Beat the Press

Dean Baker's commentary on economic reporting

6/23/2006

NPR’s Sob Story for Struggling Doctors


NPR did a piece this morning on doctors' pay that leaves you wondering why they get taxpayers dollars. The basic point was that doctors, especially primary care physicians, are struggling. The news hook was a new survey that showed that doctors’ net (after malpractice) pay is not keeping pace with inflation.

The survey showed that average net compensation for all physicians in 2003 was just over $220,000 a year (in 2006 dollars). This is down by 7.1 percent (adjusted for inflation) from the 1995 level. Of course there are big differences by specialty. (The decline in pay is partly explained by a 4.1 percent shortening of the average workweek.) While the survey found that surgeons average almost $300,000 a year, primary care physicians average just $160,000 a year.

The NPR story chose to focus on the latter, highlighting the difficulties of making ends meet. However, instead of finding a typical primary care physician, NPR found a doctor who claims to be making just $50,000 a year, less than one third of the average.

The doctor in the story sounded like an impressive person. According to the piece, she specialized in caring for pregnant women in the inner city. It sounds like hard work for very modest pay. According to the piece, she is being forced to change jobs (taking a position at Georgetown University) because she still has $300,000 in loans from medical school hanging over her head.

This is a good human interest story, but it has nothing to do with the pay of doctors. Why on earth would NPR talk to a primary care physician, who apparently earns less than one-third the average for primary care physicians, to find out about the financial difficulties facing primary care physicians? This would be like talking to an autoworker getting $7.00 an hour to find out about the situation facing the typical UAW autoworker who earns close to $20 an hour. Competent reporters do not do this.

The gist of this story was that we should be paying doctors more. If doctors get more, the custodian getting $7.00 an hour gets less. That’s the way the economy works, one person's income is another person's cost. Maybe there is a case to be made that the average physician can’t make ends meet on $220,000 a year, and the government should intervene to raise their wages. But that case must be made based on the situation of the typical doctor, not some hardworking dedicated physician who works for one-third of the average wage.

30 Comments:

  • At 8:34 AM, Blogger Tim Worstall said…

    "Maybe there is a case to be made that the average physician can’t make ends meet on $220,000 a year, and the government should intervene to raise their wages. But that case must be made based on the situation of the typical doctor, not some hardworking dedicated physician who works for one-third of the average wage."

    I fully agree. Quite outrageous reporting. Of course, we should in fact extend this concept, for example, we could use the typical minimum wage earner when talking about the minimum wage. Say, the teenager working part time for allowance money rather than that family that can’t get by on it. For if you were to add together those teenagers and those who get tips as well, they vastly outnumber the group we do hear about all the time.

     
  • At 8:52 AM, Anonymous Anonymous said…

    That’s the way the economy works, one person's income is another person's cost.

    Wow. And I used to think real GDP actually grew over time.

     
  • At 2:00 PM, Anonymous christian h. said…

    Uh, Mr. Anonymous: We are talking about a fixed point in time here. If you disagree, please double my pay - I'm sure your childrens' tuition won't be raised, it'll all come out of "GDP growth".

     
  • At 4:44 PM, Anonymous S Brennan said…

    To what Tim Worstall said:

    "...outrageous reporting. Of course, we should in fact extend this concept, for example, we could use the typical minimum wage earner when talking about the minimum wage. Say, the teenager working part time for allowance money rather than that family that can’t get by on it. For if you were to add together those teenagers and those who get tips as well, they vastly outnumber the group we do hear about all the time.

    I Say:

    Only 25% of minimum wage earners are teenagers, 25% are between the ages of 20-25 and 50% are twenty five and older.

    See http://www.bls.gov/cps/minwage2003.htm

     
  • At 5:05 PM, Anonymous Erik L. said…

    An interesting point about the bad reporting. I wonder though, if Dean is also trying to make the point "boo-hoo for the poor doc who can;t make it on $160,000/year".

    If so, I think he should take into account that it is to all of our advantages (as we age) to have medicine be a highly paid profession. We want really smart people going in to medicine and it being a straight-forward way to earn lots of dough is one good way to achieve this effect.

    Also, the student loan debt is no joke. My little bro came out of med school over $200K in debt and it influenced his choice of specialty to be a highly paid one. We all lack sympathy for the financial plight of anyone who makes more than we do (because if we could only double our salaries our lives would be perfect) but imagine you are 32, haven;t earned much money since you were in high school, are $200K in debt and now want to buy a house in a nice neghborhood that is big enough for a wife and two kids. In the suburbs of Chicago, thanks to the housing bubble that costs around $600K so now you are $800K in debt. Not exactly living lifestyles of the rich and famous.

     
  • At 5:51 PM, Anonymous Anonymous said…

    I work in a major teaching hospital on the east coast. Because of my position, I'm very familiar with physician salaries and pay scales in hospital/HMO settings. I find the figures cited as the mean to be high.

    Until they finish their residencies, doctors make less than most experienced adminisrative assistants. Residents in our area are definitely making less than $50k/year, on average. They don't start making the 6 figure salaries until 3 years post med school graduation if they went into medicine, and 3-8 years if they went into surgery.

    Also, for those who practice in settings associated with medical schools, it is common to have caps on pay well short of $250,000

    I suspect that the means you cite are heavily skewed by private practice physicans in specialties. I think the median salary might tell a different story. Also, because of the pay structure of training programs for doctors, salary reporting should distinguish between Senior and Junior physicians.

     
  • At 7:23 PM, Blogger Dean Baker said…

    A couple of points:

    first, unless someone can tell me how the survey on physicians' salaries was flawed, I am going to trust it over anyone's personal accounts. (They were trying to paint a bad picture for doctors, so I don't think they cooked it to show higher salaries.)

    In terms of whether doctors have it hard or easy, this is obviously subjective, the median wage for all workers is about $30,000 a year based on a 40 hour workweek. This puts the average doctor at more than 7 times the median, although the workweek is about 30 percent longer.

    Of course doctors do train longer than people do for most jobs. But, I'm not sure how much more one suffers in med school than cleaning toilets as a custodian.

    Anyhow, moving beyond the subjective issues, if we standardized our educational and licensing procedures, making them fully transparent, and opened up the medical profession to anyone who met our standards anywhere in the world, I have no doubt that we could fully meet the demand for doctors even if wages fell to half of their current level.

    I'll let others argue whether this would be good or fair, but this is what we have done to out autoworkers and textile workers. Certainly any consistent supporter of "free trade" would opt for this policy.

     
  • At 7:51 PM, Anonymous James Schipper said…

    Dear Mr Baker
    I doubt very much that doctors are struggling. I wouldn't be surprised if it turned out that American doctors are the highest paid doctors in the world.
    However, it should be pointed out that doctors only start making money at about the age of 26, 8 years later than a highschool graduate, and that doctors have to earn back the costs of their medical education. If we compared a doctor's lifetime income minus the cost of his medical with the lifetime income of a highschool graduate, then the difference would be smaller than the difference resulting from a comparison of annual income.
    Regards. James

     
  • At 8:49 AM, Blogger Tim Worstall said…

    For S . Brennan:

    From exactly the same page that you quote:

    "Among industry groups, the proportion of workers with reported hourly wages at or below $5.15 was highest in leisure and hospitality (about 15 percent). About three-fifths of all low-wage workers were employed in this industry, mostly in food services and drinking places. It should be recognized that for many of these workers, tips and commissions might supplement the hourly wages received."

    Add those teenagers on minimum wage not in the hospitality industry to those 3/5 ths and you get the vast majority, do you not?

     
  • At 10:04 AM, Blogger Buce said…

    Nah, I think you have lingered too long at the Brad deLong school of journalistic criticism. It is interesting to know what doctors do really make -- and I must say that, while I don't begin to feel sorry for them, they do seem to be a bit more squeezsed than they did back in the 60ss. It is also intersting that there is one saintly doctor who makes an atypical wage for doing saintly work.

     
  • At 10:23 AM, Blogger Dean Baker said…

    buce,

    Doctors' real wages have roughly doubled since the sixties, while the real wages of most workers have barely budged. This would have been a good piece of information for NPR to have included in its story.

    I suspect that almost no one knows anything about the trend in the wages for professionals relative to the rest of the population. I hold the media responsible for this ignorance, just like you hold a teacher responsible if his whole class is illiterate.

    by the way, I like Brad DeLong and appreciate his work, but I was about 5 years ahead of him on the media criticism beat (the Economic Reporting Reviewed started in 1996). So, you can't blame him for my comments.

     
  • At 10:41 AM, Anonymous Anonymous said…

    Doctors' real wages have roughly doubled since the sixties, while the real wages of most workers have barely budged.

    Why exaggerate the second part even if not close to a 100% gain?

     
  • At 11:01 AM, Blogger Buce said…

    "Doctors' real wages have roughly doubled since the sixties..."

    No kidding? I must know the wrong doctors. The ones that I knew in the 60s (a) were always buying planes that were more expensive than they needed and therefore more sophisticated than they could manage--and therefore crashing them into mountains; and/or (b) suckers for the most absurd investment frauds. The ones I know these days seem to me to lead lives that are no longer princely but merely ducal.

     
  • At 12:51 PM, Anonymous Erik L. said…

    I think the idea that dr. wages have doubled in real terms since the 1960s is probably a case of picking one's starting point (i.e. before medicare) really carefully.

    I would also like to see some support for Dean's assertion that if we opened up the US market to any doctor from anywhere in the world and offered to pay every doc $80,000 a year (half the average of $160,000, right) that we would have enough doctors.

    BTW- in asking this assumption I assume you want doctors to pass a board exam or at least have it be transparent whether or not they have passed such an exam.

    My recolection from my med school days is that the US was importing huge numbers of docs from around the world (India seemed especially prevalent) to get docs into underserved areas and those areas were still quite underserved.

    Don't forget also that if it it were simply a matter of open borders and dough that other countries might have to raise their salaries to stop their docs from leaving. That might make $80K/year not attractive enough.

    I know Dean you are trying to make a point here for the working man, but I think in this case you are guilty of making strong assertions without numbers to back them up.

     
  • At 4:20 PM, Anonymous Half Sigma said…

    It's hard to feel sorry for people making $220,000.

    OK, I admit it, I don't feel sorry for them at all!

    However, I do believe that doctor income is going down, becaue today doctor's are mostly paid by a small number of insurance companies, so they have much less bargaining power than they used to.

     
  • At 5:55 PM, Anonymous Anonymous said…

    Dean baker is absolutely right..open the floodgates from other countries,and the medical care in US would be in much better shape..As an economist, Dean knows it is a supply problem and let's solve it in an age old fashion. The medical lobbies (erecting barriers to entry) +insurance lobbies are the reason why US medicare is such a shame.. Let doctors earn a decent income say !70-90k (on par w/ engrs/scientist etc like in most countries)..What a goddamn scam we have here, all that brouhaha about malpractice notwithstanding.Hell, most docs here do nothing and hide behind defensive practice.

     
  • At 8:33 PM, Anonymous John said…

    The NY Times is running a similar series of stories on the economic status of doctors.

    So, this looks like a publicity campaign.

     
  • At 1:21 AM, Anonymous S Brennan said…

    To what Tim Worstall said:

    "It should be recognized that for MANY of these workers, tips and commissions MIGHT supplement the hourly wages received."

    So you want to hang your argument not on statistics, but the words "many", "mostly" & "might". Food service also includes those who prepare foods...think vegetable, poultry and beef processors, which explains the "many", "mostly" & "might" biz.

    I'll give you credit though, you did pick the most idiotic paragraph to quote...15% becomes 66%...breathtaking stupid. The line above that lacked the spin " More than two-thirds of all low-wage workers in 2003 were in service-type occupations, mostly in food service jobs".

    Have another sip of Kool-aid.

     
  • At 5:06 PM, Anonymous Anonymous said…

    Erik I remembers that the US was importing lots of doctors. I believe that was the case for awhile, but stopped in, I think the early 80s. My cousin-in-law is a doctor here, from India. I can't remember the exact year he came - I think early 80s, maybe late 70s, but he remembers that his "batch" was the last group of Indian doctors that was going to be allowed in the US easily, because the US had just changed the rules very significantly - his plane was full of doctors just beating the deadline for the rule change. Does anyone have more specific historical information about when this change took place and the specifics of the rule change?

     
  • At 1:49 PM, Anonymous Anonymous said…

    Why on earth does NPR do most of the things it does?

     
  • At 4:41 PM, Anonymous Anonymous said…

    Rob Paral has a study from a couple of years back, on immigation policy and physicians/nurses; the AMA had a recent article on the J-1 visa program that was indeed cut back severely in the early 80s.

    Of course, how one views migration of professionals depends largely on where one sits, as gainer or loser.

    More could probably be said about the role of the AMA as a cartel, restricting medical schools, defining licensure requirements, and generally restricting the supply of trained professionals (see., e.g., Paul Starr's Social Transformation of American Medicine).

    As for NPR, well, they did run an interesting story about how the ADA is trying to keep dental therapists trained in New Zealand out of rural Alaska.

     
  • At 3:36 AM, Anonymous Anonymous said…

    I'm a primary care doctor who is struggling. I left school with over $200,000 of debt. I work 7 day weeks, and have no savings and thanks to refurbishing the practice I took over, have another $300,000 in debt. Meanwhile, UHC cut my pay 50% last year, Medicare is cutting my pay 10% this summer, and Medi-Cal is also cutting 10%.

    My training involved working 110 hours per week. Per week. My long shifts were 36 hours long. I kept this schedule for 3 years. Now I have an "easy" 80 hour per week schedule.

    You may say that custodians cleaning toilets have it rough. But then, they didn't have to go a quarter-million in debt and work 110 hour weeks for what they do.

    Every day, I keep patients' HIV at bay so they don't get AIDS; and with AIDS patients, I restore their immune systems. I help control people's diabetes so they don't need their legs cut off, or go blind. I cure people of hepatitis, which would otherwise kill them or give them liver cancer.

    In return for doing all that, and working 80 hour weeks, 7 day weeks, getting awoken in the middle of the night by pages, and seeing my family about 4 times per year, I'm getting pay cuts. When insurance companies cut my pay, or "discount" my bill, I don't get to turn around and tell the bank, or Sallie Mae, that I'm also going to "discount" what I owe them. I still have to meet my responsibilities.

    Not a month goes by now that another young doctor from my residency announces they are leaving community practice.

    You all take us primary care doctors for granted. When the last of us have quit, in debt and in disgust, it will be all of you who will be sorry.

     
  • At 10:21 AM, Blogger ERudited said…

    Brilliant post by "Anonymous."

    I, too, work in what I consider a primary care setting. I am an Emergency Medicine physician in a rural hospital that is in dire need of physicians. To quote an average income of over $200,000/yr. is more than misleading. This number takes into account the highly paid specialists and sub-specialists. I've watched numerous colleagues close their practices because they just cannot afford to keep them open. Consider this. Let's say your Family Medicine physician earns (gross) $150,000/yr. Then subtract the $20,000 he pays in malpractice insurance. Take from that the rent he pays on his building (~$20,000). Now let's pay his office staff and billing company (~$72,000). Now, let this doctor pay self-employment tax on what remains. Get my point? Some of these doctors are actually LOSING money by keeping their practices open.

    In my work, I am challenged with the most critical of illnesses. Forget the intellectual challenge of this. How many of you can imagine what it feels like to tell a parent that their 15 year old daughter was killed in a car wreck...that we couldn't save her? Or, try telling a young mother that the reason her thirty year old husband just had a seizure is because of his large brain tumor that I just found on CT scan. Sadly, I've done both.

    Back to "Anonymous'" point:

    Continue to devalue your physicians, then panic when the day comes when you REALLY need a qualified one to take care of you, or someone you love. My guess is that, unless the trend changes, many of you will find less than stellar providers giving you EXACTLY "what you pay for."

     
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