It's easy to see why physicians are unhappy with their pay.
Despite being named among the highest-paid professions by U.S. News & World Report with six-figure salaries, many physicians and surgeons have seen annual pay growth shrink over the last decade, while their workload has stayed the same or increased. Especially over the last few years, pay increases have not kept up with inflation. The top five paying specialties, according to Medscape, are:
1. Plastic surgery: $576,000 (10 percent increase)
2. Orthopedics: $557,000 (9 percent increase)
3. Cardiology: $490,000 (7 percent increase)
4. Otolaryngology: $469,000 (12 percent increase)
5. Urology: $461,000 (8 percent increase)
Medicare has also been ratcheting down physician pay; in 2023, the conversion factor used to calculate physician reimbursement dropped 4.48 percent, although some cuts were avoided. The drop comes at a time when more Americans are entering Medicare eligibility and needing care. Physicians treating patients in fee-for-service Medicare contracts will need to see more patients to achieve the same overall pay.
"Even though we avoided the catastrophic Medicare physician reimbursement cuts, we still ended up with around 4 percent decrease beginning in 2023," said Eric Eskioglu, MD, executive vice president and chief medical and scientific officer of Novant Health in Charlotte, N.C. "When you include the annual inflation rate of 7 percent, this means physicians are making approximately 11 percent less than just a year earlier. I also see continued physician compensation pressures on legacy integrated delivery network systems."
Kerry Willis, MD, is a family physician in a rural North Carolina private practice who said the fee schedule from Medicare and private insurers is driving physicians away.
"Compensation to family physicians is less than the cost of living for the last 10 years and continues to decline as no requirements for costs of living exist in contracts," Dr. Willis said. "Since COVID-19, labor shortage and supply chain disruption have caused massive increases in overhead and labor costs without any concomitant increase in fees, even as a member of a risk-bearing accountable care organization, my net income was cut."
Both hospital-employed and private practice physicians are feeling the pinch.
Employed physicians who were highly recruited and given competitive initial contracts may see less lucrative deals from hospitals struggling financially. Last year was the worst year for hospital finances since the pandemic began, according to Kaufman Hall, as inflation drove up expenses while pandemic federal aid dried up, and several systems are reporting multimillion-dollar or billion-dollar losses.
Marsha Hayley, MD, clinical assistant professor of radiation oncology at UPMC, told Becker's she's seen Medicare reimbursement rates for services drop more than 20 percent in the last decade.
"This makes it more difficult for freestanding radiation oncology clinics to stay open and results in consolidation into large health systems," she said. "Not only does this make it harder on patients who must travel farther for treatment, but as the operating margins for hospitals diminish, it becomes harder to pay staff such as myself a competitive wage."
This year isn't expected to be much better as margins tighten and nurse and supply shortages persist. Physicians and surgeons also see how much revenue their procedures drive to hospitals, with a single interventional cardiologist driving $3.48 million or orthopedic surgeon generating $3.29 million annually, according to Merritt Hawkins, and want a bigger slice of the pie.
Independent physicians claim the negotiated fees for their services, but also are responsible for expenses. Like everyone else, independent physicians see the need to increase staff pay and supply budgets have soared since the pandemic began. Selling to a hospital, merging with a large group or bringing on a private equity partner is more attractive than ever with no other financial relief in sight.
But consolidation also leads to driving up the cost of care overall.
As the Federal Trade Commission mulls whether to ban noncompete contracts in healthcare, physicians are watching closely for the potential opportunity to leave their employers without needing to leave town to start a new practice.
Finally, insurers aren't happy with physician pay, primarily because most physicians are still in fee-for-service contracts. Providers and insurers have been working on possible models for value-based care and risk-sharing agreements, but the transition has been slow.