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Primary Care Salaries Exempt from Law of Supply and Demand

 |  By HealthLeaders Media Staff  
   June 22, 2009

If you have a clogged sink, the money you pay a plumber to unclog it will depend—in part—upon how many plumbers there are in your area, and how many sinks they're already working on.

The formula looks something like this: Fewer plumbers + many clogged sinks = higher labor costs. It's the simple law of supply and demand and it is almost universally applied in our capitalist system with the notable exception of physicians in general and primary care physicians in particular.

Maybe it's the buzz about patient-centered care, medical homes, and the renewed emphasis on the gatekeeper function in coordinating healthcare. Or, maybe it's because there aren't that many of them. Whatever the reason, a new study by physician recruiters Merritt Hawkins & Associates affirms that primary care physicians are in greater demand than any other type of doctors.

The Irving, TX, firm bases its findings on more than 3,200 physician recruiting assignments it conducted in 47 states from April 1, 2008, to March 31, 2009. In that time, the company fielded more requests for family physicians than for any other type of doctor. Requests for primary care doctors—family physicians, internists, and pediatricians increased 23% over the previous 12-month period examined in the survey.

Despite growing demand, 2009 Review of Physicians Recruiting Incentives shows that huge salary disparities continue to exist between primary care physicians and subspecialties. The average salary offered to family physicians in the Merritt Hawkins study was $173,000, the lowest of any specialty. By comparison, cardiologists were guaranteed average base salaries of $419,000 a year, and orthopedic surgeons were guaranteed $481,000.

Those compensation figures are consistent with other studies, like the Medical Group Management Association's recently released Physician Placement Starting Salary Survey: 2009 Report Based on 2008 Data. The MGMA study found that median starting salaries for all primary care physicians grew by 7.4% between 2005-2008, to $150,000, while the median starting salaries for all specialists grew by 25% for the same period, to $275,000.

Ted Epperly, MD, president of the American Academy of Family Physicians, says the salary differential between primary care physicians and subspecialists exposes a fundamental flaw in the nation's healthcare delivery system. "It's a perversely incented system that overvalues procedures and imaging and undervalues the complex mental thinking needed to keep people well," he says. "We have a total reactive sick care system instead of a proactive healthcare system."

Epperly says medical school students—many of them saddled with between $140,000—$180,000 or even more in student loans—know they can more than double their income right out of medical school by gravitating toward subspecialties.

"The supply pipeline for primary care is just trickling. Only about 10% of medical school graduates are primary care physicians. We are making more and more of the wrong kinds of doctors in America," he says. "Medical school graduates are looking at what kind of doctor they can be and they're seeing they can make two or three or in some cases seven times more in the subspecialties than a family physician; it's becoming a no-brainer for them."

"We've made this point to Congress and big business. You must pay primary care physicians more or you won't get them produced from medical schools. The payment system must change in a way that values what primary care physicians do and pays for it."

President Obama made that point last week when he told the American Medical Association's annual meeting in Chicago that the practice of medicine has devolved into "a model that rewards the quantity of care rather than the quality of care; that pushes you, the doctor, to see more and more patients even if you can't spend much time with each, and gives you every incentive to order that extra MRI or EKG, even if it's not necessary. It's a model that has taken the pursuit of medicine from a profession—a calling—to a business."

Obama has called for compensation reforms that include bundled payments and bonuses that reward physician teamwork, and positive health outcomes, and enhanced financial incentives, like loan forgiveness, for medical students who choose primary care. Will that be enough? It's hard to say.

The Obama administration has also indicated that it's not willing to increase Medicare reimbursements, which would mean slicing the pie differently. Subspecialists wouldn't be happy about taking a smaller piece. But, if we're truly going to make healthcare more cost efficient, then we will have to take Epperly's observations seriously, remove the perverse incentives, and apply the laws of supply and demand.


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