The Spend We Don’t Have, Part II

Public Policy Contributor Brad Flansbaum writes….

After discussing the budgetary unease of our country in my last post, I wish to pick up with a brief overview concerning physician salary and workforce issues.  Because U.S. doctors train in an environment favoring subspecialty over primary care, along with the asymmetric pay coupled with that association, it is a simple to assume specialists make more because their work is more complex, they do more “stuff,” and, well, that is the way a higher power wants it.

If you spend time reading about how our remuneration system and workforce ratios evolved and why they interact like they do (beyond the RUC), you will learn it is part accident, part right place, right time, part absence of oversight, and part permissive financing.  Unlike other nations, our workforce composition never sprung from a coordinated plan.  Training was left to academic institutions and overseen by non-governmental bodies like the AAMC (but financed by Medicare), and it emanated from a biomedical model that developed post-WWII, supported by generous congressional funding.  Academic medical centers, hospitals, and focused training all came with a societal outlay that required insurance and a system of coding to standardize payment (beginning with the California Medical Association).  As primary care was continually accessible, relatively inexpensive, and did not require hospital-based support however, the drive to devise codes and reimbursement in this sphere was less urgent—cash and out-of-pocket payments sufficed.  Primary care also lacked advocacy, and in the Cold War era, the primacy of a nation (and its corresponding political ideology) were functions of its scientific breakthroughs.  Transplants and Nobel prizes trumped back pain and sore throats.  End of discussion, and the fragmented, hi tech-low value system we function with is today’s disjointed product.

Obviously, the story is more complex, but from this primitive configuration, a medical pattern arose that favored subspecialty practice without centralized planning, thought to population health, or the true value of a physician’s benefit.  It is central to state while the importance of any service is debatable, I would not wrangle over the years of training as a cardiothoracic surgeon and the commensurate compensation it brings forth. However, I would dispute disproportionately high rewards for every specialty field, sometimes bordering on the obscene.

Thus, it is not solely the degree of compensation that defines a provider’s significance, but also their relative worth to society.  How we define “worth” can vary however, and depends on many factors: what the market will bear, the comparable value of specialties, how society views the contribution of each, or what is fair.  It is not a one-dimensional problem, and as such, neither is the solution.  Below is my less than definitive take:

Whether I am over or underrating primary or subspecialty practice is a fair question, and your perspective will reflect the shingle hanging in your window.*  However, on a relative scale, something is amiss and general practice’s “jack of all trades, master of none” back seat is undeserved—not because it is easy, but because it is so damn hard.  Primary care is an onerous and challenging profession with self-taught and unique skills; arguably, more than the organ or disease specific myopia applied in many specialties.  After 20 years of practicing any field of medicine, is it only the opportunity cost of the additional years of training plus certification, two on average, OR is it something additional that makes a provider more indispensable (read: status of salary)?  There is likely an “x” factor we are overlooking and it is easy to understate the psychosocial skills and then some, acquired and applied in the generalist’s field.  I do feel strongly we are undervaluing these doctors.

For illustrative purposes, look at the OECD listings of specialist and GP’s below.  The base wage multiplier in 2004 dollars is around $45-50K:

Cross-national comparisons are always fraught with peril given the vast divergences between measurement techniques, medical systems, and culture.  Still, there is merit in looking overseas for differences.  If anything, it tells us other societies value physicians another way, and it is notable that many countries—the Germans, Dutch, and Swiss to name a few—have recently retooled their delivery models (and doctor salaries) to elevate the quality of their systems.  Change is possible, and from above one can glean that American exceptionalism and our value system is not the only game in town.  Gaps between specialty and primary care service are alterable.

This is important, because as I illustrated in my earlier post, there is no new money coming into our health system! While unspoken within the house of medicine, we will need to redistribute what is currently sloshing in our accounts receivable, with some exceptions for outlier fields. Additionally, forecasts of workforce shortages and the ratios of physicians needed to service our population in the future are based on past, possibly, flawed presumptions.  What is the right primary care to subspecialty mix, how many specialists we need, and in a true patient centered medical home model, is it essential to utilize physician labor as we currently do?  Past is not prologue and all assumptions are up for discussion.

So how do we finance the primary care “x” factor, the PCMH, and is this specialty the answer to our system’s woes (versus organization of care exclusive of nature of practice)?  Moreover, do we know the optimal primary and subspecialty provider ratio for our country?  Stay tuned for Part III.

*As a disclaimer, I believe Hospital Medicine is not a primary care discipline (by definition, it is not a first contact specialty or linearly continuous in scope).

Brad Flansbaum

Bradley Flansbaum, DO, MPH, MHM works for Geisinger Health System in Danville, PA in both the divisions of hospital medicine and population health. He began working as a hospitalist in 1996, at the inception of the hospital medicine movement. He is a founding member of the Society of Hospital Medicine and served as a board member and officer. He speaks nationally in promoting hospital medicine and has presented at many statewide meetings and conferences. He is also actively involved in house staff education.

Currently, he serves on the SHM Public Policy Committee and has an interest in payment policy, healthcare market competition, health disparities, cost-effectiveness analysis, and pain and palliative care. He is SHM’s delegate for the AMA House of Delegates.

Dr. Flansbaum received his undergraduate degree from Union College in Schenectady, NY and attended medical school at the New York College of Osteopathic Medicine. He completed his residency and chief residency in Internal Medicine at Long Island Jewish Medical Center in New York. He received his M.P.H. in Health Policy and Management at Columbia University.

He is a political junky, and loves to cook, stay fit, read non-fiction, listen to many genres of music, and is a resident of Danville, PA.

5 Comments

  1. maggiemahar on June 5, 2010 at 4:45 pm

    Provocative post.

    The charts showing how much physicians earn compared to the average worker in different countries do suggest that we are over-paying specialists

    And we know that enormous gaps between those at the top of our income ladder, those in the middle, and those at the bottom de-stablize both the economy and the society.Surveys show that the majority of economists believe that the gaps must be narrowed.

    At the same time, the chart showing primary care pay suggests that we may have that about right. We are paying GPs 3.4 times the average wage– putting GP pay in the U.S. close to the very top of the ladder, right behind Iceland (3.5 times average wage.) Insofar as we don’t subsidize med school education, we should be paying more. than other countries . . The question is: how much more?

    Median wage for primary care docs in the U.S. is now around $175,000, which means that they earn more than 96% of all Americans.

    But median income tends to capture income mid-career. Newly-minted primary care docs may earn as little as $100,000 to $105,000. IF they are carrying $150, 000 in med school loans and living in a city, they are hard-pressed.

    Since new money won’t be coming into the system, we are going to have to redistribute health care dollar within the system. This means gradually lowering the incomes of the top-paid specialists., I would suggest that money might best be used subsidize med school education in areas where we have shortages (family docs, internists, gerontologists, palliative care specialists) and so that students can graduate free of loans. This also would allow more students coming from low-income families to go to med school. Most observers agree that we need more diversity in the physician work-force.

    In addition, given the years of education required- to become a doctor -and the opportunity cost– starting salaries for GPs probably should be raised to $125,000???

    But a median income of $175,000 that puts GPs in the top 4% should be sufficient to make them feel both valued and respected.

    The problem today is that GPs compare themselves to radiologists and dermatologists earning $400,000.

    Money is always relative.
    The “obscene” incomes of some specialists, like obscene CEO salaries, have distorted our sense of what a professional should earn.

    Over time, we’ll need to lower those salaries, and raise taxes on he wealthiest 2% to 3%. We can’t do it all at once because it would be far too disruptive. People have created lives that revolve around the assumption that they’ll be earning $500,000. But bit by bit we do need to redistribute those health care dollars.

  2. […] Flansbaum comments on physician salary and workforce issues in a post entitled  The Spend We Don’t Have, Part II at The Hospitalist […]

  3. Fair Pay For Our Doctors on June 14, 2010 at 5:36 pm

    […] week’s Health Wonk Review included an excellent article by Brad Flansbaum at The Hospitalist Leader.  Brad’s article discussed the details of physician pay and the […]

  4. Jack Percelay on June 15, 2010 at 12:06 pm

    Brad,
    Thoughtful as always, as is above comment.

    Here’s an interesting way of looking at the issue from the med school supply side.

    Fitzhugh Mullan and his team just published “The Social Mission of Medical Education: Ranking the Schools” which includes a metric, called the social mission score, that evaluates medical schools by their output in an adequate number of primary care physicians, adequate distribution of physicians to underserved areas, and a sufficient number of minority physicians in the workforce.

    http://www.annals.org/content/152/12/804.full?aimhp

    Certainly very applicable to the University of California system where I trained 27 years ago and paid $497 a quarter initially. Tuition actually went down my second year: there was a state budget surplus. Really. Now, it’s hard for me to justify why the taxpayers of the state of California should have subsidized my education to that extent. Or, if they do choose to subsidize medical students’ education, they would seem to have a right to influence the outcome.

    Fundamentally, however, I think career choices are more about respect and career satisfaction. But that’s another topic.

  5. […] I do not believe this is so.  We are not primary care practioners, and we know the salary imbalance between the two […]

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