September 13, 2011 — Several leaders of organized medicine have responded to a new article reporting that US physicians charge more and earn more than their international colleagues by saying that higher pay is necessary to draw the best candidates to the profession.
"If you want to attract the best and the brightest, you need to pay them enough," said Kevin Bozic, MD, MBA, a spokesperson for the American Academy of Orthopaedic Surgeons, in an interview with Medscape Medical News.
"It's why people in the Middle East, when they have a serious illness, come to the Mayo Clinic or the Cleveland Clinic," added William Jessee, MD, president of the Medical Group Management Association. "The feeling is...the expertise is here. The compensation has attracted the best and the brightest."
An article published in the September issue of Health Affairs found that US primary care physicians and orthopaedic surgeons charge higher fees than their counterparts in Australia, Canada, France, Germany, and the United Kingdom. In addition, US primary care physicians generally earn about a third more than their peers in these 5 countries, whereas US orthopaedists earn anywhere from 36% to 187% more, write political scientist Miriam Laugesen, PhD, who teaches at the Mailman School of Public Health of Columbia University in New York City, and Sherry Glied, PhD, a former Mailman colleague who now is the assistant secretary for planning and evaluation in the US Department of Health and Human Services.
One possible explanation for the earnings gap, write Dr. Laugesen and Dr. Glied, is a "broader US income structure." That is, "the share of income received by people in the top 1% of the US income distribution far exceeds the corresponding share in the comparison countries." As a result, physicians here occupy a lower rung on the income ladder than they do elsewhere, and alternative career paths are more lucrative, exerting upward pressure on physician pay.
"Their earnings reflect the cost of drawing highly skilled people to the profession in an economy where the rewards for skilled individuals are higher than elsewhere," the study authors write. That is also the line of reasoning taken up by Dr. Jessee and Dr. Bozic.
Greater Reward for Physician Skill and Time
The research by Dr. Laugesen and Dr. Glied set out to explain why the United States spends substantially more on physician services than other countries. That differential, they write, is far greater than the difference in total healthcare spending.
The authors focused on physician fees paid by both public and private payers for primary care office visits and hip replacements. They found that US primary care physicians received 27% more from public payers and 70% more from private payers for a standard office visit with an established patient. The fee differential for hip replacement was even higher, at 70% more with US public payers and 120% more with private ones.
Higher US practice costs do not fully account for higher fees because "net incomes vary about as much as fees do," according to the authors. Rather, higher fees also reflect greater rewards "for the skill and time of physicians."
In turn, higher physician income here does not appear to stem from a higher volume of services. And when the authors factored out what US physicians need to earn to pay off a heavier burden of educational debt, they found that US physicians still come out ahead financially.
These relationships lead Dr. Laugesen and Dr. Glied to conclude that "higher fees, rather than higher practice costs, volumes, or tuition expenses, are the main driver of higher US spending" on primary care office visits and hip replacements.
The authors restated that point in the study’s abstract, writing that higher fees are the main drivers of "higher US spending, particularly in orthopaedics." That wording led a number of leaders of organized medicine to protest that physicians should not take the rap for runaway health costs across the board, because physician services represent just a portion of them: 1 in 6 dollars, according to the American Medical Association.
"We question the conclusion that physician payment rates are driving our nation's healthcare costs," said American Medical Association President Peter Carmel, MD, in a statement.
In an email to Medscape Medical News, Dr. Laugesen explained that the study abstract's comment on "higher US spending" refers only to physician services.
"We Undervalue Primary Care"
In another set of comparisons, the authors found that US primary care physicians earn 42% of what orthopaedic surgeons earn, which is a wider gap than that in the 5 other countries (in Germany, primary care physicians receive nearly two thirds of an orthopaedic surgeon's income). Dr. Laugesen and Dr. Glied said policy makers in all countries need to consider how this pay differential pulls medical students toward specialty fields, as opposed to primary care.
Glenn Stream, MD, president-elect of the American Academy of Family Physicians, agrees. "The difference shows how much we undervalue primary care," Dr. Stream told Medscape Medical News.
The pay differential also caught the eye of the Medical Group Management Association's Dr. Jessee, who is a pediatrician.
"Primary care should be the cornerstone of our healthcare system," he said. "But economically, it's not in [anyone's] best interest to enter primary care."
Dr. Laugesen received financial support from the Robert Wood Johnson Foundation, and Dr. Glied received a grant from the Commonwealth Fund. This article was written before Dr. Glied's employment with US Department of Health and Human Services and does not reflect its official views.
Health Aff. 2011;30(9):1647-1656. Abstract
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