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'It's not fair!' Why are some doctors paid more than others?

From a mile away all doctors look much the same, but get up close and it turns out that they come in many shapes, sizes and disciplines. The differences are never more starkly revealed than by a quick glance at their tax returns at the end of the year.

Then you will find considerable variation based, not on how smart, hard-working or dedicated they are but on where they are located in the world and which particular medical career path they happened to have stumbled down.

A recent article in the Sydney Morning Herald highlighted a couple of things.  Firstly, compared to the typical Australian wage earner (with an average taxable income of $51,342) doctors are paid pretty well - at least three times as well to be precise.

But within the Australian medical profession itself it turns out that surgeons earn an average of $350,000 compared to the average medical practitioner at $155,000 per annum - between 2-3 times higher.

Have a look overseas and much the same pattern exist within most developed countries. The United States for example where radiologists and orthopaedic sugeons earn, on average, at least twice the income made by paediatricians. Even in the United Kingdom, where socialised medicine would be expected to even things out there is a considerable difference in the value that employers put on different specialties.

There is little online to explain why these differences exist beyond the argument that some specialties require more training than others. This alone however does not explain such a wide gap opening up once graduates leave medical school.

The magic ingredient seems to be private medicine. Even the smallest capacity to earn outside of the public health system, within any given country, upsets the applecart by offering doctors a competitive alternative to staying 100% on the public payroll. Other market forces come into play that set relative incomes based on harsh economic reality rather than deserved reward. Here are a few that I observe :

 

  1. Specialist pays better than generalist: A good GP knows something about everything whereas a knee surgeon knows everything there is to know about a very small number of things. Specialization attracts better rates of pay in all professions and medicine is no different.
  2. Intervention pays better than intellect: Every radiologist and cardiologist knows that they can add a hefty percentage to their salary if they add the word 'interventional' in front of their title. Which leads to my next point...
  3. Procedural pays better than hourly rates: Any management consultant will tell you that, if you want to make money you must charge per service and not on an hourly rate. In medicine this plays out in the difference between what a gastroenterologist can charge a patient for a half hour procedure versus a one hour consult (the former being generally much more than the latter).
  4. Rich patients pay better than poor: Sadly, much of medical science, pharmaceutical research and clinical practice is focussed on conditions suffered by patients that can pay - hence erectile dysfunction research is better funded than malaria research. Similarly, cardiac surgery pays better than paediatric surgery, given the demographic of the patients.
  5. Diagnostics pays better than treatment: Borrowing from point three, diagnostic specialties can execute a lot of transactions, charging per item rather than on time, and so can generate income faster than more involved therapeutic specialties. Also less face time with patients frees up time for billable activities.
  6. Acute pays better than chronic: An acute event like a broken bone or a myocardial infarct will tend to cost more to treat than a chronic condition. Patients with a chronic or degenerative disease are often financially vulnerable and have limited capacity to pay for private health.
  7. Elective pays better than emergency: Any specialty where patients can be predictably lined up in advance for sequential treatment, such as with a colonoscopy list, can afford to pay it’s practitioners more thanks to inherent efficiency, plus a little bit of point three again. Compare that to emergency medicine which, by its very nature is unpredictable and also cannot take advantage of the natural filtering afforded by point four.
  8. Talent restricted pays better than talent oversupplied: Touching on point one, specialty training numbers are generally controlled by a regulating body (college or board) that are often keen to make sure that there is not an oversupply of doctors in that specialty in the marketplace. Anything that artificially limits supply puts upward pressure on price, and so it is for specialist medical skills.

Many will find the above to be unfair - I have spoken to many an aggrieved emergency medicine specialist or paediatrician over the years about the 'outrageous inequity' in pay they experience compared to their surgeon and anaesthetist colleagues.

But then there were likely many non-financial reasons why they chose that specialty in the first place. It is no secret at medical school that you will make more money reading MRI scans all day compared to caring for GP patients in the community.

So pay in medicine seems to be inherently unequal, at least in any country where there is at least some component of private medicine to invoke the power of the market.

I have not touched on the geographical aspects of pay differential  in this blog, but if it makes you feel better about pay inequity spare a thought for Cuban doctors who, by all accounts, are amongst the best trained in the world, and most equitably paid within their own country - cardiologists and pediatricians do get paid much the same. They all earn about $600 (yes - six hundred US dollars!) per annum.

Food for thought.

Dr John Bethell, Director

Wavelength International

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Comments

  • Yakesh Khanna 16/07/2013 12:15am (4 years ago)

    Doctors were not so high in their compensation few decades back as medicine was treated as a service to the community which is not the case now. Market forces do not bring their rates down as doctors are virtual monopolies.
    Patients have little choice to go to a cheaper doctor and have no bargaining power. Once it is question of life and health, doctors/hospitals make best use of that helplessness of patients and keep making tons of money.
    In any other business, you have deals, discounts, etc., Doctors increase their prices every year without caring if the country is in recession. Even Investment Bankers (infamous for their greed) in US earned less in recession. Doctors in US earn five times more than average and three times more than average of doctors in other developed countries.

    Let us take an accident, a person who saves the person from death (say a fireman) gets paid very little as compared to ER doctor. Both of them saved his life but Fireman can not ask for any charges. Same is true for Policeman, Military man. They also save lives, in a different way. If they break their charges procedure wise, they can make tons of money.
    When you see the wealth of doctors and hospitals around the world, you realize that the most exploitative system is private medicine where patient has no control on cost once he is being treated.

  • Thinus Van Rensburg 16/07/2013 7:22am (4 years ago)

    Yakesh that is a gross oversimplification. Doctors have to study longer and in the private sector that results in huge debts. If they are in private medicine they do not get the overtime, shift allowances, leave entitlements, etc that those other entities that you mentioned gets. Nor do those people carry the legal risk of being sued for massive amounts (because people like you see doctors as undeserving fat cats). Come and walk in my shoes every day and see how I make my money as a GP - I earn every cent of it and do not exploit anyone

  • Yakesh Khanna 16/07/2013 1:09pm (4 years ago)

    Thinus, You are right to a great exetent. Doctors as individuals are very nice people and have worked very hard to become a doctor but the system has been turned in their favour. This has been done by intermediaries. There are too many administrators. To become a GP, if one has to study for 11 years, it is not fair at all. Since doctors make mor emoney, medical schools also become expensive. AMA has seen to it that there are entry barriers. Hopefully, someday, there would be paradigm shift in training doctors so that cost of education, medicines, procedures goes down. This shift is happening in higher education with online unversities. At this time, your children (and you too) pay higher health insurance premiums which keeps going up above inflation. US is paying twice the percentage of GDP towards health care even when 15% population is uncovered. A section of society is living in islands of wealth even after paying medical school debt, malpractice insurance though all this is actually paid by patients. I really respect this profession but a combination of players have made every user of medical care wonder where it would stop.

  • Dr Shanta Ghatak 21/07/2013 10:27pm (4 years ago)

    Although I completely agree that some doctors have fallen ...but many too many save the lives many have honed their skills spent hours weeks months years with grit and dedication at all costs ...spent their lives in building the right capacities getting that right amount of tension in the suture materials when they open and shut the skull/abdomen/etc...it takes years to master the skills and at the end the doctors really are left to die alone....who cares when they are old and cannot practice any more ?
    Only money cannot be the only yardstick....doctors don't spend time with family/children.....they essentially machinise themselves in excelling beyond their dreams.....:)

  • Raj 18/11/2013 6:23am (4 years ago)

    Well said!
    MD, USA

  • Ex NHS surgeon 05/03/2014 3:19pm (3 years ago)

    Hear, hear! Unfortunately what you say is becoming true right across the world. The banal comments of Yakesh Khanna serve to confirm that the vast majority of the public, maybe even retired members of the medical profession itself, simply do not 'get it'. Thank god neither of my daughters expressed even the vaguest wish to go into the medical profession.

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