Physician Compensation in the Coming Decade
As an individual who has many close friends piling on student loan debt to obtain that coveted MD, it hurts me the say that physician salaries will likely decline over the coming decade.
As I alluded to in a previous post (http://www.wallstreetoasis.com/forums/medicine-ve…), I think that actuaries at health insurance companies will be more highly compensated than doctors going forward.
As bureaucratic and administrative costs rise, doctors will look for the security of a large health system for stable employment. Couple these ailments with weak reimbursement rates and running a private practice just doesn't make any sense, especially when fresh MD's are saddled with $150k+ of debt.
For the sake of argument, let's say that a doctor with a large appetite for risk opens up a private practice. How can this business compete with the likes of huge health care conglomerates? They can't, health care systems know this, and so little mom and pop shops are selling their practices.
As TechBanking said,
....The day of the private practice is over. They are all being gobbled up by healthcare systems that are Kaiser clones. Doctors are becoming just another big corporate employee. There is a reason why there is a doctor shortage in the UK and Canada. It's simply not worth the time to get the MD, if you aren't going to get paid.
What are your thoughts, monkeys?
To further my point, take a look at this link:
Interesting Study
my physician and surgeon pals are on their 3-4th fellowships, etc. because the market is sucking so hard. especially for all cash specialties (plastics) their expectations are adjusting finally to reality. expecting to make a full buck and a half in their career prime, they are now happy with a 60K fellowship in the boonies.
/schadenfreude
The whole healthcare system, particularly in the United States, is distended from reality. Medical school is too expensive and doctor's pay is not allotted to value of service rendered. Malpractice insurance is skyhigh. The inefficiencies are mind-boggling.
It is ignorant to allude to physician compensation as a general trend given the enormous range and variance by speciality and practice. That said, in general you can assume that specialties involving the providing of services (cardiology, GI, IR, Urology, etc) will continue to fare well in compensation because they are performing services instead of simply diagnosing and reimbursement will remain relatively strong for them in the near future. The advent of value versus volume based reimbursement is still in its nascent stages with the coming of ACOs, which really is just IPA v2.0 since IPA v1.0 failed miserably in the 90s; physicians as it turns out are poor finance managers, are they ebtter roday? My guess is not really.
For physicians involved in the diagnosis only (primarty care, nuerology, etc), compensation will continue to be limited as reimbursement curtails in the face of cost controls.
Also, healthcare is undergoing an enormous transofrmation right now with a rollup strategy. Independent physicans can no longer practice alone given the high operating leverage and diminishing margins they face from Medicaid and Medicare reimb cuts. So, there is a roll up strategy going on with larger healthcare systems buying out hpysician groups to gain access to commercial patients and large physician organizations buying out smaller indep practicing physicians. What happens when a physician goes from self-employed to now working for a large healtcare system? Well, simple, compensation falls as risk falls since now you're an employee like everyone else and you have less risk to assume.
What offsets this reduction in compensation can potentially be better negotiating powers with payors as large healthcare systems control the market. However, does higher reimbursement translate into higher compensation for physicians now employees of hospitals? That remains to be seen as exec mgmt of hospitals and boards are not used to smart incentivized plans and don't have a history of doing as as opposed to forprofit entities, remember healthcare is predominately nonprofit for tax incentives and access to municipal debt cap markets.
I say at the end of the day, physician comp will continue to be squeezed as they stop practicing independelty. The guys who will contineu to pull 500k+ will be those providng procedures and of course surgeons.
The days of your primary care physician making 600k and specalists making 2MM are over. Way overrrrrr.
So it is ignorant to say anything about "physician compensation as a general trend given the enormous range and variance by speciality and practice," but you "say at the end of the day, physician comp will continue to be squeezed as they stop practicing independelty."
That makes sense.
You're an idiot. I wrote that non-procedure performing physician reimbursements will continue to be squeezed while their alternatives will continue to fare well in a tightening reimbursement/roll up market. I stand by what I wrote earlier and it paints a fair picture based on my idnustry experience and knowledge. Either know wtf you're talking about and come talk to me after spending your entire career in healthcare and having sold a med device company and been invited to ring the NASDAQ or stfu.
I am sorry but I cant sympathize only because I believe it is a right risk-reward level, physicians might not all make 1bn, but the salary floor is quite high, plus there will always be a job for them to do. I talk from a latam perspective of course, where going into finance is far riskier proposition, but talking with my friends, most of them finishing medicine, what I see is that either what they really miss is the "respect" and "prestige" that has been lost under medicare-like systems or they are just the greediest SOBs as a profession I've met, for they feel entitled to earn a gazillion, have full guarantee of employment, and be revered by the common man, all because they spent a lot of time studying. I just believe that amount of effort to be the right cost of having a high earnings floor in this competitive world of ours.
The fact remains that the baby boomers are getting old and will continue to demand healthcare while it is still difficult to become a doctor. Low supply, high demand = (Relatively) High wage. I understand that a primary care physician's salary of $150k is considered poverty on this website, but it's still well above the salary of the majority of people in this country.
low supply and high demand mean high physician salaries if the insurance companies weren't taking increasingly bigger cuts of a smaller monopsonistically-mandated government reimbursement rate.
Take a look at the debt overhang in the image that I posted. $150k isn't bad with no debt, but it's close to downright poverty when you are over $300k in the hole, paying a high tax rate and in your mid-30's, possibly with a family.
On the other hand, if you're going into medicine for the money, you're probably in it for the wrong reasons. Not saying that compensation isn't a factor at all, but in that occupation, it really shouldn't be the prime motivation.
Since the AMA is the greatest cartel of all time, perhaps only beaten by nurses' unions, physicians will never be uncomfortable. But they'll never be wealthy, either. You swap income potential for stability. Physicians have to do procedures and/or see patients to get paid. You have limited time. There's obvious constraints, here. Plus, you aren't hitting a reasonable salary until you're done with residency, anyway.
Med school is too long. That's my first prescription - cut out the 4th year. Make it year round, not just for the clinical years.
don't understand why this is on front page
I'm in pharmaceutical. A top tier physician is still making a lot by giving speeches and presentations at scientific meetings.
It is more than possible for them to make what you make in a month in a day. But that's for top tier physicians, which is not a bad thing at all, in order to be a top tier, you have to pull more hours doing research, studying and finding out new ways to improve current practice. So if the salary goes down, there is actually more motivation for physicians to "become top tier".
You may wonder how often are these "scientific meeting", in my department we throw a couple of them each week for ONE product.
Hey guys, I know next to nothing about the medical profession and compensation for MD's (presently and historically) but here is my question:
If the demand for healthcare services is expected to rise dramatically in the foreseeable future due to shifts in the population (baby boomers becoming older and living longer etc) why wouldn't MDs be somewhat safe given a strong demand for their labor skill and compensated generously? I understand the wide range in MD salaries based on specialty but I'm assuming that is nothing new.
Again, I'm very naive when it comes to this field, the govt intervention (medicare/medicaid program etc), the overall compensation, and hospital vs private practice arrangements. I just find it very interesting reading since I have a bunch of MD friends to whom this applies
Thanks
It's a combination of factors, healthcare doesn't fall into normal goods like CPG supply vs demand. Yes the increase in demand for healthcare services will continue to push the demand for doctors, depending on speciality, but from a compensation perspective, patients don't pay or their care, 3rd party payors do. So while consumers may demand more physician services, reimbursement will not simply increase because payors are moving from a volume to value based compensation. Now, doctors could simply rebuff all payors and demand patients pay out of pocket, but from a working capital perpsective they'd never survive unless all doctors banded together and did so. Not going to happen. Another factor that will impact pricing is that fewer doctors are remaining independent, where the real money was, and now are joining large hospitals or physician practice groups to manage risk. So, they're basically becoming employees like everyone else of a larger company, instead of practicing independently. Not all are, but some specialties will definitely roll up into large hospitals while others can remain independent (again those providing services will continue to fare better than those just diagnosing).
On a personal note, although I have several physician friends, I think medicine taught in the US isnot in the best interest of the patient. Today' doctors are so concerned with volume than value they spend minutes with patients and take cookie cutter approaches to solving health issues. Also, they are highly disincentiived to order tests/etc in order to get compensated that may provide no value to the patient. The move from volume to value is the biggest change in healthcare, and it will be ugly to say the least. But it's the step in the right direction. We've come from fee for service reimbursement (the days where your primary care doc raked in 750k) to MCO (doctors salaries overall slashed like 50%+ on avg) to ACO (volume). How ACOs will fare remains to be seen, but allowing healthcare systems the flexibility to establish their own model is the right way to go, let the market decide what's the most effective. CMS is a terrible, defunct organization.
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