Physicians derive approximately one-third of their income from public payers. Among physician specialties deriving more than half of revenues from government sources, incomes vary more than threefold.
Some have argued that certain specialties should receive higher payments than others due to high malpractice insurance costs and the need to purchase expensive medical equipment. This assumption is built into the Medicare RVU payment formula. Yet the income differentials we present reflect net income, i.e., income after all practice expenses are paid. Moreover, the problem of practice expenses applies only to the approximately 60% of physicians who are self-employed; the remainder are employees. Shifting income from specialists to primary care providers might lengthen waits for some specialists’ services, waits which some might view as proof of a specialist shortage. However, regions of the U.S. with greater supply and use of specialist services may actually suffer worse outcomes,22
and no evidence suggests a widespread unmet need for specialist care. Other nations (e.g., Canada) have achieved superior health outcomes 23–24
with far fewer specialists (and more primary care physicians) than in the US.
Certainly longer work hours or additional years of training might justify a higher income. Yet, according to the most recent AMA physician socioeconomic statistics,25
hours in professional activities correlate poorly with income. For example, general internists spend a mean of 58 hours in professional activities per week, while otolaryngologists spend 57 hours and radiologists spend 60 hours. Similarly, while both dermatologists and geriatricians spend a minimum of 4 years in postgraduate training, geriatricians earn less than half of a dermatologist’s income.
Government’s role in creating inter-specialty income discrepancies may actually be larger than indicated by our payment analyses, since many private insurers base their fees on Medicare’s fee schedule.26
Political barriers to reducing income disparities include specialists’ greater resources for lobbying and disproportionate representation on the AMA’s Specialty Society Relative Value Scale Update Committee (RUC), which advises the Centers for Medicare and Medicaid Services (CMS). Government policy-makers may also perceive, incorrectly, that income inequality is generated by a free market beyond their control.
Even lower-paid US physicians earn far more than the average American, making it difficult to generate a groundswell of public sympathy for the financial plight of primary care doctors. Yet the income inequality between specialists and generalists unbalances the health care system and ultimately puts patients at risk. If fewer medical trainees are attracted to primary care, patients will be left without physicians to coordinate their care and to follow them longitudinally. Of particular concern is the national shortage of geriatricians, the lowest paid specialty. The American Geriatrics Society estimates there are 7,600 certified geriatricians in the U.S. despite a need for approximately 20,000 geriatricians.27
Ironically, Medicare’s priority population, the elderly, is vastly underserved, in part because of Medicare’s own payment policies.
Our study has several limitations. Our estimates of inter-specialty differences in payer-specific income were based solely on outpatient income, as the MEPS does not include data on inpatient physician specialty. The MEPS surveys only non-institutionalized civilians, excluding physician care of nursing home patients (the majority of whom have Medicare and/or Medicaid), and two groups whose care is completely government paid (active duty military personnel and prisoners). Inclusion of these patient groups would have increased our estimate of the government’s share of total physician revenue.
Government could narrow inter-specialty income differentials by aligning billing codes and fee schedules with the amount of time physicians actually spend providing and coordinating care. Such a change might increase the supply of US primary care physicians.
Addressing income inequality within society may lead to better population health outcomes;28
the same may hold true for addressing income inequalities between physicians.