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NAVIGATION PNHP RESOURCES

What About Physician Salaries?


Many medical students are concerned that a single payer system would result in a significant decrease in physician salaries. This is understandable, as the average U.S. medical student graduated with $139,517 in debt in 2007, according to the AAMC1. In order to find out the reality behind these claims, we consulted data from the Canadian Institute for Health Information (CIHI) 2004-2005 annual physician report2 as well as U.S. physician salary reports compiled through a meta-analysis by Merritt Hawkins and Associates, an US-based physician search and consulting firm3. The averages from the Merritt Hawkins report were derived as the average of the salaries reported in the 7 studies mentioned, and the Canadian figures represent the average across all provinces. In order to standardize the dollar values, we used the Bank of Canada annual average exchange rate report for 2005, which stated that the exchange rate between US dollars: Canadian dollars was 1:1.21163240, which we rounded off to 1:1.2124.

We chose to compare six specialties, chosen to represent a good mix between primary care and subspecialty fields. The results of our comparison can be found in the table below.

Table 1. Standardized Comparison of Medical Specialties, in U.S. Dollars

Specialty US Average Salary Canada Average Salary (n/1.212)
Family Medicine $164,952 $167,064
Int. Medicine $170,889/ $169,450 (hospitalist) $248,721
Ob/Gyn $253,160 $261,412
Gen. Surgery $278,433 $247,375
Anesthesia $309,019 $205,441
Urology $317,778 $279,982


In general, the income differences between U.S. and Canadian physicians are not vast. Subspecialists do make less money in Canada, although they are still earning high salaries; additionally, primary care physicians are actually making more money in Canada than in the U.S., a force that might help cut down on this country’s current shortage of primary care doctors.

Any drop in income a physician might experience under a single-payer system would be mitigated by a drastic reduction in practice costs. For instance, the average malpractice premium for an Ob/Gyn, the medical specialty with the highest malpractice rates, was $195,000 in Florida for 20045. Comparatively, in the most expensive province in Canada for 2008, the malpractice rate for an Ob/Gyn was $33,563.28 annually, or $161,000 less than Florida’s6.

Administrative overhead would also be much lower with a single-payer system, as it would involve imprinting the patient’s national health program card on a charge slip, checking a box to indicate the complexity of the procedure or service, and sending the slip (or a computer record) to the physician-payment board. This simplification would save thousands of dollars per practitioner in annual office expenses, and mean that each physician takes home more of his or her gross income. A 2003 study in the New England Journal of Medicine quantified this difference, noting that administration accounted for 31% of health care expenditures in the U.S., as compared to 16.7% in Canada; if the U.S. were to lower administrative overhead to Canadian levels, the savings would be approximately $350 billion7.

References

1. AAMC 2007 Graduating Student Questionnaire
2. CIHI Average Payment per Physician Report, Fee-for-Service Physicians in Canada, 2004-2005
3. MHA 2005-2006 Physician Compensation Review
4. www.bankofcanada.ca
5. Obstetrics and Gynecology 2005; 105
6. The Canadian Medical Protective Association Fee Schedule for 2008
7. N Engl J Med 2003; 349: 768-75