later his words still ring true.
      I certainly worked hard in college, medical school and post-graduate training. However I am convinced that basically I did my homework. I had better than adequate access to good public education; the attention of more than a few excellent teachers who were simply doing their job; and had I not been a better than average basketball player would not have been given a scholarship to college, avoided the conflict in SE Asia and lived to go to medical school. I am very fortunate to have this job. I am here because a lot of people assisted me along the way. They are way more important than me. Let’s get real, people.

      • You are absolutely right. Even my student loans that I complain about so bitterly…they don’t even have those here in India. Wonderful thing about America is that competency is rewarded with opportunity. In many parts of the world, there is nothing resembling such a pure meritocracy. Don’t have money? Not going anywhere. Period.

        As a physician, not a day goes by that I don’t appreciate what I have. And you are right to say that a lot of it is luck. Maybe 80% is luck.

        In getting caught up talking about money, it is easy to forget about being grateful.

        That being said, it is not a crime for a physician to go where the money is or to make decisions based on considerations of compensation. We are good people, not Saints or Monks. We exist in a capitalist society. It would be foolish on our part not to put our personal interests first. Because that is what everybody else does and that is what people would expect you to do.

        It is important to be grateful. My mentor spent his whole life amassing a fortune as an Ophthalmic Surgeon. When he died,he left some money for his children and gave the rest to his Alma Mater. Now 20 underpriveleged medical students a year get scholarships from his foundation, so they don’t have to shoulder the debt burdens he did.

        We stand on the shoulders of Giants. It would be foolish to forget that.

    • We are in medical oncology practice. Our practice revenue has dropped about 80% due to drug reimbursment and medicare cut since 2009 but the expense are climbing 5% per year. Of couse, we still have six figure salary with working more then 100 hours a week, come home after 10 pm, take a shower and then need to review the medical record and prepare for next day patient. We have mutliple phone calls during patients visit from different physicians or patients families. Sure our pay is more then other country but do you know that our chart is 100 times thicker then the patients’ chart in other country? The paper work and the defensive medicine is killing the physicians here. The so call medicare incentive which will pay $44000 total but spread into 4 years will cost you about $22000 each year to pay for extra time, staff and software. We are fed up on all the paper work and politics. We lose passion and just struggling to be a good physician. Sometimes, we really wish to have a single payers with less paper work. However, when you see how incompetent about the government workers, I will withold my wish. Please do not describe me as a crying baby, I am just telling you the truth!

      • Most people who work more than 40 hours a week exaggerate how much they work. The 100 hour physician work week is a myth, an extreme outlier. Think about it: it would mean working every waking hour, minus meals and commute time, seven days a week.

        In fact, average physician work time has been decreasing, not increasing, in recent years, and now stands around 50 hours a week. http://www.dartmouth.edu/~news/releases/2010/02/23.html

        But if you were working 100 hours a week in order to earn your $300,000 or whatever it is, why prioritize your life like that? If you aren’t happy with your hours, you have more than enough income to cut back and still live well.

        • The 100 hr work week is most certainly not a myth. It absolutely means sleeping in the office. I have a fold out sofa bed and a shower in my office. When I was in training my boss sometimes did not go home at all on Tuesday’s and Wednesday’s. Wake up. Work. Sleep. Wake up. Repeat. That is the norm, not an extreme outlier by any measure.

          The problem is that private practitioners can’t half ass it. If you open a practice people expect you to have appts available. If you don’t you will alienate a whole cOmmunity (word of mouth will kill a practice real quick).

          So the option to “work less” isn’t there. If you run a practice it is a full time job. If you work 49 hr/wk or 80 hr/wk your expenses are the same but your income changes/ so the choice is to make $300,000 or nothing. There is no middle ground.

          The reason physicians have been working less is that more and more physicians are now women, who work less by definition and because so many practices have been succumbing to financial stress and closing. Now hospitalists are clocking in 40 hr weeks. But that is not a service for Patients. Hospital based care is inherently less efficient, slower, much less personalized, and usually more expensive than a large number of practices competing with each other.

          In trying to control costs, docs are being pushed into the umbrella of a few large chains of hospitals, which reduces patient choice, lowers standards of care, and cuts competition…which is never good for cost control.

          • John,
            I think something that is going unanswered in this discussion that I would like a better understanding of from the physician perspective is if going into private practice that the doc builds from scratch forces a physician to work 100 hour weeks (and presumably have to do this for the physician’s entire career while running this private practice), why go that route? What is it about a doc having his/her own private practice that makes it worth all that trouble? The alternative is joining an existing practice or health system, where we assume the doc wouldn’t have to work 100 hours a week. How much less would that doc make (if any less)? Would it be worth the trade off? What is the trade off in the first place (money, autonomy, control)?
            I’m genuinely trying to understand this, because (based on this discussion) it sounds like most graduating med students likely wouldn’t go the private practice route due to the required 100 hour work weeks and other demands of running a practice. So why do some choose that route? Thanks.

            • Well….it used to make sense because running a practice was not as hard as it is now. The more you worked the better you did. You were your own boss, you set your own hours, you did your Own thing. Most MDs are Type A personalities, so it worked for them. Now, it is no longer tenable, so we are relegated to being shift workers. In the absence of personalized care, Pts are the ones who ultimately suffer. Being a hospitilist is really not so bad. But u are just an employee. Being a doctor used to mean so much more. You knew people, you had relationships with them. Now it is like walking into an assembly line; sit down, take a number, shut up.

              What is happening in medicine happened in retail years ago. Mom and Pop stores got killed. Walmart rose. Same thing is happening in medicine. For the younger generation, they don’t know any different. It is normal for them. For me, I came up in a warmer, more personal system. Quality of care was higher. And at least in Ophtho, costs have never been outrageous. We give people sight, without which they are totally incapacitated. So a few thousand dollars for a cataract operation is well worth the investment. But you are right, all that is in the past. It is hard to say for sure that the modern system is worse for doctors. We make less money, but have more time to spend it as hospitalists. Patients on the other hand are getting the same impersonal treatment as the cashier at Walmart gives you. The difference is that when doctors don’t know their patients, terrible mistakes can happen which once upon a time were less likely. EMR is going a long way towards fixing that. So I guess technology may help replace the quality which was lost.

            • John,
              First, thank you for the response. I find it very insightful to understand the physician perspective. The response did generate some more questions/points in my mind.
              1) I agree with you that a certain level of autonomy is lost if a doc moves out of private practice; however, the disdain for being a shift worker is a little puzzling (and this came up against Atul Gawande’s promotion of the Surgical Checklist). Most of the workers in the world are shift workers of some kind. That in itself does not cause job satisfaction. Surely organizations can work to help shift workers feel appreciated and valued. If docs don’t feel appreciated and valued unless they call all the shots, then I think that’s unrealistic of their expectations. Even those in private practice have to answer to payers.
              2) I disagree with your Walmart comparison to a point. Just because a doc is employed by a health system does not mean he/she can’t have a personal relationship with their patient. Maybe they are less likely than a private practice, but I don’t know if that research exists. Similarly, just because a practice is part of a health system doesn’t mean it treats patients like they were a Walmart cashier. Maybe some do, but I doubt you’ll hear people say that about many integrated delivery systems (such as Geisinger, Group Health Pugent Sound, etc) who have the incentive to take care of their patients since they insure them as well. My point is, it sounds like a bit of a generalization.
              3) Do docs make less now per hour than in the past? For all specialties? Additionally, as a patient would you want to see a doctor who works 100 hours a week. I would be seriously concerned that they wouldn’t be on top of their game. Nobody can be under those circumstances for any job, let alone operating on an eyeball.
              4) I don’t know if the research is out there to conclusively say that care provided by a system is better than care provided by a private practice, but I do think it’s a very interesting and important topic to explore. I’m hoping Aaron takes a look at this.

              Just my thoughts. Thanks again for your response.

          • Wait. Women work less “by definition”? Where do you get that?

            • I don’t mean that as some chauvinistic declaration. It is just a simple fact that female doctors work less once they have children. This simple fact underlies the decline in average work hours across the nation over time. Doctors are not working shorter hours as a whole, but as the overwhelmingly male workaholic Greatest and Baby Boomer generations of doctors retire, they are being replaced by a healthier 50/50 M F mix of younger doctors. After finishing residencies, most women work a bit less to make time for child care. This also
              Explains the persistent wage gap between male and female
              Doctors. Women make the same per hr, but work fewer hrs. I am just pointing out this fact and am not suggesting that it is right or wrong.

            • Just for another physician perspective, I find that new docs coming out of residency and fellowship do not want to work in solo or small group practices. They have no interest in the business side. As I age (president of my corporation) I worry about finding someone to take my place as new docs have no interest. They just want to make a good bit of money and go home.

              Doc fees have increased slowly over the last 10 years, slower than the rate of increase for their expenses. However, total Medicare spending is way up. We appear to have increased utilization to compensate.

              Steve

          • John, I gave you data. You gave me anecdotes. When they clash, data wins. Where is your data that 100 hour work weeks are common?
            More data: http://www.medfriends.org/specialty_hours_worked.htm
            http://www.cleveland.com/healthfit/index.ssf/2011/08/new_doctors_have_shorter_hours.html
            The BLS says “About 3 out of 10 physicians worked more than 60 hours a week in 2008.”  If hours worked is even close to a Bell Curve, then 100 hour weeks would be several standard deviations from the mean. If you can find any neutral, objective study that shows more than 5% of physicians work 100 hour weeks, I will be surprised.

    • Aaron,

      A side issue to this post: Have you blogged before about the consequences of more PCPs being forced to become part of a larger health system rather than stay in an independent private practice? What are the pros and cons of this? In this post you seem to imply that the only con is hurt feelings on the side of the PCP. Is this trend better for the system though (efficiency, care coordination, outcomes, etc.), feelings aside?

      • Well, I didn’t mean to imply that. There are definite changes, but they are seen as pros and cons by different people. Probably something I should discuss. I’ll try soon.

    • The article states, “Last year, the clinic took in $2,115,101 in total revenue and barely inched into the black.”
      1) How much did the clinic pay in salaries and bonus? 2M??
      2) When small businesses (such as this doctor’s practice) upgrade, often times they use the money that would have be classified as profit. This is the cost of doing business, Doc.

      • A good MRI machine or CT scanner can easily cost north of $1,000,000. X ray machines easily run about $100,000. A good Physician’s Assistant can run $100,000/yr or more with Insurance payments, 401K contributions, etc. A practice manager (an MBA) alone can command prices north of $150K. I have not recently encountered any medical practice of good size that did not have 1-2 ladies just doing billing (calling insurance companies and cajoling them to pay) FULL TIME. That is another $100,000 in payroll at least.

        So just four people, the practice manager, PA, and two billing Ladies, + $50,000 in electricity, heat, T1 class internet Connectivity, licensing fees for EMR software ($5,000/yr at least) is $400,000 in payroll right off the bat. That is base salary with no overtime. Nobody is talking about bonuses or Malpractice Insurance, or Advertising fees, or equipment purchases, or facilities management, and on and on.

        $2 million in revenue/yr is barely enough to keep the lights on for any well sized practice, not because of Doctors’ Greed but because of the harsh reality of Fixed, non-negotiable, irreducible financial expenditures.

        Hell GE has gross income exceeding 300 billion dollars annually. But their real profit margin is only around 8% or less.

        Top line numbers always look fantastic. It is the bottom line that counts.

        • They have the books printed along with the article. Salary and Benefits consume more than 83% of expenses.

    • A great post, as usual. You state you have one main point, but I think you have two. This is what will appear in my blog, The Dismal Political Economist.

      “But the real value of this piece is this commentary here by Aaron.

      ‘But back to the article. It reports that some doctors are choosing to go work for hospitals or large groups, with the necessary infrastructure in place. That’s sad for those who like to be in private practice, but again – that’s not “struggling to make ends meet”. It’s a changing marketplace altering the way medicine is practiced. It happens in lots of fields.’

      And while Aaron sees this loss of private practices as a poossible negative, economics sees this as a positive. Physicians should be doctors, they should not be businessmen and businesswomen. They should be salaried employees of a hospital or large self contained health care provider unit. The fee for service practice is a major part of the health care model in the United States and a major reason why our health care costs are significantly more than any other countries, with the health care itself being significantly less than many major countries.

      So this trend is a positive one. Let practices be acquired by hospitals and health insurers. Let doctors receive a salary as compensation. And most of all, let’s let doctors get on with the business of health care, and not be consumed or even diverted by the health care business.”

      So if the capital requirements that are required for upgrading private practices cause a diminuation in private fee for service practices, this is an excellent side benefit that will lower costs and improve quality in the long run.

    • I went to a physician the other day and the lady at the front window said that they are no longer accepting medicare patients. I know this will all cahnge under Obamacare as many sniors will be ethuanized. But, wow! what a slog from now to then….and I am plumber.

    • I find this article a little galling. It misses some basic facts about about an important part of running a practice, dealing with what insurance reimbursement is really about and how it impacts health care professionals and ultimately health care in our communities.

      I do not even find the example given a very good one:

      “with a profit of $29,261. The practice distributes its profit as bonuses to staff” …. From a business standpoint, $29K is not a lot of money. In fact it is paltry from a business perspective. 29K divided among how many staff? Does this practice provide health insurance to all of it’s employees?

      Yes, $29K is a lot of money to an individual, but put it in business perspective: even if it is spilt amongst staff (for a practice of 2 doctors, 1 nurse, 1 receptionist, 1 phlebotomy/ECG tech that would be about $4500 a piece. It might offset health insurance costs for staff IF you are lucky depending on your state. And compared to similar businesses that supply bonuses on a regular basis it is probably below par. Let us not forget the bonuses regularly doled out on Wall Street and within within Health Insurance Companies? Let’s not even go there…

      The article also fails to mention that, unlike many other service oriented professions I can think of, many doctors and other health care providers who privately contract with insurance companies for reimbursement for medically necessary services, have seen little and in some cases NO increases in reimbursement rates in 10 or more years.

      That is because the insurance companies that actually set the rates – not the health care professional. Reimbursement to doctors is in fact not a negotiation. Anti Trust laws forbid this and along the way have given insurance companies an unfair advantage.

      When my patients complain or have questions about costs, I always have my staff show them copies of EOBs from about 2000 and today in 2012 for the same service/CPT code. We draw attention to the fact that the fee is the unchanged or changed very little. It is really an eye opener. In fact, I keep the two copies framed up at the front desk for easy access. Most patients are shocked. There has been no increase from United Healthcare, Oxford, Cigna, BCBS, Medicare and others. In fact, in the case of United Health care the fee went down circa 2004, and more recently, and HIP reduced their fee in 2011 as well.

      As reimbursement fees stagnate and fail to keep pace with inflation or cost of living, and as some fees are actually reduced, I fear that many practices and professionals will continue to have increasing difficulty “making ends meet” and investing in a practice. What I mean by that is covering expenses and having enough left over to pay for my own health insurance and retirement like any other professional might expect.

      While it is true, that like other kinds of service-oriented work, such as accounting, police officers, school teachers, rail way conductors, to an extent these service sectors have more stability in times of economic stress, but it patently unfair to judge those who provide the services on that basis. Even before the economic crisis, many health care providers fees and incomes were not rising as fast as that of police officers, teachers, etc. despite having far more education.

      I agree that there needs to be a better ways to communicate the nature and economic difficulties of running a practice and caring for patients in a way that the public can understand.

    • There is a lot of information here in these comments. I just want to say that if you read my blog you will see that these arguments have been going on for about 60-70 years and were well documented. The question I ask is “when will we stop repeating history?”

    • I will start by saying that I am a Physician, and I believe I am in the minority in regards to my peers in that I think I am appropriately compensated for what I do. However it is a little frustrating to hear people complain about how much Doctors make. Yes in some ways medical care is just like any other business. Supply and demand or whatever. I am not an economist but the difference between what I do, and what other people do is How Much? What do I mean….how much would you be WILLING to spend when you bring your 8 year old daughter into the ER in the middle of the night with abdominal pain to have a board certified ER physician who you have never met perform the right work up and order the right test? How much would you be willing to spend to have a board certified Radiologist who you have never met give an appropriate read that could differentiate between an appendicitis which could kill her, or just the stomach flu for which she wouldn’t need surgery. How much would you be willing to spend to have a board certified General Surgeon perform an operation that you sure couldn’t do yourself that would save her life? One dollar, a hundred, or just handover the checkbook? The rub of it is, when you go to the ER, you as the customer want the very best. Do you want the Chief of Staff of Surgery doing it, or the brand new intern? Give me the Chief of Staff. You want the Ferrari, but expect to pay for the Ford. In addition, you as the customer are paying dimes on the dollar because of your health insurance, and IF you don’t have insurance….guess what it’s against the law for me to deny you care because you can’t pay. That ER doc, does his best, that Radiologist does his best, and that Surgeon does his best BEFORE you give them a penny. What other sectors of the economy does it work that way? The reality is, in the wee hours of the morning, you’re lucky that when you ask how much is this gonna cost, your lucky the doctor just doesn’t say how much do you have? Would you not be willing to pay WHATEVER?