I'd like to highlight a couple of things going around the internet today. The first is one of my favorite new blogs. It is written by the financially successful spouse of an emergency physician. The blog takes the somewhat controversial tone that “I'm in the 1% and you can be too and there's nothing wrong with that.” It's called I Am One Percent with the subtitle Personal Finance Tips to Be A 1 Percenter From A 1 Percenter.
At any rate, he published a guest post from me about how you can still get into the 1% (well, the bottom of it anyway) as a doc. It's a bit of a contrast to the post I did here months ago called You're Not The 1%. I hope you enjoy it. While you're there, check out the rest of the well-written blog for some good stuff. He's seeing a lot more growth in his first few months than this blog did.
Now, for a bit of the societal reaction to doctors making a good living. I participated recently in the Medscape physician income survey, which you can find here. It had a lot of disappointing results, including that my specialty had an 8% paycut in 2011 (general surgery, orthopedics, and radiology were worse.) MSN took the survey, wrote a couple of paragraphs about it and published it under the provocative title of Doctors Bemoan Paychecks That Most Plebes Would Kill For. In asking for comments, they ask “Does this survey make you feel a little sick?” Surprisingly, many of the comments were quite supportive of docs actually making a living. I tried to post a comment but the comment machine broke after half my comment was published. Perhaps you'll have better luck. On a different section of their site, they posted a slightly more positive article, but again with a title that focuses on one of the dumber questions in the survey: Are doctors rich? They don't think so.
The articles really focus on a question in the survey that I thought was pretty poorly written anyway. Little did I know it was a gotcha question the MSNBC journalists could get some mileage out of. Here's the question:
Do you feel rich?
The possible answers were:
1)Yes, I feel that description applies to me. (11%)
2) No, my income is no better than that of many non-physicians. (A true statement for all docs the way it is written.) (33%)
3) Not really. My income probably qualifies me as rich, but I have so many debts and expenses that I don't feel rich. (54%)
I answered # 2. Many of the people I associated with in college make more money each year than I do, took out fewer loans than most docs, and have been at it for at least 5 years longer. Not to mention I think there's very few people with any income who actually feel rich. We naturally compare ourselves to those who make more, not less, whether we should or not. I mean, if we compare ourselves to the entire population of the planet, just about everyone in America is in the 1%.
Given the reaction to this survey, I think I might just cut my income by 3/4 the next time I do a salary survey. Just one more way to do the stealth wealth thing. I've written before about some issues with having a higher income than others. It gets old having to justify my income to others. There's nothing keeping them from doing the same thing, if they can.
Great post as always, thanks. How about a link to the guest post on the other blog?
This perhaps should be posted on iam1percent[dot]com, but despite a catchy title, the pharmacist and the er doc do not actually mention much objective data other than “working hard” and getting paid less then pharm reps.
According to the chart on mean net worth
http://upload.wikimedia.org/wikipedia/commons/e/e8/MeanNetWorth2007.png
They are not even in the top 10% of net worth.
And they don’t mention whether they make over the $500,000 that both
Washington Post (http://www.washingtonpost.com/blogs/ezra-klein/post/who-are-the-1-percenters/2011/10/06/gIQAn4JDQL_blog.html) and the
Wall Street Journal (http://blogs.wsj.com/economics/2011/10/19/what-percent-are-you/) define as the income of a 1% household.
So how exactly are they the 1%?
Seems my comments don’t stay on for long…but
Can someone explain to me which doctor households make over $500,000 and have a net worth of well above $4,000,000?
Because that’s what being in 1 percent is. If you don’t make half a mil or have well over $4mil in assets, you’re not the 1 percent.
You’re the 99%.
The guest post:
http://www.iam1percent.com/medicine-physician-doctor-a-pathway-to-the-1-percent/
Nice post. Thanks!
i think its a waste of energy to determine how fairly or not so fairly we are paid compared to others in this economy. Its just never going to look like we are the good guys/gals. Im also not worried what % of the population i fall into. Its got to be top 10% on an income basis but i could care less if it was lower. I can afford the things i feel are necessary, some additional money for reasonable vacations and the like and best of all, i like being a physician and believe i help a lot of people. Some might argue we need to defend our incomes or we are more likely to see decreases but im not so sure that is correct. Its going to be very hard for someone who makes a lot less to see us as doing anything but complaining.
Here’s an interesting commentary from a plastic surgeon on that medscape survey:
http://thechart.blogs.cnn.com/2012/05/01/seriously-doctors-say-theyre-underpaid/?hpt=hp_bn12
Oops. Thought I’d included that link. I’ll fix that.
Paul- There’s a wide range of estimates on what the 1% is. In the guest post I discuss it a bit. Some estimates are as low as $350K of income and $1.5 Million in net worth. Many docs are (or at least should be) in that estimate. I’ve seen it as high as $600K of income and $9 Million in net worth. That excludes most docs, even many two-doc families.
Thanks for the link JR. Hadn’t seen that yet.
Actually, according to this website: you need to make over 761K a year to be in the top 1% for married filing jointly. My wife and I are both specialists (heme-onc and anesthesia) and we don’t make that. However, we are savers (>50% after tax and retirement plans) and do passive index investing so I think we will eventually get into the top 1% in terms of net worth.
Sorry for the failed website link in my post above. I hope by using what I’ve learned on this website and similar websites (e.g. Bogleheads) and books that we can achieve financial freedom in our 50’s and just work because we enjoy our work or choose to retire early. Thanks again for this website by the way.
Guess you’ll have to settle for the 2% by income eh! I don’t think that’s going to save you a lot of grief though.
As a family doctor I appreciated seeing the FP statistics. 6% claim greater than 300K in take home. How much fraud does that involve? I make a good income but I haven’t met many FP’s that can get above 225K without seriously compromising the care they provide (or lack of care).
Beau-
I’ve heard of a few FPs making over $300K a year. As I understand it, it involves keeping overhead low, keeping the payor mix excellent (cash-only, concierge, or no medicaid/medicare), doing lots of procedures (suturing in clinic, flex-sigs, colposcopy etc), and using extenders extensively.
It seems to me there is a particularly wide range of incomes in FP.
Rex, I’m in total agreement with your entire response. I feel lucky to work in a job that I love and get paid so much for it and if I get paid less than what a neurologist was making into the 80s, so be it. That said, my informal survey of non-physicians shows that they think all physicians are all millionaires. I can see why that is the case. Before I became a doctor, I had no idea what the average md salary was. In any case, I have never once felt any resentment from anyone regarding my salary. Even my medicaid and uninsured ps have never once been disrespectful. In fact, I suspect that given the choice, pts would rather see an md who has a nice clinic and looks well off than an md who looks poor. I suspect that people who fill out msnbc surveys and comments may be self-selecting towards resentment and I doubt it truly represents a significant slice of society’s opinion.
Pray for ObamaCare and “outcome based” remuneration for physicians.
While it is true physician’s incomes only account for about 8% of America’s total health care costs, it is also true that the “fee-for-service” system provides powerful incentives to physicians to increase “volume” and over-medicate.
It always amazes me how lobbyists can buy billion dollar favors for a few thousand dollars. Same can be said for doctors, let’s not forget they’re human too. The desire to be in the upper 1% could easily drive millions of unnecessary medical procedures and account for another 20% of America’s medical costs.
Solution: Take the money and greed out of doctoring: move to a outcome based single payer system that rewards doctors proportionately to other professions, increase medical school capacity, make med school more affordable, increase residency pay and reduce hours, cap malpractice claims and implement an electronic medical records system that provides transparency, accountability and enhances our ability to evaluate the effectiveness of medical protocols and procedures.
I have a few issues with your suggestions:
1) “Take the money out of doctoring.” Why don’t we take the money out of food buying? Why doesn’t anyone care that the grocery store kingpins are making millions? Isn’t food more important than health care? Yet there is no EMTALA for grocery stores. Capitalism works. Is it perfect? Of course not. But it’s better than anything else we’ve tried. We remove capitalism from our health care system at our own detriment. What we need is a system that allows capitalism to fix the issues. We need increased price transparency and cost-sharing for all. If we can get those two things in place with reasonable levels of regulation, market forces will fix our issues.
2) As I mentioned before, no one “desires to be in the 1%.” They want to pay off their student loans, buy a nice home, drive a nice car, pay for their kids’ college, and have a comfortable retirement. Which of those do you think doctors shouldn’t desire? Are those desires so unrighteous?
3) Why would increasing residency pay be an important part of solving problems? I know A LOT of attending physicians that feel residency hours have already been decreased too much. Personally, I think $40-50K is plenty of money for a resident. How much do you think an intern is really worth? Ask any attending and he’ll agree that an intern costs him time/money. Now a chief resident is probably worth something, but I’d guess a resident isn’t worth his cost (remember to include benefits) until about halfway through residency. If we really wanted to pay a fair price, you’d pay a 1st year $10K, a 2nd year $40K, and a 3rd year $80K.
4) What other professions should doctors be rewarded similarly to? Accountants? Attorneys? Lawn mowers? That smacks of Marxism to me. We tried that. It didn’t work.
5) Outcome based renumeration sounds good in theory. But let’s really boil it down and explain how it will work. Some guys walks into my ER with CP. If he leaves alive I get paid? If I don’t admit him I get paid more than if I do? If he receives a diagnosis of chest wall pain and leaves the ED within 45 minutes I get more money than if he leaves with non-specific chest pain and it takes 6 hours? Is it all about how he is in 30 days? If I discharge him home and he’s fine in 30 days I get one amount, but if he has a PE, AMI, or dies within 30 days I don’t get paid? Conversely, if I admit him and he actually does turn out to have a 60% LAD lesion I get some amount, but only half that much if he’s fine in 30 days with no interventions? I mean seriously. Boil this down. How does it work? The more complicated the system gets, the more the people in the worst negotiating positions (usually the doctor and the patient) get hosed.
And if you really think an EMR is going to save any significant amount of money you’ve obviously never seriously used one. Be all measures, implementing an EMR increases the cost per patient. We’re now able to get paid for the stuff our poor documenting didn’t allow us to get paid for before.
Ok, I’ll try to deal with each issue you raised:
1) Capitalism works well when markets function well. Medicine has and never was a natural fit for capitalism. It is a better fit for the cost based, regulated utility model since there is no price transparency, limited market entry, limited competition between providers, limited access to information, an inelastic demand curve and massive equity and cost shifting challenges.
2) In a well functioning labor market a “fair” income might be based on the laws of supply and demand. However, as noted above, the laws of supply and demand for physicians and their services don’t exist. Hence we’re left with dysfunctional and largely self-regulated system that has enriched everyone but the consumer. As a starting point I would submit that physician incomes in the US be commensurate with their counterparts in other developed countries.
3) As for increasing residency pay I would tend to agree. Most of the doctors I’ve known always cite the opportunity cost of their residency, i.e., the long hours and low pay, as justification for charging so much.
4) See Item 2 above.
5) You make good points. Accountability is always difficult to measure and enforce. Teachers abhor performance evaluations based on student achievement, testing, etc. Personally I prefer a single payer system in which physicians are salaried, and the overall performance of the institution is used to establish payments. That way the hospital can deal with physicians based on their individual performance.
6) EMR has made the VA more efficient. Kaiser has a decent system and high efficiency. Nearly every major industry has implemented maintenance data systems as complicated as an EMR system.
The downside to a single payer system is it is a monopoly. The payer gets to decide what I’m worth. I don’t think that will lead to efficiency. Why would I want to do more for the same pay?
“Hospitals can deal with physicians” – The only way hospitals can “deal” with physicians is by employing them. This is the trend due to increasing regulatory burdens. But I hardly think it is good for physicians or patients. Patients going to physician-owned practices are currently being socked with an additional “facility” fee they didn’t use to pay.
I have no idea why you would want the salaries of a profession in one country to be equal to that of that same profession in another country. It’s all very marxist. How about letting the market solve the problem? As you note, there are issues with the health care market. But they can be fixed by increased transparency and fair cost-sharing. The solution isn’t MORE government, it’s less. But 51% of Americans don’t agree with me, so we’ll have to agree to disagree on this point.
I’m not sure salaried physicians are the solution. I’ve worked in a salaried system with a single payer. It sucked. It encouraged laziness from people who weren’t naturally lazy. While the VA EMR might have made the system more efficient, it’s pretty hard to argue the VA is efficient. If it were, why are all their patients coming to see me? I know why. I ask them. It’s because they can’t get an appointment with their primary care “provider” (almost always a mid-level) for weeks to months. They don’t like the care they get in the VA ED (and our local one is staffed by board certified emergency docs, unlike many VA EDs.) And forget seeing a specialist. I admit VA patients all the time. I always offer them a transfer to the VA. They usually turn it down. You have to ask yourself why that is.
1) “The downside to a single payer system is it is a monopoly?”
From a patient’s perspective medicine is already Big Brother. better to have a well managed monopoly than an out of control oligopoly that is wasting hundreds of billions of dollars and gouging its customers. So what if single payer is a regulated monopoly. So are fire, police, most education, water, electricity services. Single payer consolidates the vast labyrinth of private insurance companies that make your life, and more importantly, the lives of your patients a living hell. Single payer makes the rules simpler, billing simpler, facilitates development of an effective EMR system and prevents gaming by patients, physicians, clinics and hospitals alike.
2) “The payer gets to decide what I’m worth?”
What world do you live in? How many patients have a clue what their doctor charges them? At best they only know their copay. In general, the only folks who find out what their doctor charged are the bill collectors and unfortunate who can’t afford health insurance.
3) “Why would I want to do more for the same pay?”
You shouldn’t, unless your current rates are above fair market value (see above).
4) ” The only way hospitals can “deal” with physicians is by employing them.”
Hospitals can take on the responsibility of enforcing Obama’s “results oriented” performance standards for the doctors they employ. That or we we leave the AMA to self-police themselves.
5)” I have no idea why you would want the salaries of a profession in one country to be equal to that of that same profession in another country. It’s all very marxist. How about letting the market solve the problem? As you note, there are issues with the health care market. But they can be fixed by increased transparency and fair cost-sharing.”
Not equal, just comparable. Some economists adjust for GNP wealth of country but even then America’s physicians are, by a significant margin, the highest paid in the world. The financial incentives to preserve these income levels leads to excessive costs in health care.
6) “I’m not sure salaried physicians are the solution. I’ve worked in a salaried system with a single payer. It sucked. It encouraged laziness from people who weren’t naturally lazy. While the VA EMR might have made the system more efficient, it’s pretty hard to argue the VA is efficient. If it were, why are all their patients coming to see me? I know why. I ask them. It’s because they can’t get an appointment with their primary care “provider” (almost always a mid-level) for weeks to months. They don’t like the care they get in the VA ED (and our local one is staffed by board certified emergency docs, unlike many VA EDs.) And forget seeing a specialist. I admit VA patients all the time. I always offer them a transfer to the VA. They usually turn it down. You have to ask yourself why that is.”
Maybe the VA is more willing to perform the gate-keeper role – something that the insurance companies try to due presently? Maybe physicians have a financial incentive to deliver unnecessary and/or ineffective services? Maybe the patient insists on choosing his/her doctor? Or is unduly biased against VA? Some patients hate Kaiser and HMOs for similar reasons.
Are you kidding Dennier?
” better to have a well managed monopoly than an out of control oligopoly that is wasting hundreds of billions of dollars and gouging its customers”
When has ANYTHING the federal [or state, for that matter] government gotten involved in resulted in something that could be called “well managed”? I think “wasteful” would be a better adjective in almost all circumstances. Just ask anyone who has ever worked in a government run facility.
Mark,
I’ve heard many doctors say the Medicare system is much better to deal with than private insurance. I’d also cite the government run health care systems of nearly every other developed country as superior to our dysfunctional system. The VA system has a higher payout to patient than nearly every private care system. I agree the government is seldom efficient at anything it does. But some services are still better left to government lest we end up with a balkanized system based on greed and greenbacks driving the show. The complex private run system we have has been unable to keep costs under control – and that’s the challenge, i..e., being gatekeeper to medicine. As I pointed out above, it’s a conflict of interest to expect hospitals and physicians to do that job yet someone has got to as we are facing runaway costs. That’s another reason government should run health care insurance.
Let me be a dissenting voice. I’d rather deal with private insurance. Why? The private insurance company will negotiate.