Effect of pandemic on physician salaries

[alex.jl1994]

Do you guys think this pandemic will have long-term effects on the physician payment system as well as salaries for other healthcare professionals? I'm not talking about the recent pay cuts and layoffs directly due to the pandemic, but about future actions that hospitals or the government may take in response to the economic damages incurred by the pandemic that will affect healthcare workers' salaries.

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[deleted746658]

this pandemic is going to catalyze the inevitable decrease in MD/DO salaries

hospitals are taking a massive, massive hit financially. and we are the easy target. and once changes are made, they are hard to reverse

 

[Musty Goose]

this pandemic is going to catalyze the inevitable decrease in MD/DO salaries

hospitals are taking a massive, massive hit financially. and we are the easy target. and once changes are made, they are hard to reverse

Do you think hospitals will reduce salaries because they were mismanaged or decrease in reimbursements?

 

[Doggeronie]

This is insane... How can doctors and nurses be considered "heroes" and yet their salaries will be DECREASED in spite of all the sacrifices they make.
How is that logical... the country should be offering to double the salary of every healthcare worker

 

[throwaway1000000]

will decrease. I mean...when hospitals take a financial hit, we take a hit. Lot of private practices are struggling for business as well.
Only time will tell whether these cuts will be permanent. I would probably say not. As much as we speak of doom in medicine, our skills are highly specialized and lot of the silent docs now will not remain silent if their pay remains low forever while hospitals make record profits once business is back.
Paycuts will be permanent if the pandemic is used as an opportunity to lobby for single-payer system but we are talking if our health care system remains as is.

 

[communitysjw1996]

I'm not sure that the pandemic will necessitate a decrease in physician salaries in the long term...

e.g. if my hospital decided the reduce my salary for the next 2 years, the next-door hospital could work to offer a higher salary (by cutting overhead costs elsewhere perhaps) and I'd switch hospitals

 

[Kuratz]

This is an extremely complex question that no one truly knows the answer to, but it's deserving of a complex answer.

It will quicken the pace of consolidation thus favoring the mega-hospital chains and academic behemoths. Small independent physician private practices are already feeling the crunch and don't have the reserve capital that these large corporations do to be able to absorb the damage LINK

My belief is that we will continue the trend of physicians becoming employees where 20-30 years ago the vast majority were practice owners. What does this mean for salaries? Well medicine IS a business and when you are an employee you will necessarily make less than what you would if you were an owner:

I think there is a common misconception from pre-meds, med students and even beyond where they believe there is some unspoken edict that "Family medicine = $250k/yr" and "Ortho = $600k/yr", as if somehow this is the de facto "worth" of those fields to society and are somehow guaranteed. They commonly neglect why physicians in those fields have the median incomes that they do. Compensation is purely a practice's Revenue - Expenses (Profit) then divided by the owners. Clinical revenue depends entirely on billing. See more patients, bill more and bring in more revenue. This is obviously deeply nuanced with different visits or procedures bringing a higher reimbursement than others and various insurers reimbursing all over the board, with medicare and then medicaid being the lowest.** Owner physicians who understand this and maximize it to their advantage can make a lot of $$ regardless of specialty. It truly is possible to make double the above numbers IF someone has the business acumen to optimize payor bases, visit/procedure types, volume efficiency and minimize cost.

All of the above is important because it puts into context the salaries of employed physicians. Unlike the above where an owner could set their own hours and have a good amount of direct control over what they earn, employees are at the behest of the employer. If a hospital wants to offer $100k to fill a full time Orthopedic surgery position, they can sure try but will almost assuredly never fill it. Make no mistake, the hospitals (especially as they are increasingly run by non-physicians) are trying to pay employed physicians the absolute lowest that they can in order to adequately fill the position. They are in the business of maximizing shareholder/corporate earnings. However, the fact that hospitals current can't offer offendingly low salaries is largely predicated on two things: the possibility of a physician going to work at the lucrative private practice in town, for much more and the supply/demand dynamic in the area. Theoretically, if private practice universally completely died and simultaneously we began training way, way more Orthopods than the demand calls for then truly an absurdly low number like $100k could genuinely be in play. If you are competing against 100 others for the same job, better to take it at a silly low rate than have no job at all. By no means do I think the above will happen, I am just using an extreme in order to make a point. What currently happens is if Private Practice A makes $X00 per year but a candidate wants to work as an employee for whatever reason (doesn't want to do the admin of owning a business, wants to "clock-in, clock-out", wants to do academics etc) then they could probably take a position just modestly below $X00 (say 30% or so) because it's a reasonably competitive offer.

**After the government sets a Medicare rate for a billable item, the insurance companies negotiate directly with the hospital or practice to determine what multiplier of each item they will reimburse for. Humana or United goes to a large hospital, who sees a lot of patients and has leverage in order to negotiate high reimbursement rates from the insurance company. Humana and United then also go to the small private practice with 3 physicians... but since they don't really need this small practice nearly as much to be in their network they can get away with paying much less, sometimes even just Medicare rates, so the EXACT SAME PROCEDURE gets paid out much less to the small private practice then to the huge hospital system. So hopefully you can see why it is massively advantageous from a financial perspective to have a gigantic practice. This has been driving incredible consolidation in the health care field over the past decade (I'm not going to get into the ACA; "Obamacare" since it's political but a lot of the policies from that set all this in motion). Hospital systems have been buying up independent hospitals, small private practices, crossing state lines etc. Academic hospitals have been doing the same and frequently operate hospitals under their name without any true education/academic component. Small practices band together to form multi-specialty private practices to survive but lots of mom and pop practices either fold or sell out and the next generation of physicians become employees because the decks are stacked against them to hangle a shingle to form a new practice and there just honestly are nowhere near the private practice opportunities in many fields for everyone.

This COVID pandemic has wounded already vulnerable private practices and megacorporations will be just as hungry to expand once volumes come up. Thus fewer ownership opportunities (more employed) and also less leverage in negotiating a salary for these employed positions. This is why I think pay will go down. Thankfully we aren't also flooding the market by rapidly expanding residency positions (well some, EM seems to be) so I think it will be a slight permanent dip (5-10%).

Sorry for the diatribe. Med School really, really needs to make Business of Medicine a mandatory course. I'm always baffled at how few students/residents understand how a physician gets paid. If you are a keen businessman you can augment a lot of this and make a lot more than your specialty median, but far too many just go with the mindset of "I don't care about the business side of things" and then end up getting hosed without even realizing it. Please take it upon yourselves to learn the business, it's a huge factor in your income.

TLDR: Predict salaries go down 5-10% as some private practices fold and more docs become employees

 

[Yankees27]

Bottom line is that, we will struggle for a while, but like everything else, things will turn around and we will recover. Even if salaries take an initial hit, at some point they will rise. The floor is not caving in as most of the media would like us to believe. All they do is spread fear and doom & gloom, which I suppose helps them sell...journalism has really gone down the tubes, but that is off topic.

The United States is the greatest country in the world and we will come back stronger than before this pandemic!

 

[throwaway1000000]

This is an extremely complex question that no one truly knows the answer to, but it's deserving of a complex answer.

It will quicken the pace of consolidation thus favoring the mega-hospital chains and academic behemoths. Small independent physician private practices are already feeling the crunch and don't have the reserve capital that these large corporations do to be able to absorb the damage LINK

My belief is that we will continue the trend of physicians becoming employees where 20-30 years ago the vast majority were practice owners. What does this mean for salaries? Well medicine IS a business and when you are an employee you will necessarily make less than what you would if you were an owner:

I think there is a common misconception from pre-meds, med students and even beyond where they believe there is some unspoken edict that "Family medicine = $250k/yr" and "Ortho = $600k/yr", as if somehow this is the de facto "worth" of those fields to society and are somehow guaranteed. They commonly neglect why physicians in those fields have the median incomes that they do. Compensation is purely a practice's Revenue - Expenses (Profit) then divided by the owners. Clinical revenue depends entirely on billing. See more patients, bill more and bring in more revenue. This is obviously deeply nuanced with different visits or procedures bringing a higher reimbursement than others and various insurers reimbursing all over the board, with medicare and then medicaid being the lowest.** Owner physicians who understand this and maximize it to their advantage can make a lot of $$ regardless of specialty. It truly is possible to make double the above numbers IF someone has the business acumen to optimize payor bases, visit/procedure types, volume efficiency and minimize cost.

All of the above is important because it puts into context the salaries of employed physicians. Unlike the above where an owner could set their own hours and have a good amount of direct control over what they earn, employees are at the behest of the employer. If a hospital wants to offer $100k to fill a full time Orthopedic surgery position, they can sure try but will almost assuredly never fill it. Make no mistake, the hospitals (especially as they are increasingly run by non-physicians) are trying to pay employed physicians the absolute lowest that they can in order to adequately fill the position. They are in the business of maximizing shareholder/corporate earnings. However, the fact that hospitals current can't offer offendingly low salaries is largely predicated on two things: the possibility of a physician going to work at the lucrative private practice in town, for much more and the supply/demand dynamic in the area. Theoretically, if private practice universally completely died and simultaneously we began training way, way more Orthopods than the demand calls for then truly an absurdly low number like $100k could genuinely be in play. If you are competing against 100 others for the same job, better to take it at a silly low rate than have no job at all. By no means do I think the above will happen, I am just using an extreme in order to make a point. What currently happens is if Private Practice A makes $X00 per year but a candidate wants to work as an employee for whatever reason (doesn't want to do the admin of owning a business, wants to "clock-in, clock-out", wants to do academics etc) then they could probably take a position just modestly below $X00 (say 30% or so) because it's a reasonably competitive offer.

**After the government sets a Medicare rate for a billable item, the insurance companies negotiate directly with the hospital or practice to determine what multiplier of each item they will reimburse for. Humana or United goes to a large hospital, who sees a lot of patients and has leverage in order to negotiate high reimbursement rates from the insurance company. Humana and United then also go to the small private practice with 3 physicians... but since they don't really need this small practice nearly as much to be in their network they can get away with paying much less, sometimes even just Medicare rates, so the EXACT SAME PROCEDURE gets paid out much less to the small private practice then to the huge hospital system. So hopefully you can see why it is massively advantageous from a financial perspective to have a gigantic practice. This has been driving incredible consolidation in the health care field over the past decade (I'm not going to get into the ACA; "Obamacare" since it's political but a lot of the policies from that set all this in motion). Hospital systems have been buying up independent hospitals, small private practices, crossing state lines etc. Academic hospitals have been doing the same and frequently operate hospitals under their name without any true education/academic component. Small practices band together to form multi-specialty private practices to survive but lots of mom and pop practices either fold or sell out and the next generation of physicians become employees because the decks are stacked against them to hangle a shingle to form a new practice and there just honestly are nowhere near the private practice opportunities in many fields for everyone.

This COVID pandemic has wounded already vulnerable private practices and megacorporations will be just as hungry to expand once volumes come up. Thus fewer ownership opportunities (more employed) and also less leverage in negotiating a salary for these employed positions. This is why I think pay will go down. Thankfully we aren't also flooding the market by rapidly expanding residency positions (well some, EM seems to be) so I think it will be a slight permanent dip (5-10%).

Sorry for the diatribe. Med School really, really needs to make Business of Medicine a mandatory course. I'm always baffled at how few students/residents understand how a physician gets paid. If you are a keen businessman you can augment a lot of this and make a lot more than your specialty median, but far too many just go with the mindset of "I don't care about the business side of things" and then end up getting hosed without even realizing it. Please take it upon yourselves to learn the business, it's a huge factor in your income.

TLDR: Predict salaries go down 5-10% as some private practices fold and more docs become employees

100%. Most physicians lack an understanding of how the market works.
Lot of my friends say they would never want to deal with the business side (which really isn't that hard compared to medical school difficulty). And if you don't, then a corporation will cut your pay and do the business side themselves.
@InvestingDoc here has an excellent thread on how to start and run a primary care practice. Honestly an inspiring example.

 

[Splenda88]

This is insane... How can doctors and nurses be considered "heroes" and yet their salaries will be DECREASED in spite of all the sacrifices they make.
How is that logical... the country should be offering to double the salary of every healthcare worker

There are a lot of "heroes" who don't have money to put food on their table...

 

[CyrusHabs7695]

This is an extremely complex question that no one truly knows the answer to, but it's deserving of a complex answer.

It will quicken the pace of consolidation thus favoring the mega-hospital chains and academic behemoths. Small independent physician private practices are already feeling the crunch and don't have the reserve capital that these large corporations do to be able to absorb the damage LINK

My belief is that we will continue the trend of physicians becoming employees where 20-30 years ago the vast majority were practice owners. What does this mean for salaries? Well medicine IS a business and when you are an employee you will necessarily make less than what you would if you were an owner:

I think there is a common misconception from pre-meds, med students and even beyond where they believe there is some unspoken edict that "Family medicine = $250k/yr" and "Ortho = $600k/yr", as if somehow this is the de facto "worth" of those fields to society and are somehow guaranteed. They commonly neglect why physicians in those fields have the median incomes that they do. Compensation is purely a practice's Revenue - Expenses (Profit) then divided by the owners. Clinical revenue depends entirely on billing. See more patients, bill more and bring in more revenue. This is obviously deeply nuanced with different visits or procedures bringing a higher reimbursement than others and various insurers reimbursing all over the board, with medicare and then medicaid being the lowest.** Owner physicians who understand this and maximize it to their advantage can make a lot of $$ regardless of specialty. It truly is possible to make double the above numbers IF someone has the business acumen to optimize payor bases, visit/procedure types, volume efficiency and minimize cost.

All of the above is important because it puts into context the salaries of employed physicians. Unlike the above where an owner could set their own hours and have a good amount of direct control over what they earn, employees are at the behest of the employer. If a hospital wants to offer $100k to fill a full time Orthopedic surgery position, they can sure try but will almost assuredly never fill it. Make no mistake, the hospitals (especially as they are increasingly run by non-physicians) are trying to pay employed physicians the absolute lowest that they can in order to adequately fill the position. They are in the business of maximizing shareholder/corporate earnings. However, the fact that hospitals current can't offer offendingly low salaries is largely predicated on two things: the possibility of a physician going to work at the lucrative private practice in town, for much more and the supply/demand dynamic in the area. Theoretically, if private practice universally completely died and simultaneously we began training way, way more Orthopods than the demand calls for then truly an absurdly low number like $100k could genuinely be in play. If you are competing against 100 others for the same job, better to take it at a silly low rate than have no job at all. By no means do I think the above will happen, I am just using an extreme in order to make a point. What currently happens is if Private Practice A makes $X00 per year but a candidate wants to work as an employee for whatever reason (doesn't want to do the admin of owning a business, wants to "clock-in, clock-out", wants to do academics etc) then they could probably take a position just modestly below $X00 (say 30% or so) because it's a reasonably competitive offer.

**After the government sets a Medicare rate for a billable item, the insurance companies negotiate directly with the hospital or practice to determine what multiplier of each item they will reimburse for. Humana or United goes to a large hospital, who sees a lot of patients and has leverage in order to negotiate high reimbursement rates from the insurance company. Humana and United then also go to the small private practice with 3 physicians... but since they don't really need this small practice nearly as much to be in their network they can get away with paying much less, sometimes even just Medicare rates, so the EXACT SAME PROCEDURE gets paid out much less to the small private practice then to the huge hospital system. So hopefully you can see why it is massively advantageous from a financial perspective to have a gigantic practice. This has been driving incredible consolidation in the health care field over the past decade (I'm not going to get into the ACA; "Obamacare" since it's political but a lot of the policies from that set all this in motion). Hospital systems have been buying up independent hospitals, small private practices, crossing state lines etc. Academic hospitals have been doing the same and frequently operate hospitals under their name without any true education/academic component. Small practices band together to form multi-specialty private practices to survive but lots of mom and pop practices either fold or sell out and the next generation of physicians become employees because the decks are stacked against them to hangle a shingle to form a new practice and there just honestly are nowhere near the private practice opportunities in many fields for everyone.

This COVID pandemic has wounded already vulnerable private practices and megacorporations will be just as hungry to expand once volumes come up. Thus fewer ownership opportunities (more employed) and also less leverage in negotiating a salary for these employed positions. This is why I think pay will go down. Thankfully we aren't also flooding the market by rapidly expanding residency positions (well some, EM seems to be) so I think it will be a slight permanent dip (5-10%).

Sorry for the diatribe. Med School really, really needs to make Business of Medicine a mandatory course. I'm always baffled at how few students/residents understand how a physician gets paid. If you are a keen businessman you can augment a lot of this and make a lot more than your specialty median, but far too many just go with the mindset of "I don't care about the business side of things" and then end up getting hosed without even realizing it. Please take it upon yourselves to learn the business, it's a huge factor in your income.

TLDR: Predict salaries go down 5-10% as some private practices fold and more docs become employees

Are they any websites or books you recommend for learning the business aspects behind medicine? I really wish schools incorporated into the curriculum. Would be pretty easy to fit in the schedule if there wasn't useless PBL sessions every week

 

[deleted600623]

This is kinda a relevant question but may be overkill. Based on what has happened, would it be smart to get an MBA while in Med school? Or is that overkill? If so, what resources are there to learn business of medicine on our own?

 

[InvestingDoc]

Healthcare salaries have always been viewed as recession resistant. In the midst of the pandemic, many assumed that physicians would be extremely busy but are finding out that this is not the case. Hell, half my friends who are hospitalist have been sitting at home playing xbox the last month because there is no work.

OP asked for what our thoughts on the future are so here it goes. I probably will be wrong but can't hurt to take a guess.


1. Hospitals, health care companies, and many physicians are very reliant on elective procedures. Many insurance companies have made a ton of money off this pandemic. They don't have to pay out elective procedures and pay out paltry PCP or urgent care visits instead. My prediction: Health care companies will get a taste of these cost savings and make it more difficult in the future to do a hip replacement on a 90 year old. We nickle and dime checking vitamin D on patients (which is basically no longer covered) but 4 months ago I was a hospitalist on a case for a 94 year old who had their knee replaced for severe OA. We may see the end of these extreme examples in the somewhat near future.

2. Doctors have been often offered a fixed salary with small incentive bonuses prior to this. I expect this to flip in the future. Small guaranteed salary and high incentive bonuses will be the new normal.

3. Salaries will most likely be driven down but not doom and gloom level like some predict. The rise of midlevels mixed with high debt load of new graduates who are less likely to take a risk and join an independent group (or start up their own practice) will help drive down salaries. This mixed with VC firms buying out groups, leveraging debt and that debt has to be paid off with interest will lower salaries for those who are not "cashing out." Hell, half of the psych, 2 derm clinics/ med spas, and an HIV clinic within 10 miles of where I practice are 100 midlevel run. No physician on site.

4. Telemed and charging for these visits may actually increase PCP income. PCP's often answer so many questions unpaid, that if these can be now billed for then this may increase income.

5.. Practices that have large amounts of real estate will most likely hurt. It will take years before people feel comfortable sitting in a waiting room with 20 other coughing people waiting to see the doctor. Clinics who have huge amounts of real estate will most likely struggle to remain as profitable pre COVID-19. Especially primary care where it may become a new normal to telemed with 20% of your daily visits. No need for so many exam rooms or huge waiting room.

6. We will see a downturn in the number of physicians completing some non procedural fellowships. When midlevels can practice in a derm clinic, obesity medicine clinic, hospitalist, or other non heavily procedural specialty, it will be a hard sell to doctors to tell them to go to medical school, residency, then fellowship in obesity medicine or hospitalist medicine or palliative care. Why delay income one more year when a midlevel did less training and is practicing as a palliative care provider? With midlevels who can easily just slide into these jobs without training, I suspect that these non procedural specialities will see a huge decrease in attractiveness to residents. Will this bring back the true generalist?

7. Niche medicine will pick up. We already are getting a flavor of this with functional medicine who claims to treat the root of any medical problem (as if medicine does not already do this). Integrative medicine is picking up steam also for primary care. There are people who claim to be longevity medicine physicians, lipidologist etc. I suspect in light of increased competition with the rise of mid levels we will see more doctors or midlevels try to make a name for themselves with some sort of niche to stand out.

8. Private healthcare has too strong of a lobby to allow themselves to disappear from importance. I won't hold my breath for a main single payer system for all with a lobby that strong.


So In summary I don't think it will be doom and gloom but I do think that we will move toward overall a trend towards lower pay but not drastically. As with any industry, anyone carrying a ton of debt runs the risk of being in for a world of hurt if things do not return to mostly normal soon.

I may of had a few scotch drinks tonight so I let the guesses fly. Someone asked about the business of medicine and where to learn. I write about this a ton on my website but if anyone ever has any questions, PM me. I'll be an open book. Love it when people want to get into business in medicine for yourselves to take back control!

 

[Candidate2017]

By my estimation, last month's patient visits were down at least 1/4 for my psych resident clinic. This was due to residency bureaucracy (took a long time to implement COVID screening procedures and telepsych). Local psych practices were unaffected since they are nimbler and have better leadership. Clinic patient volume is now at pre-pandemic levels. On the inpatient side, there was about a 50% drop in inpatient census for a few weeks before getting back to usual. This was partly due to implementation of COVID procedures and also less SI (initial fear of dying from COVID tends to make people not have SI).

Overall I foresee smaller offices/rent and overhead for psych practices as telepsych becomes accepted by patients as an add-on convenience. Its a big win for patients and docs.

I hear the elective and hospital based people are taking a hit (EM, GI scopes etc).