Exclusive Survey Earnings: Primary care tries to hang on

Family physicians and internists didn't keep up with inflation in 2003.

In news reports last year, the word "economy" was frequently preceded by the word "sluggish." Nobody knew that better than primary care physicians. Their median total compensation in 2003 was the same as it was in 2002—$150,000.

This glum picture emerges from the latest Medical Economics Continuing Survey, which sampled office-based MDs and DOs in 24 specialties. With flat earnings, primary care doctors actually lost ground financially, as they watched the cost of living jump 1.9 percent last year.

Doctors' earnings blues stemmed from a number of causes. One is flat reimbursement. Medicare increased its fees by a paltry 1.6 percent in March 2003, and commercial payers, who typically take Medicare's lead, were just as stingy, either freezing their fees or cutting them. In some markets, laid-off workers who lost their health insurance translated into fewer visits. "People just put off going to the doctor," says consultant Keith Borglum in Santa Rosa, CA.

Meanwhile, the cost of running a practice continued to climb. "Our health insurance premiums went up 5 percent in 2003," says FP Michael Fleming, member of a 10-doctor group in Shreveport, LA, and president of the American Academy of Family Physicians. "We also needed to give raises to our employees to retain them." Not surprisingly, there wasn't any raise for Fleming himself last year.

To Atlanta consultant Gary Matthews, stagnant earnings in primary care represent a hangover from the heyday of managed care in the 1990s. "Compensation was artificially high when the gatekeeper concept was in vogue," says Matthews. "Hospitals and large groups were giving income guarantees as high as $180,000 a year to doctors straight out of residency. When the guarantees ended, everybody realized that the doctor couldn't bring in enough to justify that pay."

Despite facing some of the same economic forces as primary care doctors, many procedure-based specialists fared well in 2003. Invasive cardiologists, for example, registered an 11-percent jump in income. The proceduralists have benefited from the waning of the gatekeeper model, since they're now more accessible to patients. And they're kept busy by graying baby-boomers anxious to preserve their hearts, knees, and various organs.

Specialists also have managed to make up for meager third-party reimbursement by generating income from ancillary services such as diagnostic imaging, outpatient surgery centers, and even specialty hospitals, says Dan Stech, director of survey operations for the Medical Group Management Association. "Primary care doctors typically don't have enough money to launch a big ancillary service."

As is always the case, the income picture also changes considerably by geography, the size of the practice, age, gender, and a number of other variables. Job-hunting physicians, for instance, might want to remember the following factoid: You'll make the most down South. Doctors there earned a median $200,000 in 2003, $40,000 more than their Eastern counterparts, who were at the bottom of the income pecking order.

What accounts for the difference? Supply and demand is one likely explanation. Eastern states on the whole have more physicians per capita than any other region. Massachusetts, for example, had 419 physicians per 100,000 population in 2001, about two and half times the rate in Mississippi and twice the rate in Texas. Doctors in short supply tend to be busier. Conversely, insurers have more bargaining power to drive down fees where doctors abound, adds Dan Stech.

Physician income also tends to rise where HMOs are weakest. In 2003, the South had the lowest rate of HMO enrollment—15 percent—in the country, according to Interstudy Publications, a managed care research organization in St. Paul, MN. The Midwest had the second lowest penetration rate—19 percent—and, perhaps not coincidentally, the second highest level of physician income. "Capitated physicians often don't do as well as others," notes attorney and consultant Daniel Bernick with The Health Care Group in Plymouth Meeting, PA. "And HMOs have tighter referral policies than other types of plans."

Group practice is another predictor of financial success. Soloists ranked the lowest in earnings with $177,000, while doctors in groups of 10-24 were tops at $250,000. Income tailed off in groups of 50 or more, perhaps reflecting a greater prevalence of lower-paid employed physicians.

Male physicians once again out-earned their female counterparts in 2003, this time to the tune of $70,000, although the gender gap shrinks to $30,000 in primary care. On one level, it's a matter of sheer production. Because their family duties generally exceed those of men, female physicians tend to work fewer hours at the office and consequently see fewer patients.

Likewise, women gravitate to family-friendly employee positions with more fixed schedules. "Those jobs don't offer opportunities for greater income," says Leesburg, VA, public health specialist Diane Helentjaris, president of the American Medical Women's Association. And the specialties they choose tend to be less call-intensive—dermatology as opposed to neurosurgery—and, not surprisingly, less lucrative.

There's one more explanation for why female physicians make less—gender discrimination. "From what my AMWA members tell me, it's not over yet," says Helentjaris.

Gender, demographics, the post-9/11 economy—there are stories galore behind the numbers in our income survey. How about your income story? The accompanying charts and tables will help you compare yourself to other doctors.

Who's king of the compensation hill?

With less managed care,
Southern physicians earn more

  159,000

How revenue and compensation
varied in 2003

In primary care,employed
docs bring home less bacon

Work in the city—but not too far in

The gender gap narrows in primary care

Where do you stand
on the earnings ladder?

Primary care earnings—
in a holding pattern

How we conducted this year's survey

Questionnaires for the 2004 Medical Economics Continuing Survey, spearheaded by Sandy Johnson, manager of field services, were mailed in March to 54,725 MDs and DOs in private, office-based practice throughout the US. This represents a random sampling of 23 specialties from the AMA master list maintained by Phoenix Marketing Group, a subsidiary of St. Louis-based Express Scripts. Nonrespondents received a follow-up mailing in April.

By the cutoff date of May 20, 11,094 MDs and DOs—20.3 percent—had responded. We discarded returns with apparent discrepancies and those from physicians who hadn't rendered office-based patient care throughout 2003. This left us with a working sample of 8,159 physicians. These were coded by the Medical Economics research staff and then tabulated by Suzanne Coopersmith of Crosstabs in Syosset, NY.

The survey sample was selected to be representative within each specialty as to type of practice, age, geographical region, and gender. We weighted the results to reflect these criteria.

Robert Lowes. Exclusive Survey--Earnings: Primary care tries to hang on.

Medical Economics

Sep. 17, 2004;81:52.