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Why Is Doctor Pay Decreasing and What Can We Do About It?
MEDPAGE TODAY ^ | July 1, 2024 | Jordan Frey, MD

Posted on 07/08/2024 12:05:57 PM PDT by nickcarraway

— It's time to take back control of our profession

As you may recall from my recent analysisopens in a new tab or window of the 2024 Doximity compensation report, doctor pay is decreasing in real terms. That's a problem given that the same report indicated the large majority of doctors do not feel fairly compensated. Moreover, physicians are being asked to do more and more. We see this in doctors' responses that indicate higher patient workload and greater administrative burdens as top causes of burnout.

Decreasing doctor pay coupled with greater workload is a recipe for disaster on both an individual and systems level. Burnout is at an all-time high among physicians. If things don't change, that will only get worse.

So, let's examine why exactly physician pay is decreasing and what we can do about it.

The Current State of Decreasing Physician Pay

In 2023, average doctor compensation increased by nearly 6%. This is a positive difference from 2022 when doctor pay fell by over 2%.

While this is great for 2023, overall trends still do not favor physicians. Inflation is slowing, but it has run rampant in recent years. With these inflationary pressures, doctor compensation has seen no real growth.

In simple terms, doctor pay has not kept up with inflation over the past several years. Thus, in real terms, pay is contracting. Our purchasing power based on our compensation for clinical and non-clinical care is less than it was before.

Other Factors Leading to Lost Income

Even though physician pay increased overall in 2023, multiple factors have led to declines in specific areas.

Declining reimbursement

Medicare physician payment has decreased by 26%opens in a new tab or window since 2001. Additionally, a recent Harvey L. Neiman Health Policy Institute study foundopens in a new tab or window that physician reimbursement per Medicare patient decreased 2.3% between 2005 and 2021 when accounting for inflation. And this was despite a 45.5% increase in physician services to each patient. Again, less pay and more work.

Medicare data is the most widely available and thus serves as the benchmark in these cases. However, it appears insurance reimbursements are down across the board. Thus, a main factor here is decreasing insurance reimbursement for physician services.

Changing employment models

For the first time, the majority of physiciansopens in a new tab or window work within an employed model under a healthcare system, university, or private equity company.

Why this happened in the first place is up for debate. One view is that physicians wanted to trade the stress of running a business and dealing with insurance companies and government policies for a stable paycheck and no headache. That's a large part of why I opted for an employed position.

The tradeoff here is that physicians gave up control of their business. We became employees. We found ourselves on the outside looking in when it came time to negotiate reimbursement rates, policies, and even practice guidelines.

And unfortunately, we also started to be viewed as expendable by our employers. Some physicians came to view themselves as expendable as well. So, we accepted a lower value and took on more work.

Lack of education

The last big factor I will discuss is a lack of education. No, not medical education. We all get plenty of that. But we lack an education in the business of medicine, practice management, negotiation, and personal finance.

We therefore feel like we do not have the ability to run our own practice, making an employed position the only option. Again, I am an employed physician. My chosen practice setting best allowed me to provide the type of care I wanted within my field of reconstructive microsurgery. But even within that framework, this education is important should our practice change or if we want to have leverage within an employed setting. Without knowing how to negotiate, we cannot leverage our unique skills and value for better pay.

And lastly, without good personal finance habits, we are tied to our paycheck. But once you enact a plan and reach financial freedom, you are no longer financially tethered. You can practice medicine on your own terms.

A Quick Aside: Plastic Surgery

In the Doximity compensation report, plastic surgery was one of the few specialties that bucks the trend. We saw an increase in pay even after factoring in inflation.

Why is that? I believe one driving factor is that the aesthetic portion of plastic surgery is an out-of-pocket, cash pay practice model. And, despite aesthetic surgery being a very minor portion of my practice, aesthetic surgery dominates the field of plastic surgery.

A cash-based practice allows plastic surgeons to negotiate prices and reimbursement directly based on supply and demand, as well as inherent skill and services offered. Insurance and red tape are cut out.

Even within an employed or hospital model, this trend may be due to the fact that plastic surgeons help reduce length of hospital stay and services needed by managing challenging wounds and surgical problems. These are important parameters for hospitals and they may be willing to compensate those improving the metrics.

Lastly, in general, I do believe that plastic surgeons tend to be more likely to learn about the business of medicine. Maybe because private practice is still such a big component of the field, unlike other specialties that have become predominantly employed. But really, this is just speculation.

The Impact of Decreasing Doctor Pay

Overall, this lack of growth in physician compensation may:

Increase specialty gaps Worsen the physician shortage Increase burnout All of this leads to fewer doctors and worse patient care. Not good for medicine or society as a whole.

What Can We Do?

Many of the contributors to decreasing pay are out of our control. But there are always things we can do at both individual and system-wide levels.

On a system-wide level, we must advocate for physician well-being, including financial well-being. We also need to reassess the structure of medical practice. Perhaps a concerted effort toward more favorable practice settings are needed. Representation and a voice at the table with regards to policy is also necessary.

Realistically, however, there's no quick or easy solution to the issue of compensation at a systems level.

At an individual level, my recommendation is for physicians to improve their financial education and build basic habits that will lead them to financial freedom -- so they can practice medicine because they want to, not because they have to. Moreover, doctors should know how to negotiate with health systems and insurance companies to ensure fair reimbursement for the services they provide. We need to get into the game.

If we can take back control of our finances and come to better understand the business of care, we can do more to take back control of our profession.

Jordan Frey, MD, is a plastic surgeon at Erie County Medical Center in Buffalo, New York, and founder of The Prudent Plastic Surgeonopens in a new tab or window.

Looking to improve your financial well-being? Check out Frey's online course, Graduating to Successopens in a new tab or window, a comprehensive and interactive 12-module course that helps doctors achieve personal, professional, and financial success during and after their transition from trainee to attending. Or read his best-selling book, Money Matters in Medicineopens in a new tab or window.


TOPICS: Business/Economy; Health/Medicine
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1 posted on 07/08/2024 12:05:57 PM PDT by nickcarraway
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To: nickcarraway

When the ACA went into effect, three of the four doctors in the practice retired, and the admin staff went from 3 people (one part-time), to 12, with the remaining doctor selling his practice to a company that he then worked for.


2 posted on 07/08/2024 12:11:21 PM PDT by lepton ("It is useless to attempt to reason a man out of a thing he was never reasoned into"--Jonathan Swift)
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To: nickcarraway

Privatize healthcare like it used to be on the free market in America, the best healthcare system in the world.

Voluntary cooperation directly between doctors and patients with no gov’t in the middle with their hand out for more and more money and sledgehammer out for coercion and force.


3 posted on 07/08/2024 12:13:03 PM PDT by Jim W N (MAGA by restoring the Gospel of the Grace of Christ (Jude 3) and our Free Constitutional Republic!)
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To: nickcarraway
This is a no-brainer:

India becomes the biggest source country for doctors in the US


4 posted on 07/08/2024 12:13:40 PM PDT by xoxox
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To: nickcarraway
Simple. The conversion to corporate medicine has been in full swing for decades.

The nanny state has too many regulations and paperwork which has to be filled out rigorously, or it is felony time for a physician.

So half or more of health care costs go to "administrators".

5 posted on 07/08/2024 12:14:38 PM PDT by marktwain (The Republic is at risk. Resistance to the Democratic Party is Resistance to Tyranny. )
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To: nickcarraway

What to do about it?

One answer: Admit fewer women to medical school. As the number of women increases in a profession, its prestige ( and salaries) decrease.

Ok...I will now read the article and, (maybe), make a few more comments.

Dr. Wintertime ( a woman)


6 posted on 07/08/2024 12:15:22 PM PDT by wintertime ( Behind every government school teacher stand armed police.( Real bullets in those guns on the hip!))
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To: nickcarraway
Get rid of LBJ's add on to FDR's Unconstitutional Ponzi scheme AKA Medicare, and let market forces work.

I defy anyone to show me an example of a centrally planned, government managed program that made things better, cheaper, and easier to access, without destructive side effects which ultimately destroy the very services they regulated while bankrupting the government that instituted it.

NHS, I am looking at you.

7 posted on 07/08/2024 12:18:33 PM PDT by SecondAmendment (The history of the present Federal Government is a history of repeated injuries and usurpations ...)
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To: nickcarraway

A plastic surgeon complaining about pay!

Notice how he doesn’t actually cite their current pay levels.


8 posted on 07/08/2024 12:19:36 PM PDT by 9YearLurker
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To: nickcarraway

Why dropping? Less qualified as DEI hires and 3rd world education. They are also now employees rather than independent professionals.


9 posted on 07/08/2024 12:19:53 PM PDT by Reno89519 (I'll go out on a limb: Trump & Gabbard 2024 or Trump & Sanders 2024)
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To: nickcarraway

HIPPA followed by Obamacare massively increased the administrative costs with massive increases in medical care documentation.

My nephews wife is the Infectious Disease head at a major metro NYC hospital. She used to be an employee and then they made her job. and her, very much like a consultant.

She can be on her computer from the time she gets home to when dinner is ready, and return to her computer many times after dinner and somtimes till bedtime - completing all her notes on all her work at the hoispital that day.

My cardiologists sits talking to his cumputer - more than me - during our visits, using software that turns his speaking into text, to help him document his required notes for the day.

All part of the exploded administrative overhead across all health care. Why? HIPPA and Obamacare together added to what Medicare demands and the insureance companies doubled up on that to be sure coverages would fist get acceped by Medicare.


10 posted on 07/08/2024 12:20:29 PM PDT by Wuli
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To: nickcarraway

Re: Business Education

The professional schools should stick to the education of the profession. It is what they know well. Business education is better acquired from people with experience in diverse types of successful businesses.

Before opening my office, I spoke with other established professionals in my field. One question of several I asked was, “ If you could start over, what would you **not** do?” I made certain to **never** do what had caused my fellow professional so much regret.


11 posted on 07/08/2024 12:34:38 PM PDT by wintertime ( Behind every government school teacher stand armed police.( Real bullets in those guns on the hip!))
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To: nickcarraway

Any time a profession is over-weighted with women salaries go down. It’s been true of every profession women have taken over since the early nineteen hundreds.


12 posted on 07/08/2024 12:37:02 PM PDT by GOPJ
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To: lepton
Yep.

Most doctors are owned by a hospital that is a part of a multi-state conglomerate. There are almost no private practices any more.

The amount of paperwork has tripled and ACA put the insurance companies firmly in the drivers seat. Do you have a medical condition that you have been getting treated for your whole life? Every couple of years now the insurance company has the power to force your doctor to justify continuing to treat you.

13 posted on 07/08/2024 12:43:46 PM PDT by Harmless Teddy Bear ( Roses are red, Violets are blue, I love being on the government watch list, along with all of you.)
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To: nickcarraway

Halt insurance rate hikes. But since the jab 60% can go becomes PAs or less fir all I care!-


14 posted on 07/08/2024 1:01:46 PM PDT by Harpotoo (Being a socialist is a lot easier than having to WORK like the rest of US:-))
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To: 9YearLurker

“A plastic surgeon complaining about pay!

Notice how he doesn’t actually cite their current pay levels.”

And the brain surgeon who bought two dogs at $150,000 per.


15 posted on 07/08/2024 1:18:55 PM PDT by utax
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“Realistically, however, there’s no quick or easy solution to the issue of compensation at a systems level.”

Hire more foreign medical grads (FMGs), which is what corporations are doing.

Pretty soon all your “providers” are minorities, FMGs, nurse practitioners and PAs. Good luck with that.

Med malpractice lawyers is a growth business.


16 posted on 07/08/2024 1:46:44 PM PDT by bkopto
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To: nickcarraway
WRVUs and productivity oh my!

The perfect storm for the medical professional. Pressures of reduced reimbursement for services coupled with ever increasing patient load brought on by being employed by hospitals.

17 posted on 07/08/2024 1:48:54 PM PDT by buckalfa (Gut feelings are your guardian angels)
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To: utax

Ha—that, too!


18 posted on 07/08/2024 1:52:38 PM PDT by 9YearLurker
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To: nickcarraway
LOL. All I can say is "get in line, bub". I was here first.

19 posted on 07/08/2024 2:18:21 PM PDT by Governor Dinwiddie (LORD, grant thy people grace to withstand the temptations of the world, the flesh, and the devil.)
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To: nickcarraway

Dr visits sure hasn’t gone down in price.


20 posted on 07/08/2024 2:19:17 PM PDT by roving (Deplorable Erectionists Listless Vessel )
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