Parija Kavilanz recently published an article on CNN called Doctors Going Broke. The article itself was pretty good, focusing more on issues running private practices than the physicians' personal finances. I review it here. The real revelation in the article, however, is found down below in the comments. I'd like to respond to a few of the themes notable in the comments.
Doctors Don't Pocket The Bill You See
Last time I was at a doctor the bill was $125.00 for 5 minutes. When my husband saw an oncologist it was over $200.00 for 10 minutes. A chemo treatment is over $2500.00. And you're telling me doctors aren't making money? Sorry, if they aren't it's their own fault. No sympathy here when they make in 5 minutes what I make in an entire day.
A few misconceptions here. First, just because the doctor was only in the room with you for 5 minutes doesn't mean he only spent five minutes on your care. For example, in the emergency department for every 10 minutes I spend with the patient I spend 10 more doing paperwork and another 10 interacting with the lab, x-ray, or a consulting physician.
Second, charges are very different from payments. Due to our dysfunctional insurance system, it is not uncommon to receive only 40% of our charges from an insurance company. Government payors such as Medicare may pay far less. For instance, Medicare pays us about 20% of charges and Medicaid pays 10%. And about 15% of people don't pay us at all.
Third, these payments are business revenue, not physician salaries. The physician must pay the rent, the utilities, insurance, employee's salaries and benefits, pay for capital expenditures, pay the accountant, coder, and biller etc. What he gets is what is left after all that. If the practice makes $1 Million in revenue, and he has $700,000 in expenses, then his salary is $300,000. If revenue goes down 20%, his salary goes down by 2/3rds.
Doctors Don't Have Money Coming Out Of Their Ears
All of the doctors I see don't drive anything less than a new Mercedes, so they all can't be suffering as much as their patients.
Oh right, well maybe some of them should move out of their McMansions and get a home like most Americans can afford. I am making $100,000 a year less than I was a year ago when I was making $500k I am going broke boo hoo.
Poor little doctors having to live off 1 instead of 2, 5, or 10 million per year. Your greed caught up with you and now it is time to pay the price!
[Canadian doctors] make a respectable living, though they likely don't pull in the millions that some American doctors do.
I drive a $4000 Durango. My last car was a 9 year old Mazda 626. Now you know one. If the goal was for everyone to suffer equally we could put Kim Jong Il in charge. This particular commenter makes a mistake that even many doctors make, that you are what you drive. Anyone who drives a Mercedes MUST be rich, no? The average physician makes $200K, not $500K. With an average medical school debt of $156K (and rapidly rising), and high marginal tax rates, $200K doesn't go nearly as far as many Americans think, especially when you consider that private physicians have to pay for all their own benefits, including retirement. Most doctors aren't part of the reviled 1%. They just don't make enough money.
There Is More To Healthcare Than Doctors
Doctors are overpaid, they manufacture prices for services out of thin air (had an MRI that they actually had the balls to bill for $10K–I asked the doctor how he slept at night, he admitted it was ridiculous but said he could get away with it), and there are simply too many of hem. If it takes the doctors going broke (like the rest of the world) to illuminate the myriad problems with the healthcare industry, I say THANK GOD.
Doctors in America are highly overpaid. In most other countries they just make a middle class wage. In America there are many millionaire doctors.
The radiologist's portion of this bill is likely ~$200. From that, he needs to pay his overhead and might be left with half of it. Where does most of the money go? To the hospital that owns the MRI and who employees the technician who performed it. There are approximately 954,000 doctors in the US. At $200,000 a piece, that comes out to about $191 Billion dollars. The cost of health care in the US is about $2.5 Trillion. So doctors' salaries compose about 7.6% of total. Our health care crisis can hardly be blamed on high physician salaries. Look to insurance companies, hospitals, pharmaceutical companies, and bureaucracy if you want somewhere to place the blame.
Many Doctors Run Their Business Poorly, and Do The Same With Their Personal Finances
The only way docotors are going broke is if they spent their money stupidly. Doctors make alot of money much more than the average person. I will be so bold as to guarantee that most doctors are millionaires (unless they jsut squander their money like some broke hollywood celebrities.)
They have the potential to cure cancer… but can't balance a check book?
Sadly, I have to agree (somewhat) with these statements. While most doctors are NOT millionaires, they should be (eventually). The reason they're not is that they squander their money like “some broke Hollywood celebrities.” Hopefully this website can help with that.
A more important lesson for doctors is this- Perception is more important than reality. The general public assumes you are rich and does not care about your ability to generate a good income, or even keep your doors open. Many people fail to see the connection between reimbursement and access to care. The long-term trend for your income is not reassuring. Run your business as best you can and live off much less than you earn so you can get through the rainy days ahead. Make hay while the sun shines. There may come a time when your income will be only $50-100K (or the equivalent.) Make plans now for what you will do in that scenario. Hopefully you'll never need them, but you never know.
Wow, lots of ignorant people out there. I had no idea there were this many misconceptions about physician income (although unfortunately, I am not surprised).
Yeah those comments are pretty scary… though even my family doesn’t quite understand a physicians income. They just see the big numbers, not the mountains of debt/work it takes to get there.
Many people are offended by the idea of a doctor regarding medicine as a business. They will not feel sorry for us in the least though if our practice goes under due to bad business practices.
I spent a good hour reading all the comments. There is little sympathy for the plight of doctors out there. The insurers have succeeded in reframing the problem as that mainly of “greedy doctors.” We know the problems are complex, but since we are the face of the health care industry (i.e. interact directly with the patients) we are seen as the villain. The AMA has failed in redirecting/defining the public’s perception of our role in the health care business scheme.
Unfortunate isn’t it? An oil baron or a software mogul makes billions adding questionable value to the world and people just say its business. In medicine, however, people dedicate their lives to helping people and yet people are irate at someone trying to make a living off of it.
Doctors can do their best to make sure their side of the story is heard, but they may –like you say–have no choice but to deal w/ adverse perception as it stands today.
i wish that article hadn’t been written on cnn.
no one will ever feel sorry for someone making more on average and in a most cases a LOT more than they do. In most cases they will dislike that person. Somehow athletes and celebrities though are exempt from this.
The general masses perceive most of our jobs as easy (in that they aren’t hard labor), there are too many hollywood shows that glorify doctors as rich, and there are sadly too many “cocky” docs.
Even my wife who is not in the industry thinks a lot of my services seem like “overcharging” to her.
No one can understand what it took to go through that difficult school, to spend all those hours in residency, taking all those tests.
They’ll never realize how few people are mentally gifted and motivated enough to do it.
And it is exactly because of comments like the ones in that story that makes me wish i’d gone into finance or something.
Insurance companies have much better PR departments than physicians and dentists do… so they’ve framed the problem on our incomes rather than all the waste that’s associated with what the hospital makes or what the ins. co’s make.
That’s probably our fault.
Tough situation… only going to get worse for docs.
Save hard, retire as fast as you can before the masses and ins co’s hammer your salary down to middle class wages and you regret every hour you spend studying for boards.
For whatever reason, whenever I am at a party or new situation, I always have a bunch of people who do real estate on the side start giving me their business card cause they hear I am a doctor.
I think most people think the average doc is pulling in one million per year, so with the poor economy there is no sympathy.
I tell people I work with not to bring their expensive cars to the hospital because it just looks bad. I have my weekend car{yes it is italian}, and it has never been in the physician lot. I park my low grade toyota at the hospital, right next to the orthopods Rolls Royce.
Perception is a big thing, and look too rich in a bad economy, you won’t be getting sympathy from the general public. And truth be told, I see their viewpoint.
Most Drs I know have extravagant homes, vacation homes, way expensive cars, and send their kids to private school. They take several elaborate vacations a year. They work 3 1/2 days a week. If they say they are going broke they are either a) living way beyond their means and not investing profit back into the practice or b) flat out lying for sympathy.
i actually doubt you know many doctors or are exagerating substantially. Even if you were telling the truth, you some how know a very small subset of physicians. With that said, in this economy one shouldnt expect a lot of sympathy for physicians and that is appropriate. There are likely many doctors who are now poor bc of factors they could have and should have controlled. There is definitely another subset that are hurt bc of factors they can not control and related to issues in medicine they likely couldnt have forseen. Until there is a severe shortage of these type of physicians, the problem will continue.
Those comments are interesting. Largely they seem to be based out of jealousy and ignorance. I think I remember reading that there were “too many” doctors? Who knows what flawed resource or logic they’re basing that off of. Many people think that doctors do make, “1, 2, 5 or 10 million per year” since they seem to act like it but, as books like “The millionaire next door” point out, the ones who look like they make that much are probably doing worse than the onse who don’t look like they are.
My father is a doctor and while I’m not certain I think my parents are millionaires. To tell you the truth though, I actually thought we were poor growing up. We bought off of the dollar menu and shared large fries and drinks when we rarely went to fast food restaurants. My parents drove cars 5-10 years old. Our house wasn’t elaborate though it was nice (I think it’s worth about $250 even now). My parents did donate a lot of money. We used to laugh at an autistic kid at our school who would rave to people that my dad was the richest guy in town. Now, after reading books like the one I mentioned above and others by that author I’m starting to realize that kid might be right.
I really appreciate this website because I’m truly not wise when it comes to investments. I was raised to be frugal and learned a lot from that. I’m eager to see what the future holds for me compared to many of my residency colleagues. My dad grew up dirt poor and made his money and taught me the same thing. I’ve paid my own way for everything and have managed to have little debt. Some of them have had their schooling and other things paid for and have a lot of debt. At least half of my residency class had bought a brand new nice* car prior to graduating residency. I’m driving a 10 year old ford Taurus valued at less than $1000. I’ll probably upgrade next year, but I doubt it will be the $70k BMW one of my close friends bought prior to graduating residency.
Honestly, I feel like medicine is safe from any severe monetary problems for at least a few years. I’m EM and so, I’m not too worried about my “practice” getting shut down by my finances since we as a profession are doing better than ever. My biggest question right now is how big of a home to buy. I think the market is perfect for getting in. If I get a 15 year loan and somehow manage the 20% down, I can get a 3% interest (which is ridiculous). I want to be comfortable but don’t want to dump money into a house that should be invested elsewhere. But, I also don’t want to have to upgrade my house in a few years when interest rates are back up to the 20% range like they were in the 80’s and house prices are re-inflated. I realize there are other factors like having to pay utilities and taxes too.
Unlike many of the posters on this issue I want my physician to be both well paid and educated. Although I am not a physician, I work in the field and understand the time commitment, long hours, high cost and huge debt the physicians must endure to get their credentials. They (doctors) should be very well compensated and deservedly so. What kind of physicians would we expect to get for a working salary? Who would want to go into medicine for such a salary? I wouldnt want them operating on me or giving me medical advice.
I find it strange that most patients would pay a Chiropractor or massage therapist rather than pay a doctor! Patients think that since they pay insurance premiums per month, the visit and all doctors services are free. It is interesting to note that the payors are conveniently out of direct contact withe patients and have made the doctors the middle man by filing claims for patients, checking eligibility etc ( the work we don’t get paid for).
The doctors should charge extra for filing claims and for documentation. If a visit with a patient is for 15 minutes, another 5-7 minutes is spent on documenting it, so we can prove that we have indeed provided the service. There is no other business in this country which has to prove that it has provided a service before getting paid.
Doctors work a lot and are stressed out. The money they make is after a lot of hard work and being constantly regulated. A lawyer can charge $250/hr but a doctor can not charge by the hour to the payors.
Good points, Sara.