Pay And Profit Inequality In The Practice Of Medicine

Why do some doctors seem to earn more? Certainly some seem to spend more which may give the outward appearance of wealth, even though colleagues may actually be earning higher incomes. However the 2019 Medscape Physician Compensation Report details that there can be a large swing even when doctors are practicing in the same specialty. There are income disparities for sure between male and female physicians due to reasons we examine later in this article, however what might be the factors at work when the average income for an Internist is $243,000, but the national compensation rate ranges from $177,000 to $309,000?

Overall Primary Care Physicians reported $237,000 vs $341,000 for Specialists. Physician overall salary for 2019 was $313,000, about 20% more than was reported when the survey was taken in 2015. For employed physicians, compensation included salary, bonus, and profit sharing contributions. For partner physicians, it included earnings after taxes and deductible business expenses before income taxes.

Certain specialties like orthopedics and cardiology have always been at the high end of the earnings spectrum while pediatrics and family medicine tend to traditionally rank lower. Overhead varies – PCPs requiring more operating resources as they see more patients and minimizing overhead makes a practice more profitable of course. But why the pay disparity within each specialty?

• All physicians were full time practitioners, most share similar administrative burdens. Self-employed physicians earn more than those that are employed, and these seem to be older doctors, as 64% are age 50 years or more.
• Demographics might be at play such as the state where the practice is located, and urban vs rural areas.
• The size of practice matters, as does the number of locations, etc. Physicians in large practices tend to earn more money due to economies of scale.
• Profitability increases significantly when Physician Assistants and Nurse Practitioners are introduced into the practice.
• Some physicians have modified their acceptance of Medicare and Medicaid patients, as treating these types of patients directly affects income.
• Self employed physicians who take advantage of ACOs are able to substantially boost their income.
• Researchers have linked high income to taking negotiations with payers seriously, and performing billing and collections in house. Many practices have dropped insurers that are poor payers.
• Often a doctor’s reputation, visibility or influence within the community attracts patients and they are “rainmakers’ for their practice.
• Some run extremely efficient practices and simply treat more patients without the increase in overall hours (number of patients per week seen by high earners was 122, whereas low earners saw 84).
• Compensation is higher at single specialty groups compared to solo practice and multi-specialty groups.
• Offering ancillary services has always been a driver of income, a new and promising area for revenue enhancement is telemedicine.
• Last but not least, those who are entrepreneurial and have created a “niche” within their specialty, or invented medical devices and apps, or backed ventures such as surgery centers, testing facilities, etc., tend to increase their wealth substantially.
 
So back to examining the pay disparity between male and female doctors. Male doctors earned 25% more than their female colleagues. Male specialists 33% more in fact. One of the reasons might be that male physicians are more frequently promoted and find it easier to advance in their careers. One study suggests that male doctors are better salary negotiators and more aggressive asking for what they want, and asking more often! But when you dig a bit deeper, these factors play an important part:

• Women physicians are usually found in the lower paying specialties. The percentage of women in higher paying specialties like cardiology and orthopedics is generally low. The good news is more women are gravitating towards plastic surgery.
• Age has an impact. There are far more women physicians now than 20 years ago. Younger physicians earn less than seasoned clinicians and may have skewed the sample.
• Fewer women physicians are self-employed, the age factor may contribute to this as well since only 14% of private practices are owned by female physicians.
• The Physicians Foundation says female doctors tend to see patients 4 hours less than male counterparts but do much more paperwork.
• Last but not least, the gender pay gap is still a contributor to unfairness in pay for female doctors, but hopefully will continue to decline. Pay parity among male and female physicians has reduced below a six-figure salary gap in 2018.

There are many economic trends at play in the medical and healthcare environment that affect compensation. Among them those that loom large and affect physician income are the rise in hospital mergers and acquisitions and the fact that fewer than half of U.S. physicians own their own practice. Doximity reports suggest that soon wages for physicians may begin to plateau, except for the medical specialties that require significant advanced training like neurosurgery.

CONTACT US: Stay tuned – next month’s TFG Health newsletter will detail what you can do to boost your income and make your practice more profitable in spite of inflation, increasing costs, and decreasing reimbursements. The professionals at TFG Health have the perfect Rx for revenue enhancement and operational efficiencies so you can focus more on what you do best, practice medicine. Call toll free 855-534-2727 for a complimentary consultation or visit www.tfghealth.com.
 

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