Organized Medicine Defends Top Pay for US Physicians

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

FDA Plans to Extend Its Global Regulatory Reach

June 20, 2011 — The US Food and Drug Administration (FDA) plans to take a more global approach to ensure the safety and quality of regulated drugs and medical devices, the agency's commissioner announced during a media briefing today.

One prong of the new 4-pronged approach will involve partnering with counterparts worldwide and creating global coalitions of regulators intent on ensuring and improving global product safety and quality, said FDA Commissioner Margaret Hamburg, MD.

"This is a long-term strategy," Dr. Hamburg said. "It cannot be accomplished immediately and will probably take many years to implement, depending upon resources."

One part of the new approach will mean regulators no longer regard borders the same way. "The border can no longer be the nation's primary line of defense against unsafe imported products," she said. "Instead, the border must serve as a final checkpoint on preventive controls throughout the supply chain."

An FDA report, Pathway to Global Product Safety and Quality, describes the new strategy. Most notably, it calls for the agency to change how it conducts business and to take a more global approach to promote and protect the health of US consumers. Highlights of the report include 3 other prongs of the 4-pronged approach:

• The coalitions of regulators will develop international data information systems and networks and increase the regular and proactive sharing of data and regulatory resources across world markets.


• The FDA will build in more information gathering and analysis, with an increased focus on risk analytics and information technology.


• The FDA increasingly will leverage the efforts of public and private third parties and industry and allocate FDA resources based on risk.

Such coalition-type models do not exist in the world of FDA-regulated products, said John Taylor, JD, acting principal deputy commissioner of the FDA, and the FDA does not already have a coalition in place. However, many peer regulators have expressed interest in working more closely together to ensure the safety and integrity of products moving through the global supply chain.

Current Regulatory Authority Outdated

When asked whether the FDA would need new authority from Congress to proceed with the project, Taylor said the agency would move ahead with the strategy regardless of whether it needs new authority to do so. He also noted that the agency's authority relating to medical products is outdated. In 1938, the authority given to the FDA largely grew out of a world where manufacturers of regulated products were based in the United States.

"We've been a domestic agency that works in an international world," he said. "What we need to do is transform ourselves into a global agency that is able to work all around the world and address product issues that arise all over the world."

Taking a more global approach will enable the FDA to better monitor companies in far-flung areas that might otherwise escape regulatory scrutiny as more FDA-regulated products are produced overseas.

Global production of FDA-regulated goods has exploded over the past 10 years, according to Dr. Hamburg. Manufacturers increasingly use imported materials and ingredients in their US production facilities, "making the distinction between domestic and imported products outdated, to say the least," she said.

Products regulated by FDA, Dr. Hamburg said, reflect the globalization of today's economy:

• 10% of all imports into the United States consist of products FDA regulates,


• 80% of active pharmaceutical ingredients in the drugs Americans use come from overseas,


• 40% of drugs themselves are imports, and


• about half of all medical devices used in this country are imported.

Yet the FDA does not have the resources to keep pace with demands created by globalization, according to the report issued today that describes the FDA's new plan. In 2008, the Government Accountability Office recommended that the FDA increase inspections of foreign drug companies, but at current rates, it would take 9 years for the agency to inspect every high-priority pharmaceutical facility just once.

The new strategy would build on changes already made by the FDA. Between 2007 and 2009, the FDA increased the number of foreign drug manufacturing inspections by 27% and opened international offices in several key locations around the world.

The FDA has also collaborated with counterparts in the European Union and Australia on drug inspections, and it has joined an organization of drug manufacturing inspectorates from 39 countries. The FDA and other global leaders are also creating an expanded global regulators forum for medical devices.

More information on the new strategy is available on the FDA Web site.