5 ms·

Do American doctors get paid too much?

13 points by peter123 17y ago

ars 17y ago
> According to Reinhardt, doctors' take-home pay (that is, income minus expenses) amounts to only about 1 percent of overall health care spending, or about $26 billion. This doesn't make any sense whatsoever. So where is all that money going? > That's a drop in the ocean compared with overhead for insurance companies, billing expenses for doctors' offices, and advertising for drug companies. There is absolutely no way those things add up to 99% of medical expenses. In every field most of the money goes to pay people. So who is making the money? Is Reinhardt excluding specialists perhaps?
- deleted 17y ago
  [deleted]
- ams6110 17y ago
  He left out a lot of other stuff. Hospital rooms. Nurses, lab technicians, all the other staff at the hospital/clinic/doctor's office. Other overhead (office rent, equipment leases) on and on. Liability insurance premiums for malpractice insurance. A huge cost. Enough to drive doctors away from some specialties, such as obstetrics. There's some overhead in insurance company billing operations, but I've not seen any good evidence that the government can do it for less.
  - Locke1689 17y ago
    I was curious, so I asked my dad what it was on average. He said that it was about $30,000-$40,000 per year per doctor, but that is highly dependent on the specialty. For surgeons, probably close to $100,000 a year, while probably close to nothing for psychiatrists.
  - trevelyan 17y ago
    》 I've not seen any good evidence that the government can do it for less. France? Any argument against single payer has to cope with the multitude of countries which provide health care better and cheaper to all of their citizens.
- jsz0 17y ago
  I believe it. The administrative overhead is huge in private health care. I did some contract work for a doctor a few years ago and it was amazing that this small office had a staff of 8 or 9 people basically devoted to moving around paper files, making copies, making phone calls for prescriptions, etc. This small general practice office had probably 12 employee's total but only 2 doctors. So using this as an example that's an administrative/care ratio of 6 to 1. When you widen it out to tests, drugs, etc the actual number of people directly giving care to a patient is tiny compared to all the supporting elements.
- kingnothing 17y ago
  It isn't 1% of my total bill, but I did pay out of pocket for an outpatient surgery several years ago. The doctor charged me $500, including all follow-up office visits, whereas the hospital charged me close to $5000. Doctors are not the ones to blame about high medical costs.
falsestprophet 17y ago
Has anyone seen an adequately objective breakdown of United States health care costs? edit Here is the best I can find: http://www.kaiseredu.org/topics_im.asp?imID=1&parentID=61&id=358 http://www.kaiseredu.org/topics_im.asp?imID=1&parentID=6...
- baran 17y ago
  This McKinsey report shows the best breakdown of costs that I have seen: http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_he...
brown 17y ago
Yes, they do. In my opinion, the biggest cause of this is the artificial caps on the number of doctors graduated every year. Only a small fraction of qualified med school applicants are accepted each year. (In my idealism) more doctors would create more of a free market. The market would find ways to identify high quality doctors who deserve $1m a year, but there would also be the $200k/yr doctors for normal middle class and $50k doctors for low income areas. The cynic would say it's because the medical community is being protectionist. The conservative would say it's those pesky liberals worrying too much about our safety. The doctors I've worked with speculate it's because of the "priest" like status that doctors have historically held in society. For hackers... well, let's just say there's a lot of money to be made in medical software. Doctors value their time very much and are willing to pay silly amounts of money for modest efficiency improvements. Most hackers are scared away from medical software because of concerns of excess regulation and complexity. That's a fair concern, but that doesn't mean there's still not good opportunities.
- fnid 17y ago
  Doctors haven't always held priestlike status. They used to be normal everyday people a couple hundred years ago.
- tokenadult 17y ago
  Economist Martin Feldstein found out a long time ago that increasing the supply of doctors just increases the share of national income that all doctors enjoy, and still results in high incomes for each doctor, because doctors refer to other doctors. The United States has a higher supply of medical doctors per capita than most countries, and those doctors make a good living. After edit: Here's a link to a follow-up paper by that economist on the issue of physician income: http://lingli.ccer.edu.cn/he2007/ref/1014/reply.pdf http://lingli.ccer.edu.cn/he2007/ref/1014/reply.pdf
splat 17y ago
I'm surprised that the article doesn't mention the effect that the AMA has had on the medical community. The article points out that in France and the UK one aspiring doctors go to medical school for free immemdiately after high school, whereas in the US aspiring doctors go to a university before going to medical school and must pay tuition for both (not to mention the residency period afterward). This is a consequence of rules put in place by the AMA (which, in turn, are backed up by legislation). The AMA has ensured that doctors in the US tend to be quite good, but it has also restricted the supply. The result is that cheap, lower-quality doctors are forbidden from entering the marketplace. In many cases, this is good -- I wouldn't want to undergo open-heart surgery with a low-quality doctor. But if I break my arm, do I really need to see a doctor who has had over 10 years of training? I would likely be just as well off seeing a doctor who is not quite as good and has had only a few years of training. As a consequence of the AMA, patients are forced to see extremely well-trained doctors even for routine procedures. In many cases, this is just overkill. But the net effect is reduction in the supply of doctors, and an increase in their salaries.
- gcheong 17y ago
  The physician's assistant is a position that was created in order to fill the need for lower cost medical care where direct consultation with an actual physician is not required but it does not seem to have really taken off in the US as far as I can tell. One thing that does seem to have an effect in lowering medical costs long term is technology such as the Da Vinci robot which allows "regular" doctors to perform procedures that previously could only be done by highly skilled surgeons.
- oldgregg 17y ago
  SPOT ON. The AMA is an unconstitutional cartel that punishes the poor. All the changes they are talking about are total bullshit until this issue is addressed. And what about prescriptions? The vast majority of drugs are safer than a bottle of Nyquil, but oh, we have to protect you so you have to make a doctors visit for some freaking allegra. Prescriptions need to come to an end unless it's a highly addictive or dangerous (class II?). You can't let the "experts" dictate what is best for all those "dumb citizens" when they stand to dramatically benefit from fear-mongering. It's elitist idiocy. It's the same reason why I'm highly skeptical of most global warming policy. Maybe we have global warming, but we have no idea if we can even stop it to begin with-- so hell, let's just let the "experts" make stuff up ("change your light bulbs!")... while we dump tons of money into funding research projects. Dumb.
barrkel 17y ago
Well, the AMA appears to use an almost Marxist model of labour supply: > Apparently the American Medical Association has a board that calculates something called "relative value units", or RVUs. These attempt to measure how difficult a given procedure is for the physician [...] We have a name for setting prices this way. It's called the "labour theory of value", and it was invented by a guy named Karl Marx. http://www.economist.com/blogs/democracyinamerica/2009/09/maybe_medicare_really_is_commu.cfm http://www.economist.com/blogs/democracyinamerica/2009/09/ma... http://www.slate.com/id/2227082/ http://www.slate.com/id/2227082/
isaacgarcia 17y ago
It's a free market - leave it alone. If anyone wants to be a doctor - go to school for 12 years. No one is stopping you. The article also fails to address the ridiculous cost of malpractice insurance that doctors must carry (for obvious reasons).
- deleted 17y ago
  [deleted]
- fnid 17y ago
  It's the exact opposite of a free market. The supply of doctors is limited. The ability for people to care for their own health is limited by the FDA and prescriptions. Lots of very good candidates for medical school are eliminated from the physician pool by the AMA every year due to the availability of med school seats, which currently is around 11,000 per year. Doctors limit the supply of doctors. When DeBeers does this in the diamond industry it's considered illegal.
  - tokenadult 17y ago
    See my other reply. http://news.ycombinator.com/item?id=816755 http://news.ycombinator.com/item?id=816755
motoko 17y ago
Do technology startup founders get paid too much? And: if you think doctors do get paid too much? What are you going to do about it? Offer to pay less? That would be reasonable, but do you pay your doctor?
deleted 17y ago
[deleted]
baran 17y ago
Dont forget about medical malpractice. This insurance has gone through the roof in the last 10-15 years, many times dramatically eating into doctors salaries. Also remember doctors have peoples lives in their hands. I dont understand how people could think they are overpaid.
- asciilifeform 17y ago
  > doctors have peoples lives in their hands And so do bus drivers.

13 points by peter123 17y ago

ars 17y ago

> According to Reinhardt, doctors' take-home pay (that is, income minus expenses) amounts to only about 1 percent of overall health care spending, or about $26 billion. This doesn't make any sense whatsoever. So where is all that money going? > That's a drop in the ocean compared with overhead for insurance companies, billing expenses for doctors' offices, and advertising for drug companies. There is absolutely no way those things add up to 99% of medical expenses. In every field most of the money goes to pay people. So who is making the money? Is Reinhardt excluding specialists perhaps?

deleted 17y ago
[deleted]
ams6110 17y ago
He left out a lot of other stuff. Hospital rooms. Nurses, lab technicians, all the other staff at the hospital/clinic/doctor's office. Other overhead (office rent, equipment leases) on and on. Liability insurance premiums for malpractice insurance. A huge cost. Enough to drive doctors away from some specialties, such as obstetrics. There's some overhead in insurance company billing operations, but I've not seen any good evidence that the government can do it for less.
- Locke1689 17y ago
  I was curious, so I asked my dad what it was on average. He said that it was about $30,000-$40,000 per year per doctor, but that is highly dependent on the specialty. For surgeons, probably close to $100,000 a year, while probably close to nothing for psychiatrists.
- trevelyan 17y ago
  》 I've not seen any good evidence that the government can do it for less. France? Any argument against single payer has to cope with the multitude of countries which provide health care better and cheaper to all of their citizens.
jsz0 17y ago
I believe it. The administrative overhead is huge in private health care. I did some contract work for a doctor a few years ago and it was amazing that this small office had a staff of 8 or 9 people basically devoted to moving around paper files, making copies, making phone calls for prescriptions, etc. This small general practice office had probably 12 employee's total but only 2 doctors. So using this as an example that's an administrative/care ratio of 6 to 1. When you widen it out to tests, drugs, etc the actual number of people directly giving care to a patient is tiny compared to all the supporting elements.
kingnothing 17y ago
It isn't 1% of my total bill, but I did pay out of pocket for an outpatient surgery several years ago. The doctor charged me $500, including all follow-up office visits, whereas the hospital charged me close to $5000. Doctors are not the ones to blame about high medical costs.

falsestprophet 17y ago

Has anyone seen an adequately objective breakdown of United States health care costs? edit Here is the best I can find: http://www.kaiseredu.org/topics_im.asp?imID=1&parentID=61&id=358 http://www.kaiseredu.org/topics_im.asp?imID=1&parentID=6...

baran 17y ago
This McKinsey report shows the best breakdown of costs that I have seen: http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_he...

brown 17y ago

Yes, they do. In my opinion, the biggest cause of this is the artificial caps on the number of doctors graduated every year. Only a small fraction of qualified med school applicants are accepted each year. (In my idealism) more doctors would create more of a free market. The market would find ways to identify high quality doctors who deserve $1m a year, but there would also be the $200k/yr doctors for normal middle class and $50k doctors for low income areas. The cynic would say it's because the medical community is being protectionist. The conservative would say it's those pesky liberals worrying too much about our safety. The doctors I've worked with speculate it's because of the "priest" like status that doctors have historically held in society. For hackers... well, let's just say there's a lot of money to be made in medical software. Doctors value their time very much and are willing to pay silly amounts of money for modest efficiency improvements. Most hackers are scared away from medical software because of concerns of excess regulation and complexity. That's a fair concern, but that doesn't mean there's still not good opportunities.

fnid 17y ago
Doctors haven't always held priestlike status. They used to be normal everyday people a couple hundred years ago.
tokenadult 17y ago
Economist Martin Feldstein found out a long time ago that increasing the supply of doctors just increases the share of national income that all doctors enjoy, and still results in high incomes for each doctor, because doctors refer to other doctors. The United States has a higher supply of medical doctors per capita than most countries, and those doctors make a good living. After edit: Here's a link to a follow-up paper by that economist on the issue of physician income: http://lingli.ccer.edu.cn/he2007/ref/1014/reply.pdf http://lingli.ccer.edu.cn/he2007/ref/1014/reply.pdf

splat 17y ago

I'm surprised that the article doesn't mention the effect that the AMA has had on the medical community. The article points out that in France and the UK one aspiring doctors go to medical school for free immemdiately after high school, whereas in the US aspiring doctors go to a university before going to medical school and must pay tuition for both (not to mention the residency period afterward). This is a consequence of rules put in place by the AMA (which, in turn, are backed up by legislation). The AMA has ensured that doctors in the US tend to be quite good, but it has also restricted the supply. The result is that cheap, lower-quality doctors are forbidden from entering the marketplace. In many cases, this is good -- I wouldn't want to undergo open-heart surgery with a low-quality doctor. But if I break my arm, do I really need to see a doctor who has had over 10 years of training? I would likely be just as well off seeing a doctor who is not quite as good and has had only a few years of training. As a consequence of the AMA, patients are forced to see extremely well-trained doctors even for routine procedures. In many cases, this is just overkill. But the net effect is reduction in the supply of doctors, and an increase in their salaries.

gcheong 17y ago
The physician's assistant is a position that was created in order to fill the need for lower cost medical care where direct consultation with an actual physician is not required but it does not seem to have really taken off in the US as far as I can tell. One thing that does seem to have an effect in lowering medical costs long term is technology such as the Da Vinci robot which allows "regular" doctors to perform procedures that previously could only be done by highly skilled surgeons.
oldgregg 17y ago
SPOT ON. The AMA is an unconstitutional cartel that punishes the poor. All the changes they are talking about are total bullshit until this issue is addressed. And what about prescriptions? The vast majority of drugs are safer than a bottle of Nyquil, but oh, we have to protect you so you have to make a doctors visit for some freaking allegra. Prescriptions need to come to an end unless it's a highly addictive or dangerous (class II?). You can't let the "experts" dictate what is best for all those "dumb citizens" when they stand to dramatically benefit from fear-mongering. It's elitist idiocy. It's the same reason why I'm highly skeptical of most global warming policy. Maybe we have global warming, but we have no idea if we can even stop it to begin with-- so hell, let's just let the "experts" make stuff up ("change your light bulbs!")... while we dump tons of money into funding research projects. Dumb.

barrkel 17y ago

Well, the AMA appears to use an almost Marxist model of labour supply: > Apparently the American Medical Association has a board that calculates something called "relative value units", or RVUs. These attempt to measure how difficult a given procedure is for the physician [...] We have a name for setting prices this way. It's called the "labour theory of value", and it was invented by a guy named Karl Marx. http://www.economist.com/blogs/democracyinamerica/2009/09/maybe_medicare_really_is_commu.cfm http://www.economist.com/blogs/democracyinamerica/2009/09/ma... http://www.slate.com/id/2227082/ http://www.slate.com/id/2227082/

isaacgarcia 17y ago

It's a free market - leave it alone. If anyone wants to be a doctor - go to school for 12 years. No one is stopping you. The article also fails to address the ridiculous cost of malpractice insurance that doctors must carry (for obvious reasons).

deleted 17y ago
[deleted]
fnid 17y ago
It's the exact opposite of a free market. The supply of doctors is limited. The ability for people to care for their own health is limited by the FDA and prescriptions. Lots of very good candidates for medical school are eliminated from the physician pool by the AMA every year due to the availability of med school seats, which currently is around 11,000 per year. Doctors limit the supply of doctors. When DeBeers does this in the diamond industry it's considered illegal.
- tokenadult 17y ago
  See my other reply. http://news.ycombinator.com/item?id=816755 http://news.ycombinator.com/item?id=816755

motoko 17y ago

Do technology startup founders get paid too much? And: if you think doctors do get paid too much? What are you going to do about it? Offer to pay less? That would be reasonable, but do you pay your doctor?

deleted 17y ago

[deleted]

baran 17y ago

Dont forget about medical malpractice. This insurance has gone through the roof in the last 10-15 years, many times dramatically eating into doctors salaries. Also remember doctors have peoples lives in their hands. I dont understand how people could think they are overpaid.

asciilifeform 17y ago
> doctors have peoples lives in their hands And so do bus drivers.