Actually I think everyone would be surprised to know that doctors didn't really make a lot of money until the mid 80s. Before that clinical work was considered more of a public service than a business transaction.
From my copy of
The Medusa and the Snail by Lewis Thomas:
"
I had forgotten what things were like in the good old days of medicine, and how different...I found in the other day while glancing through the
yearbook of my class at Harvard Medical School at the time of graduation, in 1937...Coons, as editor, decided to do something more ambitious for the yearbook than simply record the class statistics, and
prepared a long questionnaire which was sent to all the alumni of the medical school from the classes which had graduated ten, twenty and thirty years earlier...To everyone's surprise 60 percent of the 265 alumni filled out the questionnaire and returned it...
The findings of greatest interest, presented in some detail in the yearbook, concerned the net incomes of the alumni, which were, by the standards of the day, significantly higher than the AMA's figures for American physicians in general...
We knew that interns and residents got room and board but no salary to speak of. We were glad to hear that Harvard graduates did better financially once out in practice...
The median net income of the group of 165 HMS graduates, ten to thirty years out of school, was between $5,000 and $10,000 a year (about 80K to 160K in today's dollars). In the ten year class, 43% made less than $5,000. Only five men earned over $20,000 (~300K c. 2015) and a single surgeon, twenty years out, made $50,000 (~700K). Seven graduates of the class of 1927 had incomes below $2,500 (below 40K).
The alumni were invited to send in comments along with the questionnaire, in a space marked "Remakrs", with the understanding that since so much of the form was directed at finding out how much money they were making they might like to say something about life in general. As it turned out, most of the "Remarks" were also about money,
a typical comment being the following: 'I am satisfied with medicine as a life's work. However, I should recommend it only for the man who has plenty of money back of him. Many men never make much in medicine.' Forty one years ago, that was the way it was (LT wrote this in the 1970's)."
Everything in parentheses was written by me to provide 2015 dollars using a couple of online inflation calculators that seemed to roughly agree on those numbers. I bolded the bits I found the most interesting.
Things to take away:
1) Docs probably didn't make as much in the "good old days" as you think they did, barring the 80s-90s.
2) The more things change the more they stay the same (regarding med student and physician attitudes about the profession and financial compensation).
3) Yup, back then you
lived in the hospital as an intern. No salary. Just enough to live and eat at the hospital.
Ahh, but what did tuition cost back then eh?
According to UPenn's historical data, tuition for medical school in 1937 (per year) was:
Tuition: $500 (About 8,000 in today's dollars)
General Fee: $15 (~80-100$)
Room and Board: $520 (About 8,000 in today's dollars)
HMS' fees would most likely be a little less if not on par with UPenn's figures. I was unable to find HMS data. What does this mean? This means that in 1937 one could attend an elite private medical school (to be fair, there were far fewer so this most likely had less meaning) for $16,000 dollars a year...in other words, a little less than tuition at, say, UTSW or Baylor today (a testament to just how
cheap Texas medical schools are).
Furthermore, according to Encyclopedia.com, medical doctor salaries in the 1950s ranged from $8,272 to $28,628 for a neurological surgeon. The average salary of a physician was $11,058. In today's dollars that ranges from about $26,000 to $248,000 with the average sitting around $100,000. Given Lewis Thomas' commentary on salaries for attendings in 1937 this means that HMS grads were
certainly making much more than the average physician in 1937. I'll update if I can find a general source for all physicians in 1937. In 1955 medical school tuition + room and board at a private medical school (using UPenn archive numbers again) was roughly $16,400 in today's dollars (around 1800-2000 then) thus showing that medical school attendance costs had not changed very much from 1937.
Government data also indicates that both in the 1930s and 1950s physicians were making around, or at most the double of, the average income in the US and far above the average income for health care service workers in the US.
Another study from 1992 takes a look at physician income trends beginning around 1982. From the charts, we can see that Surgeon salaries have always been significantly higher than average physician or specialist salaries. In those days, specialists made less than the average physician (certainly this is skewed by surgeons; it is not clear whether surgeons were left out of this calculation or not) and general practitioners have always made the least. Around 1985 significant spikes occur, especially in surgeon salaries. General practitioner salaries tend downward near the early 90s. The report is interesting and I recommend you skim it. The report had this to say as to why salaries rose:
Reasons for Income Increase
"Greater volume and profit per service. Provision of more services and higher profit per service contributed roughly equally to physician income growth in the 1980s.
We estimate that 42 percent of the growth from 1982 to 1988 in real net income per office-based physician was due to a greater number of services provided per physician, and the remaining 58 percent resulted from higher unit-profit margins. Since physician supply increased rapidly in the 1980s) across all physicians as a group, growth in volume of services was the dominant factor explaining rising net income. It accounted for two-thirds of aggregate income growth, while increased unit-profit margins explain only one-third. These conclusions are consistent with other evidence.
Studies using Medicare data have shown large increases in volume for many procedures, especially surgery, radiology, and special diagnostic tests.
Moreover, many of the procedures that are increasing most rapidly are among the most profitable relative to physician time and effort. These include cataract operations, coronary artery bypass graft surgery, and upper gastrointestinal endoscopy. Conversely, cognitive services such as visits, which are thought to be relatively underpaid, have not grown as rapidly.
In addition to raising charges faster than expenses are increasing and providing a more profitable mix of services, physicians have attained higher unit-profit margins by lowering their cost per service. Specialists have achieved enormous economies of scale and productivity gains for certain procedures through “learning by doing,” as techniques have been refined and volumes have risen.
Despite a mid-1980s fee freeze and some “overpriced procedure” reductions, fees for such services as cataract surgery and coronary artery bypass grafts have not fallen enough to reflect productivity gains. Moreover, as volume has grown in the 1980s, physicians have been able to spread fixed practice costs such as office rent, equipment, and malpractice insurance over a greater number of services. They have also lowered costs by providing related services jointly (for example, completing a diagnostic test during an office visit).
Fees have not been reduced to fully reflect lower costs.
Another reason...
Slower increase in physician supply. The physician supply and the physician-to-population ratio continued to grow rapidly in the 1980s.
Nevertheless, the rate of increase in supply slowed. The average annual rate of increase in patient care physicians per person (excluding residents) fell from 3.7 percent between 1978 and 1983 to 1.9 percent between 1983 and 1989. For a given rate of increase in the demand for physician services, a slower rate of supply growth implies a higher rate of increase in income per physician.
The average annual rate of growth in real income per physician was nearly three times as high between 1983 and 1989 (3.1 percent per year) as it was between 1978 and 1983 (1.1 percent per year). Nevertheless, the rate of increase in the aggregate real net income of physicians as a group was virtually identical in the two periods (6.0 percent per year versus 5.9 percent per year).
The higher growth in income per physician was almost entirely due to the reduction in the rate of growth of the physician supply from 1983 to 1989 (2.9 percent per year) as compared with the period from 1978 to 1983 (4.8 percent per year). Moreover, over the past decade (1978–1989), the number of surgeons grew less rapidly (2.8 percent per year) than the overall number of patient care physicians (3.8 percent per year, excluding residents). This helps to explain surgeons’ rapid income gains.
And...
More comprehensive insurance coverage. Out-of-pocket expenses as a proportion of total spending for physician services have been falling for a long time, and the trend continued in the 1980s.
In 1970, 42 percent of national expenditures on physician services were paid for out of pocket. This proportion fell to 27 percent in 1980 and 19 percent in 1989.23 Lower out-of-pocket cost (that is, more comprehensive insurance coverage) increases patients’ willingness to use physician services, allowing physicians to raise their incomes by increasing both the volume of services and prices. [Lucca's commentary: More insured patients led to an increase in physician compensation??? Say whaaaaaaaa??! /sarcasm] The specialties whose services are covered most completely by insurance-particularly surgery-have experienced the most rapid income growth. Specialties whose services are less well insured-for example, general practice and pediatrics-have fared less well.
Outpatient shift and technology diffusion. Real physician income was relatively flat from 1982 to 1985; it only began growing rapidly after 1985. Although the coincidence is not exact, the timing of the spurt in physician income suggests a connection with the shift from inpatient to outpatient care with the implementation of Medicare’s prospective pay- ment system (PPS) in 1983. Private third-party payers have also encouraged the substitution of outpatient for inpatient care. The result was an explosion in outpatient surgery and diagnostic testing in hospital outpatient departments, freestanding surgery and imaging centers, independent laboratories, and physicians’ offices.
Physicians’ higher outpatient earnings have more than offset their reduced inpatient revenues. They now earn an entrepreneurial return on capital (equipment, building space) and labor (aides) that was formerly appropriated by hospitals. [Lucca: And soon to be re-appropriated lol technology costs] Lower cost and convenience for patients has probably been a major reason that the volume of many procedures and tests has skyrocketed in the outpatient setting. Without a hospital admission, patients can avoid expensive inpatient deductibles and co-payments. Their time costs are also lower because of the convenience of ambulatory surgical centers and doctors’ offices.
Outpatient procedures are often less invasive, less painful, and less risky than inpatient procedures and have shorter recovery times. The much less stringent utilization review afforded to outpatient activity than to inpatient admissions may be another important factor in higher outpatient volumes. Technical advances and diffusion have enabled the growth of many outpatient procedures and tests and also augmented physicians’ inpatient earnings in the 1980s. Older procedures/ technologies such as joint replacements and open-heart surgery have ‘also been refined and are performed on more patients than before because of improved outcomes.
Physicians, especially procedure-oriented ones, simply have more ways to make money now."
And the rest is history...
