How much money should physicians earn, and what role should compensation play in influencing the professional decision making of medical school faculty members and our learners? This question is important to academic medicine for a number of reasons. Income is one basis on which college-age people choose their careers, and if physicians are underpaid compared to other occupations, medical schools may attract fewer applicants. Income also affects the choice of medical specialty, providing an inducement for students to enter fields that require relatively long courses of study, such as radiology and neurosurgery.
This incentive is heightened when students emerge from training encumbered with substantial educational debt that they must begin to pay off once they complete training. Earning potential also influences where physicians choose to locate, as well as the choice between academic and community practice. Even within the ranks of academic medicine, income influences effort. For example, if clinical work generates more revenue than teaching, academic physicians seeking to sustain or augment their incomes may find themselves devoting less time to teaching and more to patient care.
Where you stand on physicians' incomes depends in part on where you sit. From the point of view of patients whose healthcare costs are rising rapidly, physicians' incomes may seem too high. From the standpoint of primary care physicians such as pediatricians and general internists, the incomes of specialists such as radiologists and neurosurgeons may seem excessive. Yet to radiologists and neurosurgeons working longer hours in the face of declining reimbursements and rising malpractice insurance costs, incomes may seem barely adequate, or even insufficient.
A number of arguments have been advanced to justify the relatively high incomes of physicians. These include the fact that physicians contend with a strenuous selection process to gain admission to medical school and residency, undergo a long course of training, work long hours, face difficult decisions where life and death may hang in the balance, make major contributions to patients' quality of life, and so on. Of course, physicians are not the only people who work long hours, and some people barely earning minimum wage, such as taxicab drivers, work longer hours than many physicians.
Likewise, other groups in our society, such as law enforcement officers, face life and death decisions, but earn substantially less. The incomes of college professors are lower, despite the fact that many endure an equally long course of training and face stiffer odds of finding secure employment. Relatively poorly paid primary school teachers often make important contributions to their students' lives. If none of these conventional explanations explains the relatively high incomes of physicians, is there a rational basis for explaining how well doctors are paid?
Most analyses of physician incomes adopt a microeconomic perspective. Income is often regarded as a management tool, a way of getting people to do things they would otherwise avoid. If people are failing to do what we need, or not doing a sufficient amount of it, their compensation can be tied to their productivity in that area. For example, physicians could be paid according to the number of resource-based relative value units (RVUs) they generate. Such productivity-based compensation systems seem to offer some advantages. They mitigate the unfairness of paying low-productivity workers no less than high-productivity workers. They also discourage loafing and create a financial incentive for everyone to work harder.
Yet productivity-based compensation systems also entail perils. There is no guarantee that work effort and productivity are closely correlated. A physician performing procedures may generate substantially more RVUs per hour than a physician seeing patients in clinic, despite the fact that they are working equally hard. Moreover, such systems may underrate nonclinical but potentially important professional activities such as teaching, research, and service. Productivity-based compensation systems are also subject to abuse, if physicians begin to seek out high-RVU work and shun low-RVU work, potentially leaving some patients in the lurch. Finally, such systems can spawn a professional culture in which people begin to care more about the rewards of work than the work itself.
Compared to the microeconomic perspective, the macroeconomic perspective on physician incomes has received considerably less attention. From a macroeconomic perspective, the question is neither whether members of a particular group are being compensated fairly, nor whether a physician group's leadership is making effective use of compensation as a management tool.
Instead the question is whether particular medical specialists or physicians in general are being appropriately compensated relative to other workers.
Where should the incomes of family physicians stand in relation to other medical professionals, such as cardiologists, orthopedic surgeons, ophthalmologists, general internists, psychiatrists, and pediatricians? How much should physicians earn relative to people in other occupations, such as hospital administrators, nurses, medical technologists, public school teachers, college professors, firefighters, professional athletes, and the chief executive officers of large corporations? Would it be appropriate for medicine to be the highest paid occupation in our society? The lowest? If neither of these alternatives is appropriate, where should medicine lie on the income spectrum?
Psychologically, it is important for workers to believe that they are being fairly compensated. If people genuinely believe that the value of what they do significantly exceeds their compensation, then their level of commitment, both to their employer and to their profession, may wane. On the other hand, if workers feel that their compensation exceeds both their level of effort and the value of what they contribute, then their self-respect is liable to suffer.
Broadly speaking, there are four approaches to assessing the appropriateness of an occupation's level of compensation. These are market worth, comparable worth, societal worth, and fairness. Although none of these approaches provides a precise numerical formula for calculating the appropriate compensation for any particular occupation, each offers a distinctive and illuminating perspective. This section examines each of the four approaches to determining an occupation's worth, and then steps back and considers more broadly the standing of money as a source of professional motivation.
The first approach, market worth, may be succinctly summarized as follows: the appropriate level of compensation for any occupation or individual is precisely the income obtained in an open market for such services. According to social philosophers such as Adam Smith and Friedrich von Hayek, the array of factors involved in a thorough calculation of wages and prices is so complex and subject to so many biases that the free market is the only system robust enough to carry it out.
Suppose several physicians receive an offer of higher compensation to join another group. Should they? On the one hand, the new group offers a higher salary. Does that mean they automatically accept the offer? No. Perhaps the new group is located in a less attractive region, its reputation among patients is not as good, or the quality of its work environment is inferior. The market worth approach acknowledges that many trade-offs are involved in assessing the desirability of a position, and wages are not the only factor in the equation. When otherwise comparable positions differ substantially in their levels of compensation, prospective employees should ask themselves a question: why do some employers find it necessary to offer more?
There are limitations to the market worth approach. One is the fact that the US market in medical labor is not truly free, because the supply of physicians is constrained. The numbers of medical school and residency positions are relatively fixed. People who decide to enter the medical labor pool must devote many years to study and pass a number of examinations before being allowed to practice independently. There are also hurdles in the form of state medical licensure and board certification. If every person could decide to begin offering medical services at any time, competing with one another strictly on the basis of quality and price of service, the incomes of physicians might fall. From an economist's point of view, the professional requirements for entry into medicine artificially raise the price of medical services and the incomes of physicians. Some critics argue that such requirements represent monopolistic practices that redound to the detriment of the public.
Others believe such barriers to entry are necessary. They cite the profession's fiduciary responsibility to set high standards for its members and to police its own ranks. Can a layperson determine whether a surgical procedure is truly necessary, or critically evaluate the surgeon's technique? Can a layperson determine whether signs and symptoms are being accurately interpreted, or assess the validity of recommendations for management? Opponents of a free market in medical labor, including most physicians, answer these questions negatively. They assert that the general public lacks the knowledge and skill necessary to ensure quality medical care, requiring the members of the profession to regulate themselves.
Another pitfall of the market worth approach is the fact that it has the potential, over time, to turn professions such as medicine into mere businesses. To rely strictly on the free market to regulate practice is implicitly to adopt the view that the physician-patient encounter is fundamentally a commercial transaction. The physician is a vendor of health services, no different in principle from the automobile salesman, and the patient is a healthcare consumer, no different from a prospective buyer shopping for a car. On this account, the bulwark against medical malfeasance would be the principle that bad medicine is bad for business. When word gets out that a particular physician is taking advantage of patients for personal profit, or inflicting injuries on patients through incompetence, that physician's business will suffer. The market itself will weed out bad doctors.
Yet is this our vision of what it means to be a physician? Should physicians willingly prescribe any medication or perform any procedure for which a patient is willing and able to pay? Are physicians restrained from misconduct and incompetence only by their adverse financial consequences? Or do we believe that physicians should answer to a standard of conduct higher than the bottom line? Should physicians put the good of their patient before their own financial self-interest? If yes, then a purely free market approach to compensating physicians may threaten the profession's moral identity.
The comparable worth approach to assessing compensation rests on the premise that each occupation has an inherent value apart from its market valuation. The mere fact that people in a particular line of work tend to receive a certain level of compensation is no guarantee that their income is in fact appropriate. To take a rather extreme case, the fact that some individuals are able to generate large incomes through criminal activity does not establish that they deserve what they make. A comparable worth perspective might question some aspects of our society's current income distribution; for example, whether professional basketball players should be able to generate more income in a single game than a public school teacher earns in an entire year. Of course, another proponent of comparable worth operating by different criteria could argue the converse, that the biological endowments and skills of such athletes are so rare, and their performances bring delight to so many people, that they warrant their substantially higher levels of compensation. It depends on the criteria by which we assess comparable worth.
What factors might enter into the calculation of an occupation's comparable worth? One factor would be the level of skill required by the occupation, and the amount of time and effort required to develop that skill. There is a positive correlation between years of training and the income levels of different medical specialties. No one would dispute that diagnosing disease requires a higher degree of skill than, say, sweeping floors. On the other hand, it is not a given that performing medical procedures requires more skill than taking a patient's history, although the former tend to be more highly remunerated than the latter. Another factor in determining comparable worth is education. The fact that physicians' incomes are higher than those of nurses might be justified in part by the fact that physicians undergo a longer course of training, and may be required to demonstrate a higher level of academic achievement.
Other factors that might be relevant in calculating an occupation's comparable worth include the level of responsibility assumed by its practitioners, the amount of mental effort required to perform it, and the pleasantness of the conditions in which the work is performed. On this account, we might expect the most highly compensated occupations to be those that involve a very high level of skill, a long and difficult course of training, great responsibility, considerable mental effort, and perhaps, relatively unpleasant working conditions.
The RVU system attempts to make judgments about comparable worth, although it is heavily biased in favor of activities that make extensive use of expensive technology. For example, a gastroenterologist generates considerably more RVUs (and considerably more income) per unit time performing endo-scopic procedures than counseling patients in clinic. Are we certain that endoscopy requires more skill? Is it truly more difficult or less pleasant to perform endoscopy than to take a complete history, or to educate a patient about therapeutic options? A truly robust system of assessing the comparable worth of different occupational activities would need to take such considerations into account.
Anyone advocating a comparable worth approach to determining compensation needs to address a difficult question: Who decides? Proponents of the market worth approach rely on the market itself to make such determinations, preventing any single person or group of people from gaining control over compensation. If we argue that the market cannot be trusted, then we must locate a person or group to which responsibility can be assigned. Should such determinations be made by a board of medical specialists, by the courts, by an impartial group of economists, or by representatives of the Department of Labor?
Some critics find it easy to argue that the salaries of certain medical specialists, professional athletes, and recording artists are out of line, or that different medical specialists, teachers, and law enforcement officers are underpaid. But to put such judgments into practice is a different matter. To accomplish that, authority for judgment and enforcement must be vested in some agency, involving a transfer of power with which many would-be proponents of the comparable worth approach find themselves distinctly uncomfortable.
The societal worth approach seeks to value occupations in terms of their contributions to whole populations. Such populations might be communities, cities, states, nations, or even all of mankind. From the perspective of societal worth, it does not matter how much a certain group of workers is being paid at the moment, or even how much they have tended to be paid in the past. Nor is it necessary to account for how much one occupation is being compensated relative to another. Instead the critical question is this: how much does the public benefit from this particular line of work, and what level of compensation is appropriate to that benefit? Thus the societal approach adopts a fundamentally utilitarian perspective. It seeks to promote the greatest good for the greatest number of people, and treats compensation primarily as a tool for achieving that end.
A strong case could be made for the societal worth of any medical specialty. Consider, for example, diagnostic radiology. In a recent survey of physicians by investigators at Stanford University, cross-sectional imaging (computed tomography and magnetic resonance imaging) was rated the most important development in medicine over the past 30 years. Diagnostic imaging enables earlier and more accurate diagnosis of disease, more precise targeting of therapy, and spares many patients interventions, such as exploratory surgery, that they do not need. Diagnostic radiology is a vital component of contemporary healthcare.
Yet an advocate of the societal worth approach might ask some probing questions about a field such as diagnostic radiology. For example, how do we know that radiological services need to be provided by radiologists? Perhaps society would benefit even more were chest radiographs to be interpreted by specialists in other fields such as emergency medicine and pulmonology, and were neuroimaging studies to be interpreted by neurologists and neurosurgeons. Diagnostic radiology is important, yes, but is society making the best use of the resources it currently allocates to radiologists' incomes?
An illuminating way to analyze the social worth of a medical specialty such as diagnostic radiology might be this. What level of income would be necessary to entice a sufficient number of individuals to enter the field and promote a sufficient level of quality in their practice? Paying radiologists one dollar per day is clearly not enough. On the other hand, paying them a billion dollars a year would be overkill. In the latter scenario, many might opt for early retirement, thus depriving the public of experienced practitioners. Moreover, the associated reallocation of resources would have serious consequences for the rest of the economy. From a societal point of view, the goal would be to pay groups of physicians such as radiologists enough to guarantee readily accessible, high-quality imaging services, but nothing more, and certainly not so much that the community suffers.
Again, a crucial issue arises. Who decides? Services that provide little value to a population in aggregate may appear very desirable to small groups of patients. From a societal point of view, funds currently being expended on organ transplantation might be put to better use preventing diabetes, hypertension, and other underlying medical conditions that cause organs to fail. But to a patient in chronic kidney or heart failure, current levels of expenditure on organ transplantation may seem grossly insufficient.
The fourth perspective from which to assess compensation is fairness. The societal worth approach operates according to a utilitarian principle, seeking to ensure that compensation levels are set according to the greatest good for the greatest number of people. The fairness approach asks a seemingly similar but in fact quite different question: Are different occupations being justly compensated? Is it fair that a radiologist can generate more income in five minutes reading an abdominal CT scan than a primary care physician earns during a half hour counseling a patient in clinic?
These examples highlight an important feature of the fairness approach. Assessments of fairness always involve comparison. To make such comparisons, it is necessary to define a context in which they will occur. Such contexts may be local, national, international, or even cultural. Do we compare apples only with other apples, or with oranges and bananas, too? What seems fair in one context may seem distinctly unfair in another. The compensation of diagnostic radiologists may seem eminently justifiable compared to that of professional athletes. After all, radiologists are not merely entertaining people, they are helping to save lives. On the other hand, adopting a more global perspective, it may seem problematic to some observers that a US radiologist earns more money each year than many dozens of families in some of the world's poorest nations.
How widely do we set our field of view? Specialist physicians who are deeply offended by the fact that some members of their group earn slightly more than others may have no difficulty with the fact that members of their medical specialty earn twice as much as physicians in other specialties. Do physicians seek justice within their particular physician groups, or more broadly, in terms of the interests of their hospital, the profession, the society, or even all mankind? Twentieth-century moral leaders such as Mohandas Gandhi and Martin Luther King, Jr. insisted that we need to expand our field of view to encompass not only local interests, but those of humanity.
In Plato's Republic, Socrates contrasts two different kinds of physicians. One is motivated by the desire to make money. The other is motivated by a desire to improve patients' lives. The former kind of physician Socrates labels a "mere moneymaker." Only the latter does he recognize as a true physician. Where the good of patients and society is concerned, Socrates argued, true professionals must guard against the temptations of greed. According to ancient Greek legend, the Phrygian King Midas was granted his fondest wish, the ability to turn everything he touched into gold. This enabled him to create as much wealth as he wished. Yet this apparent blessing turned out to be a grave curse, when he inadvertently turned even his own beloved daughter into a lifeless gold statue. Like the Socratic critique of mere moneymakers, the story of Midas serves as a powerful warning not to mistake suffering patients for goldmines.
No one would argue that physicians should ignore the financial aspects of medical practice. In fact, it is a good sign that many professional organizations are devoting greater attention to the business aspects of medicine, helping to place healthcare organizations on sounder financial footings. Such attention can remain salutary, however, only as long as physicians keep their gaze fixed on ends other than merely maximizing income. Are they using their knowledge of business to improve patient care? Are they helping to create a work environment where colleagues and co-workers feel proud of the work they do? Are they helping to advance knowledge within the field, and playing their part in training the next generation of health professionals?
What trade-offs are tomorrow's physicians prepared to make between earning money and helping patients? In the extreme, a purely income-driven physician might be tempted to increase patient throughput, and thus revenue, even to the point that quality care is compromised. How great a quality price are tomorrow's physicians prepared to pay in order to achieve a higher income? Alternatively, how much of a cut in pay would they be prepared to accept in order to practice better medicine? Of course, income and quality are not necessarily opposed to each another, but numerous situations arise in daily practice where it is impossible to maximize both. Taking time to talk with a distressed patient is often not the shrewdest financial move.
We need to ask ourselves and our students some basic questions. What would a practice designed to maximize physician income look like? Which functions would be performed by physicians, and which by other personnel? How much time would physicians spend talking to patients? How much research, teaching, and service, as opposed to clinical work, would go on in such a department? Alternatively, what would a practice dedicated to providing the best patient care look like? Which functions would be performed by physicians, and which by other personnel? How much time would physicians devote to talking with patients? How much research, teaching, and service, as opposed to clinical work, would go on in such a department? Of course, answers to these questions hinge in part on the time frame in which they are addressed. Are we trying to optimize performance for this day alone, or to build a sustainable strategy that would carry medicine forward for decades?
The compensation question is an important but by no means simple one. Few issues arouse more passion in the workplace, particularly when compensation is perceived as unfair. Yet there are many features of work life that are equal to or even greater in importance than compensation. Among the crucial questions to be addressed are these. Do people feel meaningfully challenged by their work? Do they feel that they are growing and developing, both as professionals and as human beings, through the work they do? Do they feel appreciated by the people with whom they work? Do they feel that their work gives them an opportunity to make a difference in the lives of others? Income is an important thing, but it is not the only thing. Where true professionals are concerned, it is not even the most important thing.
Where do we, as academic physicians, stand on the income issue? Do we believe that it is possible for a physician to be paid too much? If so, how much is too much? If we recognize no limit to how high physicians' incomes should rise, what are we saying about the role of money as a motive for medicine? Do we recognize other professional ends for which we would be prepared to trade income? What attitudes do we project to our students? Where does money rank relative to our efforts to deliver better care for patients, to advance medical knowledge, to educate the next generation of physicians, and to serve the profession? If we allow ourselves to become mere income maximizers, what will happen to the respect and trust in medicine of our students, our patients, and ourselves?
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