24 August 2010

The Irrationality of Physician Specialty Reimbursement

@txmed tweeted an interesting link from Residency Notes, the blog of a thoughtful neurosurgeon in training, regarding the issue of specialty pay.  I've interacted with this author before and recall him as being a pretty reasonable person, and the argument he makes is refreshingly straightforward:
I want to make the argument for why the orthopaedist, the cardiologist, the neurosurgeon deserves to earn more, and considerably more, than the primary care physician. And to make the argument that maybe we’re not so far off the mark with out current reimbursement structure.

I would lay out the argument for the specialist’s pay like this: the training is longer and more difficult, there is a disparity in early earnings and the assumed risk is something much more.
And to some degree these are points which are not in dispute.

The fallacious assumption, however, is that the value generated by the specialty surgeon, and the investment represented in his or her training is accurately reflected in the potential income.  It's also incorrect to assume that the reimbursement system for physicians was designed deliberately to create the existing disparity.

It's a little bit of a straw man to compare a neurosurgeon to a family practitioner.  It's not a fair comparison. Neurosurgery is, I'll grant, really hard. It's also a life-or-death profession in some cases*.  FPs, with all respect, are on the lower end of the critical care/selectivity/prestige spectrum. Let's look for more apples-to-apples comparison. Consider, say, the urologist and the nephrologist.  The duration of postgraduate training is about the same for both. The training is harder for surgeons (whether that's a question of necessity or culture I'll leave for another day) so I'll grant that perhaps there should be a salary premium to the surgeon. And it is true that surgery is a profession which is less forgiving of error, so there is another argument for higher pay for the surgeon.  The general practice of a urologist, however, is not incredibly exacting: kidney stones and cystos and urodynamics are not exactly brain surgery, if you'll forgive a terrible pun. However, the nephrologist generally represents the highest caliber of internist -- their patients are horrendously complex and incredibly difficult to manage. They also make life-altering decisions, nearly as dramatic in their own way as a surgeon's (living on dialysis is rough).  And there is little margin for error in the practice of a nephrologist: their patients are brittle and will go into flash pulmonary edema or life-threatening hyperkalemia at the drop of a hat.  Both specialties lead difficult lifestyles -- I probably call in our nephrologist for emergency dialysis more than I call in a urologist for an emergency foley.  (OK, cheap shot. I apologize.)

If you look at average physician incomes, however, the nephrologist commands a 30% premium above that of a family practitioner, whereas the urologist is at a princely 200% of the "baseline" physician salary.

The same thing plays out across many other specialties. The Infectious Disease specialist makes 110% the FP "baseline" but the Radiologist is 220%. The Pediatric Cardiologist (a largely non-interventional specialty) is 20% above the baseline, but the orthopedist who does joint replacements is 300%.  And for that matter, the income variation among surgeons makes little sense, either. Ortho-Spine is reimbursed 50% more than Ortho-Hand. Why? Is the training that much harder? Is the value provided that much more? Is the surgery that much more intricate? Pick your example. Is Neurosurgery actually twice as hard as pediatric surgery?

So what is the justification for the differential?  There's none.  Sure, you can invent your theories for why the kidney surgeon deserves more money than the kidney doctor, or why the spine surgeon deserves more than the brain surgeon, but it's all a retro-fictional apologetic for the status quo, and more often invented by beneficiaries of the status quo who have an interest in preserving it. The reality is that the reimbursement system as it now exists was a pretty ad hoc creation that has more to do with the political power and tactical maneuverings of proceduralist physicians than a carefully crafted mechanism designed to produce the current state.  The RUC, the committee that created the current RVRBS which dictates physician piecework compensation, is a non-representative committee which somehow surgeons managed to dominate, and they created a system in which proceduralists (and any specialty in which volume could be maximized) could flourish.  The value provided by a given physician specialist and their reimbursement were completely delinked.  It all became about the number of cases they could do, and as minimally invasive procedures grew, as new devices streamlined surgery, as new surgeries and devices were invented, the proceduralists prospered beyond their wildest dreams.

http://images1.makefive.com/images/200934/94ccb702ce71fea8.jpgSince the health care budget pie is something of a zero sum game, the windfall for the surgeons came at a price for the primary care doctors. (Note that while we bemoan the plight of PCPs, all cognitive-based physicians have suffered, from the infectious disease specialists to neurologists to endocrinologists, etc.)  The rate of change of actual take home salaries for office-based docs is well below the rate of inflation over the least decade.  And it's only getting worse.  Is it any wonder that 2% of medical students intend to go into primary care?

Ultimately, the economic issue at hand is not whether the surgeon "deserves" more than the office-based physician. As Clint Eastwood said in Unforgiven, "Deserving's got nothing to do with it."  It's an arbitrary and irrational system. The question is whether the incentive provided by the income and other benefits is effective in producing the desired behaviors. Well, doctor pay and prestige is still adequate to keep med schools full, so doctoring money overall is clearly adequate.  But the income available to primary care doctors (in addition to the lifestyle factors and other fringe benefits/drawbacks) is clearly inadequate. Medical students flock to specialty training and the dearth of family physicians is generating real problems for access to care. The use of foreign-trained physicians to fill that gap is a temporizing measure, not a vindication of the compensation strategy.  In order to maintain (and reconstitute) the primary care industry, a dramatic revision to physician compensation is needed.

* Note that not all neurosurgery is brain surgery. The most disgustingly wealthy physicians are the neurosurgeons who whore themselves out to assembly-line laminectomies and diskectomies, whether or not patients actually benefit from them. The "best" neurosurgeons tend to be those who do complex cranio/angio stuff in academic centers. I suppose nothing could ever demonstrate the disconnect between value and compensation like the community-academic pay disparity, regardless of specialty.


  1. So, my take on such things has been to accept that compensation is unrelated to the moral-ish factors that would constitute an evaluation of what someone "deserves." Accepting this, I advocate for social policies that are just in how they treat the under compensated. So, what is just? That's where I spend my mental energy.

    In your post, however, you suggest that the compensation system should be overhauled to better meet the needs of society, e.g., provide more primary care physicians. Is the industry capable of making such a conscious choice?

  2. Capable? Yes. Likely? No. Physician compensation is set by a committee. It doesn't make a decision like "Plastic surgeons should make 1.5x general surgeons" or anything along those lines, but it does say and appendectomy is worth 8.5 and a broken hand is worth 9.2 and a sprained ankle is worth 3.1 and these relative value units are what ultimately determine how much various specialties make. So that committee could rework its formulae and change the set points. Given that it is dominated by surgeons, I would not expect anything like that to happen.

  3. I'd be curious about your views on what I call "credentials creep": the tendency for professional cartels to lengthen the "training" period in order to (a) limit the supply of said professionals, (b) increase bragging rights regarding the difficulty/prestige of said profession which enables the cartel to (Ta-Da!) demand higher salaries.

    Nothing special about medicine, here, I've seen it in many others as well. (Anything from education or physical therapy to welding.)

    But I'm curious what the marginal value of much of this extra training is (measured by outcome, i.e. patient care x #of patients benefitting) given that medical professionals are, you know, practicing medicine for basically all of their training.

  4. This is an excellent post, but my absolute favorite phrase is "cognitive-based physicians."

  5. I've always been in favor of tying compensation to life-years-saved. It may be somewhat self-serving, since my wife is a Pediatric Oncologist and would be at the top of the payscale. On the other hand, all other specialties look at her and say "I could never do your job"


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