Tag: income

Should doctor salaries be publicized?

Should doctor salaries be publicized?

One of my coworkers who grew up in India told me that their teachers in grade school would post everyone’s scores in the hallway after every exam.  This comparison of grades and objective testing further extended to cities and even regions in the country.  There are people going through the hierarchical ranks with “gold medals” in science or engineering.  Throughout this process, it was relatively transparent who the smartest or highest achieving people (at least on paper) were.  The “winners” in the system also got the best opportunities for jobs and potential to move to the United States.  He once asked me why the hospital systems aren’t transparent about doctor salaries or executive salaries.
While there isn’t a single best answer to his question, I began to wonder how our healthcare system would fare if incomes were publicized.
Can grades even be compared to income? No way.  There is a finite cap on grades, and everyone in the class can theoretically earn a 100% if no one ever misses a question.   There is only so much money floating around in the world.  Not everyone can get a “100%” on their salaries.

Corporate America can do it

The corporate world often discloses the compensation of some of its management members under their shareholder agreement.  Non-profit entities have to disclose their executive compensation schedules through a 990 form—this is a powerful resource for you financial voyeurs who want to see what other people are earning.  Remember, all non-profit institutions (read: hospitals) file this publicly so you might actually find some interesting financial information on your coworkers or friends.  Some of the names on these compensation schedules belong to doctors, but these numbers are unrelated to what doctors earn in their clinical practice.

Posting salaries of your doctors
Clearly publicly posting one’s income is not really a socially acceptable analogue to posting grades in school.  The inherent problem with the public being aware of your physician’s salary is that laypeople truly have little idea what goes into the training or daily routine of a doctor; they just see the salary and judge based on a number. 

What might actually be an interesting scenario is if everyone’s compensation within a hospital or medical group be listed.  This includes everyone—the janitor, all of the mid-level managers who make your lives hellish, all of the HR people who litter their email signatures with online and fabricated degrees (BA, AClh, MBA, CFO, BLS), and the one guy who doesn’t do much of anything but still gets paid more than the pediatricians and family medicine doctors in the group. 

Here is a hypothetical layout of the salaries of Medical Group A:

How about these apples?

While physicians still remain at the top of the income chain, you might be surprised how many hands are in the pot.  At the basic level, doctors (and to a certain extent midlevels and physician extenders) are fundamentally responsible in bringing in the revenue.  However, this revenue has to be distributed among all of the other workers in the organization.  And we all know that the number of administrators in healthcare has grown by several thousand percent since the mid 1970’s.  What has been most revealing in speaking to various hospital personnel is that most non-physicians have little idea what doctors actually do, even though they are working alongside the doctor!

Go back and reread that statement. Those of you in the hospital or clinic settings will know what I am talking about.  Remember the time the hospital facilities person told you that his call schedule was worst than yours because he was on call all of the time?  The worst case scenario was that a water pipe in the hospital had burst so he had to unlock the door for the plumbing staff to do the repairs.  Oh, if he “forgot” to pick up the phone there would not be any consequences. <end rant>

In the end, I realized that nothing good would come out of posting anyone’s salary.  We would actually lose out as doctor because what people want to see are numbers, not how much work or how long it takes to get to where you’re at. 

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Doctors need to understand their worth

Doctors need to understand their worth

There was a recent news brief stating that the average internist generates about $2.4 million annually for the hospitals that they work for.  While it’s no surprise that doctors help others make money, seeing a figure to your worth hammers home how much we sustain the healthcare system, often at our own expense.

This basically means that a Hospitalist making $240,000 a year doing average work for the hospital is working with a 90% overhead!  This is not just a matter of robbing Peter to pay Paul—this is robbing Peter, Paul, and their  children to pay the king!  I certainly wouldn’t want to be running a business with a 90% overhead.  Those of you who are hospitalists probably know of the various incentive programs that your hospital offers to its doctors for good work:

  • A $10,000 annual bonus for twelve consecutive months of good patient satisfaction scores.
  • A $5,000 quarterly bonus for handling more admissions from the ER.
  • An invitation-only steak dinner catered by the hospital for a year of prompt charting.

Now this article is not intended to get all doctors to strike, but we do have to sit back and realize that we’re getting moldy carrots for a whole lot of work.  In case you were wondering, those fat cats occupying the C-suite are getting steak dinners more than once a year.

How does a Hospitalist bring in $2.4 million to the hospital?

This is more of a thought exercise, but I’ve had colleagues tell me that their RVUs amount to a fraction of this $2.4 million figure.  Sometimes, hospitals show doctors their RVUs simply to shame them into working harder—maybe comparing them to each other or showing that a particular doctor isn’t meeting the baseline number of admissions.  Not all RVUs are created equal, but that will be a discussion in another article.
In order to follow the dollar signs, you have to look at what can happen with every hospital admission:

Even though the primary doctor only brings in direct revenue from daily exams, labs, and diagnostics, all of the consultants downstream generate even more money for the hospital.  Remember that revenue comes both in the form of professional and technical charges.  The technical and facilities charges bring in serious amounts of money into the system. Just look at some of the bigger hospitals in metropolitan areas—they are all renovating their facades and public spaces in order to attract more patients.  The money is coming in somewhere, and doctors play an integral role in capturing that revenue for the hospital.

The conundrum of the doctor

Unfortunately understanding the money trail isn’t going to get your hospital to pay you more.  The issue has to do with numbers.  Just as hospitals are trying to supplant M.D.’s with physician extenders who can follow protocols at a lower salary, the more doctors of your “type” there are, the easier it is for the hospital to hire.  In the medicine world, internists are a dime a dozen—you can always be replaceable if there is someone out there willing to do your job for less pay.  More specialized doctors may have more leverage in the health system, they are still replaceable.  I’ve seen highly trained specialists in metropolitan areas become replaced by hospitals when they gripe about work hours or inadequate salaries.

The more work for less pay issue doesn’t sit well with me—we all obviously have different thresholds on our worth, but the lack of uniformity among our profession contributes to our downfall.  I’d imagine that starting debt after our training contributes to our willingness to negotiate higher salaries, as does our starting net worth.
Until we find a more unified front to combat the system, I simply continue to tell my trainees to learn as much about the healthcare system as they can if they intend to practice medicine. 

What would you suggest doctors should do to qualify our worth?

Should You Be Content With Your Income?

My financially interested colleagues often ask me whether they should be content with their income. It’s obviously a loaded question since there are too many variables that will influence the answer. Fortunately it does not have to be a difficult question to answer, especially if you ask the question early and frequently in your career.

How important is income to you?

This is the primary question to ask yourself. Are you planning to retire in the next five years but still have three kids to put through college? Do you have expensive hobbies or habits that you can’t forgo? Establishing a realistic goal of how much you need and how much you’d want to have in a certain timeline will help you focus on an income target.

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Does your income in your main occupation provide your income goal?

If it does, then you’re set. You don’t have to do anything other than keep your job. Make sure you do it well, and make sure you continue to enjoy what you do. If your main occupation becomes a chore, then you will not be happy no matter what you earn.

If not, figure out what you can do to increase your primary income. Do you need to look for a better job? Do you need to negotiate a higher salary? Can you reach the upper tier for your specialty and level of experience? Would doing so compromise your lifestyle or secondary obligations?

If you cannot increase your primary income and still need to increase your overall income, you have to decide whether you want to spend your free time making money. Do you have hobbies that can generate income? Money is plentiful in the world, but it is not easy to come by. You can hustle and earn lots of money. You can hustle and earn nothing. Expect to have many failures before finding success. For instance, I spend a disproportionately high number of hours per week managing this website, but still have not generated any income. Who knows, maybe one day it will reward me with ancillary income. But I can’t quit my day job yet.

What is important to understand is that we are not limited to one venue for income. You can have income through your primary job, an online consulting business, or driving for Uber. All it takes is hunger, hard work, and time.

Keep reassessing your financial situation.

Ask early, and ask often. Is income important to you? What have you done today to increase your income? What is your time horizon to achieve these goals? Rinse and repeat.

What are you doing to assess your income needs?