Kent Bottles: Do Doctors Make Too Much Money? Part II

August 13, 2009 at 8:26 am 3 comments

Doctors in the United States are generally paid on a fee-for-service basis; the more services they order the more money they make. As outlined in Atul Gawande’s influential article “The Cost Conundrum,” The New Yorker, June 1, 2009, many of these procedures and tests are not necessary.  They raise the cost of health care, but they do not improve the health of the patient.

Arguments are being made that one of the possible solutions to the cost problem is that physicians should be paid by salary, not by fee-for-service.  Gardiner Harris in a New York Times article entitled “Hospital Savings:  Salaries for Doctors, Not Fees” ( describes how Cleveland Clinic and Bassett Healthcare in Upstate New York deliver high-quality care at low cost with salaried medical staffs.  Dr. Philip A. Heavner, the chief of pediatrics at Bassett, prefers the salaried model. “I was in private practice for years in New Mexico and there was no interest in doing anything like this because people thought it would take volume away from their practices.” Dr. J.Turner Stauffer, a gastroenterologist, left Bassett and went into private practice in Georgia. “To provide for my family, I felt I needed to be reimbursed on a fee-for-service model. I make three to four times what I was making there.”  Senator Charles E. Schumer states in the article: “Everyone knows that the Bassett model is the right model. The question is, How do you get from here to there.”

In a blog entitled “A Happy Hospitalist,” a physician summarizes the above Times article and writes: “So I ask you, would you rather get your care by a doctor who delivers care at the top tenth percentile or the doctor who earns in the top tenth percentile.  Some would argue that the doctors in the fee-for-service work harder. Perhaps it’s time to ask that they stop working so hard.  There seems to be an inverse relationship with working harder and providing better care.”  And it is not only doctors who are thinking about this issue.  A comment to this blog states: “The oncologist rushes down to the morgue to give the last dosage of chemo to his patient.  He pulls out the drawer and, in place of the body, is a sign which reads…’gone to dialysis.’” (

An emergency physician in Texas writing in the blog “GruntDoc” does not agree with the Happy Hospitalist.  “The Happy Hospitalist, generally an excellent blogger, wrote yesterday about salaried docs must be delivering better care than those greedy FFS docs, because the Cleveland Clinic does a terrific job with docs on a salary. I suspect their excellent outcomes have nothing to do with reimbursement model and a lot more to do with systemness and a strong gatekeeper model. (

This back and forth reveals tensions in the doctor/patient relationship.  There is a fascinating exchange of letters between Arnold S. Relman, MD, former editor of the New England Journal of Medicine, and Uwe. E. Reinhardt, Professor of Economics at Princeton. ( The letters address the question: “Is the physician a businessperson who purveys services like any businessperson, or does his professional credential mean he is a breed apart.”  Reinhardt views “physicians as regular-issue human beings.”  Relman argues “there is something unique about the doctor-patient relation which clearly distinguishes it from the relation between a car mechanic, a home repairman, or any other commercial purveyor and his customer.”

This back and forth is also represented in the article “Piecework,” The New Yorker, April 4, 2005, where Gawande interviews a surgeon who does not accept insurance and makes over a million dollars a year. “For doctors to think we have to be altruistic is sticking our heads in the sand.”  This attitude bothers Gawande who wants to believe “that doctors remain fundamentally motivated by the hope of doing meaningful and respected work for society.”

Peter Ubel, “a primary care physician at the University of Michigan, who does not make even close to $300,000 per year, but who’d gladly take a pay cut to help move this country toward a more sensible health care system,”  writes that “health care reform ought to be forcing us to take a hard look at just how wealthy U.S. physicians have become in the last few decades, far wealthier in fact than their colleagues in other developed countries.  Yet this topic of doctors’ incomes has been largely ignored in the public debate that has surrounded health care reform.” (

Uwe Reinhart has never been shy about tackling sensitive subjects like this, and in a recent New York Times blog he uses Adam Smith and the U.S. Bureau of the Census distribution of money income of American families in 2007 to arrive at a “just” physician annual income of  “$250,000 or so.”  Adam Smith wrote that “Honor makes a great part of the reward of all honorable professions.  In point of pecuniary gain, all things considered, they are generally under-recompensed…Disgrace has the contrary effect.  The most detestable of all employments, that of public executioner, is, in proportion to the quantity of work done, better paid than any common trade whatever.”  (

Richard B. Gunderman is a physician and philosopher who writes on this subject of physician compensation. (Richard B. Gundeman and Mark Adam Hubbard (Med Sci Monit, 2005; 11(2):  SR 5-10) ( Gunderman analyzes four possible ways to determine the appropriate income level:  market worth, comparable worth, societal worth, and fairness.

Market worth says the appropriate salary is whatever the market determines.  However, we should probably keep in mind that American medicine with its state licensure, board certification, and fixed number of medical school and residency slots is hardy the kind of free market Adam Smith described.

Comparable worth holds that each occupation has an inherent value apart from its market value.  Levels of skill, amounts of responsibility, and years of education could be relevant factors to put into a comparable worth equation.

The societal worth approach seeks to rank occupations in terms of their contributions to society. This utilitarian approach tries to determine which occupation promotes the greatest good for the greatest number of people.

The fairness approach asks the question are different jobs being justly compensated. Radiologists are fairly compensated when compared to professional basketball players, but overpaid when compared to elementary school teachers.

This whole subject of physician compensation, fee-for-service vs. salary, just compensation, and the public’s perception that physicians may be overpaid will play out as health care reform is accepted or rejected by Americans.   For an example of how heated and tense this discussion gets between doctors and patients see

Entry filed under: Health Care Redesign. Tags: .

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  • 1. john g  |  August 13, 2009 at 10:09 am

    Physicans work is rarely glamorous, the hours tend toward the extreme, the presure and the extent to which work follows you home is certainly on the high end of the scale. Certainly there are some specialties where compensation seems disproportionate but there are many (underserved) where pay rates are absurdly low. Primary care and pediatrics require some of the “heaviest lifting” and freshly minted MD’s in these fields can hardly service their medical school debt.

  • 2. Trisha Torrey  |  August 13, 2009 at 4:06 pm

    In the US, healthcare is about money and sickness, not health or care – so shouldn’t we expect the marketplace to decide this question for us?

    The problem is, we don’t have a pure marketplace. We can’t get a “real” answer to your question as long as the cost of care is hidden behind reimbursements. If we patient-consumers had any idea, or control, over what was being spent for our care, then it would affect doctors and salaries vs fees differently.

    We also can’t get a real answer as long as specialists are reimbursed for procedures as Dr. Gawande outlined, and primary care doctors continue to make diddly-squat for the time they must, necessarily, take with their patients to do their jobs right.

    Uncover the real costs of care, help us better understand how a dollar from our pockets gets transferred to the doctors we know are helping us, and patients will have a better understanding of how to answer that question.

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