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Are physician salaries too high?

March 20th, 2007 by Dr. Val Jones in Medblogger Shout Outs
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I am opposed to millionaires, but it would be dangerous to offer me the position.

–Mark Twain

As we consider the wastefulness of the healthcare system, I have heard many people complain that physician salaries are one of the main culprits in escalating costs.

Dr. Reece compares the average income of some of the highest paid physician specialists, with that of hospital executives, medical insurance executives, and fortune 500 CEOs. Check this out:

Highest Paid Physicians

1. Orthopedic, spinal surgery, $554,000
2. Neurosurgery, $476,000
3. Heart surgeons, $470,000
4. Diagnostic radiology, Interventional, $424,000
5. Sports Medicine, surgery, $417,000
6. Orthopedic Surgery, $400,000
7. Radiology, non-interventional, $400,000
8. Cardiology, $363,000
9. Vascular surgery, $354,000
10. Urology, $349,000

Executive Pay for Massachusetts Hospital CEOs

1. James Mongan, MD, Partners Healthcare, $2.1 million
2. Elaine Ullian, Boston Medical Center, $1.4 million
3. John O’Brien, UMass Memorial Medical Center, $1.3 million
4. David Barrett, MD, Lahey Clinic, $1.3 million
5. Mark Tolosky, Baystate Health, $1.2 million
6. James Mandell, MD, Children’s Hospital, Boston, $1.1 million
7. Gary Gottlieb, Brigham and Women’s Hospital, $1 million
8. Peter Slavind, MD, Massachusetts General Hospital, $1 million

2005 Total Annual Compensation for Publicly Traded Managed Care CEOs

1. United Health Care $8.3 million
2. Wellpoint, Inc, $5.2 million
3. CIGNA, $4.7 million
4. Sierra Health, $3.4 million
5. Aetna, Inc, $3.3 million
6. Assurant, Inc, $2.3 million
7. Humana, $1.9 million
8. Health Net, $1.7 million

Top Corporate CEO Compensation

1. Capital One Financial, $249 million
2. Yahoo, $231 million
3. Cedant, $140 million
4. KB Home, $135 million
5. Lehman Brothers Holdings, $123 million
6. Occidental Petroleum,, $81 million
7. Oracle, $75 million
8. Symantec, $72 million
9. Caremark Rx, $70 million
10. Countrywide Financial, $69 million

But the real story here is the salary of our primary care physicians – those unsung heroes of the front lines. KevinMD pointed out a recent news article citing $75,000.00/year as the average salary of the family physician in the state of Connecticut, and that their malpractice insurance consumed $15,000.00 of that. Although this is certainly below the national average for pediatricians (they start at about 110,000 to 120,000), I’ve seen many academic positions in the $90,000 to 100,000 range.

Now I ask you, does it seem fair that the vast majority of physicians (the primary care physicians) are making one tenth of the average hospital executive salary? Should doctors really be in the cross hairs of cost containment?

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.

What are orthopedic surgeons worrying about?

February 26th, 2007 by Dr. Val Jones in Expert Interviews
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I had the chance to speak with Jim Herndon recently about how the current healthcare climate is affecting orthopedic surgeons. He said that there are 3 things that worry orthopods:

1. Decreasing Medicare reimbursement. In 1990, reimbursement for a total hip procedure was $2,200. In 2007, the reimbursement is $1,190. Medicare is planning to further cut reimbursement 30% in the next 4-5 years.
2. Increasing malpractice insurance costs. Premiums are steadily increasing. In Boston, the average malpractice insurance is about $50,000/year. In Philadelphia, the cost is $150,000. And if you’re an orthopedic surgeon specializing in spinal surgery, malpractice insurance premiums can start at $250,000/year.
3. Pay for performance. No one really knows how this will be applied specifically to surgeons (other than the obvious infection rates), but fears are mounting regarding how to show the best possible performance in one’s practice.

Let’s say that a typical surgeon in Philadelphia pays 33% in overhead (the hospital facilities, staff, etc.). Let’s say that he is also taxed 33% on his income. That means that he’d have to perform 382 hip replacements per year, just to pay his malpractice insurance. That’s almost 2 surgeries/day, 5 days a week, 11 months/year.

So what are surgeons doing? They are reducing overhead by setting up outpatient surgery centers (Dr. Herndon estimates that 60% of orthopedic surgery can be performed in an outpatient setting), they are increasing the volume of surgeries they perform, they are buying radiology facilities where they send their patients for XRays, MRIs etc. (Dr. Herndon explains that Stark Laws don’t prohibit this, so long as the physician takes on the risk of the facility – i.e. that he can potentially make or lose money), and they are financing physical therapy practices that supply therapy to their patients.

Orthopedic surgeons in private practice have become very business savvy in order to survive in this climate. But somehow I feel saddened by all this – the business of medicine is a grim reality that can create a wedge between the physician-patient relationship. A patient is left to wonder about the motivations behind tests and therapies – and perhaps even behind recommendations for the surgery itself.

I guess the second opinion has become more important than ever before?

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.