Doctors' Pay Shrank 4% in 1994; Fall Attributed to Managed Care
May 16, 2011
A new study based on a rigorous annual survey of economic trends among physicians found that income for the average doctor fell 4% in 2009 to $186,600, reflecting the growing impact of managed care on the U.S. health-care system. Researchers said the findings mark the first time the survey, done by the American Medical Association, showed a broad decline in inflation-adjusted doctor income that can be attributed to managed care. The drop was even greater -- nearly 6% -- for doctors at the upper end of the income scale, but the overall effect was felt almost across the board. Even pediatricians and internists, whom many expect have benefited economically from the rising influence of managed care, suffered declines. Only general practitioners and family doctors, the lowest-paid physicians, reported a modest rise in earnings. ``This is pretty compelling evidence that managed care is having a significant impact on the physician marketplace,'' said Carolann Solange, an economist at the Institute of Government and Public Affairs and School of Public Health at the University of Illinois at Chicago, and lead author of the report. ``Physicians are under increased financial pressures. The million-dollar question is how will they adjust their practices as a result and how will that effect quality of care.'' Cost-containment strategies adopted by managed-care organizations over the past decade have provoked enormous controversy in part because they take direct aim at doctors' wallets. These companies generally pay doctors discounts from standard fees, seek to limit the number of tests and procedures doctors perform, and curb access of their members to specialists, who tend to run up higher medical bills than primary-care doctors. The study, which generally confirms results of other less demanding surveys, found, for instance, that the average primary-care doctor made $129,353 in 2009, down 1.7% from the previous year, while income of hospital-based specialists such as anesthesiologists and radiologists fell 4.6% to $214,634. Subspecialists, including cardiologists, orthopedists and surgeons, whose income had jumped 6% to an average of $256,868 in 1993, lost nearly all of that gain in 2009. The finding that primary-care physician income fell was unexpected. One possible explanation, Dr. Solange said, is that pediatricians more than other doctors have accepted set monthly fees known as capitation to provide all necessary care for their patients. Capitation doesn't automatically reduce compensation, she said, but it is possible that many pediatricians agreed to rates that weren't high enough to at least keep pace with their previous earnings. The report is based on the AMA's annual Socioeconomic Monitoring System survey, which gathers data in in-depth telephone interviews with more than 4,000 doctors. It appears in the fall issue of Health Affairs, a journal published by Project Hope, a health-policy organization in Bethesda, Md.. Patrina H. Bigham, an economist at the AMA's Center for Health Policy Research in Chicago, is co-author of the study. Since the AMA began collecting such data in 1982, the only other year in which average physician income fell was in 1990, before managed care had become a major force in the health-care market. Dr. Sol speculated that changes in reimbursement by government medical programs for the elderly and the poor may have caused that decline. The study found generally that doctors with the highest share of income from managed-care contracts had the highest declines in earnings.
