Military physican Retirement benefits vs. Civilian Retirement

[EMTB2MD]

The value of a military pension for physicians cannot be underestimated. I was doing some financial planning for a civilian doctor last night and the subject of military medicine came up.

The base retirement pay (pensions) is 50% the average of the highest 36 months of active duty base pay ("high-3") received. Just for illustrative purposes lets say that the average for this calculation for a doctor retiring this year comes out to be $8K per month. The monthly pension amount today would be around $4K a month. Now if you look at the pay scale 20 years ago for the military rank 05-O6 then the pay was roughly half of what it is today.

Assuming normal cost of living pay raises it is very likely (if history repeats itself) that people retiring at the 05-06 level will have a pension amount of $8K per month since the average income 20-25 years from now (adjusted for inflation will be around $16K per month.

How much money does a civilian have to save to be able to fund their own pension at $8K per month 20+ years from now? The answer is around $2 million. Most financial experts advise a safe withdrawal rate of 4-5% in order to not run out of money during 20-25 years of retirement. A minimum of 2 million dollars is needed in order to provide for $8K per month during retirement 20 years from now.

So how much does a civilian have to save in order to accumulate 2 million in 20 years? Over $2600 a month (given a 10% rate of return). Keep in mind this is after taxes so you have to EARN around $4K per month (depending on your tax bracket and other considerations).

ALL of this is assuming the military stopped cost of living adjustments for people collecting pensions during retirement. I didn't have time to calculate the COLA benefit last night. If we factor in the value of the COLA during retirement then one would have to invest much more than $2600 per month (my guess would be somewhere around $4000 per month without doing the calculations).

I realize there are no guarantees that the federal government will continue to pay out pensions 20-30 years from now but there are also no guarantees that our investments will average 10% either (just look at the last 10 years).

What is the value of military health care during retirement?

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[demh23]

you're wrong

 

[EMTB2MD]

Please excuse my quick pension analysis for military physicians. I'm not in the military (yet) and am probably missing something here. Am I far off in my pension prediction for military docs retiring this year? Is it much more or less than $50K per year?

Thanks

you're wrong

 

[demh23]

the fundamental problem is that you're using the inflated estimate 8k/month pension in the future while comparing that to saving up to withdraw 8k/month in the present

 

[EMTB2MD]

Thanks,

I think a monthly pension amount of $8K per month for the rank of O6 in 2031-2035 is realistic. Keep in mind $1 today is going to be worth around 50 cents 20-25 years from now (depending on the inflation rate).

A monthly pension amount of $8K per month in 2031 is equal to a civilian's retirement account value of 2 million dollars (in 2031). If you have 2 million dollars invested correctly you have a 85-90% chance that your money will last 25 years during retirement paying out around $8K per month in income.

 

[a1qwerty55]

Thanks,

I think a monthly pension amount of $8K per month for the rank of O6 in 2031-2035 is realistic. Keep in mind $1 today is going to be worth around 50 cents 20-25 years from now (depending on the inflation rate).

A monthly pension amount of $8K per month in 2031 is equal to a civilian's retirement account value of 2 million dollars (in 2031). If you have 2 million dollars invested correctly you have a 85-90% chance that your money will last 25 years during retirement paying out around $8K per month in income.

Your numbers aren't that off. Yes you had to make some assumptions about the military actually paying out, and inflation adjustments continuing.

While all of us wish the retirement system took into account out bonuses (a common gripe on the forum) it still is a pretty generous payout - What people forget is you start collecting on retirement. In my case I'll be receiving about 6K/mo (taxable) in military retirement at age 47. I don't plan on being fully retired so I then on top of that collect a full civilian MD salary and can save like a maniac. Since I've also maxed out IRA's, TSP that is a second income stream.

Redundancy is key - honestly the stock market could easily lose 70% of its value in a year (not likely) but possible and those who have staked everything in equities are screwed for decades. So if my IRA/TSP etc dump, I at least have the military retirement to fall back on. What many physicians forget is that in general, physicians are notoriously crappy investors and savers - I've seen plenty with 500K incomes in hoc to their gills. In essence the military pension is a forced savings program....

Now do I trust my government not to drastically gut the military retirement? No way (but military retirees are a very powerful voting block).- If the Democrats could, they'd take our retirement to fund gay adoption agencies and a work to methamphetamine program.

 

[deuist]

The numbers that you are quoting might be accurate, but you are neglecting some very important details. The military's pension system is an "all or none" system, meaning that if I spent 19 years and 11 months on active duty, I will not get one cent once I leave the military. I have to invest the full 20 years to get a dime out of the DoD. If I were to work as a civilian, however, I could change jobs and roll over my retirement accounts.

You are also neglecting that civilian physicians can make a substantially higher salary than military doctors. In my field, emergency medicine, I could be making $100,000 per year higher had I gone the civilian route. With a salary that much greater, putting back $30,000-$40,000 a year is not so difficult. Further, as a civilian I do not have to worry about deployments or moving around every couple of years, things that will substantially hurt my spouse's income as well whenever she has to look for a new job.

 

[a1qwerty55]

The numbers that you are quoting might be accurate, but you are neglecting some very important details. The military's pension system is an "all or none" system, meaning that if I spent 19 years and 11 months on active duty, I will not get one cent once I leave the military. I have to invest the full 20 years to get a dime out of the DoD. If I were to work as a civilian, however, I could change jobs and roll over my retirement accounts.

You are also neglecting that civilian physicians can make a substantially higher salary than military doctors. In my field, emergency medicine, I could be making $100,000 per year higher had I gone the civilian route. With a salary that much greater, putting back $30,000-$40,000 a year is not so difficult. Further, as a civilian I do not have to worry about deployments or moving around every couple of years, things that will substantially hurt my spouse's income as well whenever she has to look for a new job.

Valid points for sure -
There are some other intangibles - commissary priv. health care - which although there are detractors - Tricare has the most generous drug benefit out there. Inherent in serving in the military is the reality there is disability coverage however this in no way comes close to replacing a physician's lost wages. One last consideration is moonlighting. If your Command allows it and your speciality is one which can take advantage of it you can add 20-30K or more to your investments annually.

I'm definitely not painting the military system as a great retirement system but is is a very valid option for some/many.

 

[Mirror Form]

Thanks,

I think a monthly pension amount of $8K per month for the rank of O6 in 2031-2035 is realistic. Keep in mind $1 today is going to be worth around 50 cents 20-25 years from now (depending on the inflation rate).

A monthly pension amount of $8K per month in 2031 is equal to a civilian's retirement account value of 2 million dollars (in 2031). If you have 2 million dollars invested correctly you have a 85-90% chance that your money will last 25 years during retirement paying out around $8K per month in income.

Aside from the numerous factors you're neglecting, a 2 million dollar retirement account is worth MUCH more than a military retirement. Of course it's variable on the stock market, but it would be hard to imagine a 25 year period where 2 million dollars yielded on average less than 8k per month just in interest. Plus, capital gains are much more shieldable from taxes. If it was last year, your 2 million dollar savings account could have generated 300-400k in capital gains.

 

[dwb8p]

Aside from the numerous factors you're neglecting, a 2 million dollar retirement account is worth MUCH more than a military retirement. Of course it's variable on the stock market, but it would be hard to imagine a 25 year period where 2 million dollars yielded on average less than 8k per month just in interest.

Is there any data to support this? I don't think that's accurate at all. The Trinity study supports a 4% safe withdrawal rate, which would amount to no more than $80,000 per year or $6,666 per month from a portfolio of mixed stocks/bonds. I also think it's quite easy to imagine a 25 year period where 2mil yielded less than 8k per month (or 4.8% net interest per year) after inflation is subtracted. But even putting that quibble aside, your 2mil portfolio couldn't come close to providing an immediate annuity with that sort of payout in addition to guaranteed, heavily-subsidized healthcare for the rest of your life as the Tricare benefit does.

If it was last year, your 2 million dollar savings account could have generated 300-400k in capital gains.

Right, but thats one year over the 25+ that matter. Why not also include the losses from 2008 and '09?

 

[AF M4]

As deuist said, you are making some very important assumptions about the military's retirement system and benefits.

1) Will the retirement pension increase with inflation? Better look this up. It's required by law to increase with inflation, but gosh, they're talking about holding it up with the debt ceiling debate. Hmm.

Remember, with two wars going on, they only increased 2011 active duty military pay by 1.4%. They haven't changed most physician bonus pays in years, so every year they pay a little less. How much of your retirement plan do you want in the hands of Congress?

2) Same goes for Tricare, etc. They're raising the co-pays for that, and they will do it again. And I've seen what Tricare pays doctors and hospitals; many of the docs I know took it out of a sense of charity and patriotism, but they may soon not be able to afford that anymore. When it comes to free health care, you may end getting exactly what you pay for.

http://articles.dailypress.com/2011...s-fee-increases-tricare-prime-enrollment-fees

When I'm an old and crotchety AF M4 and needing all my medications sorted, the last person I want to see walk through the door is some fresh-faced young GMO who got booted to this Tricare clinic because he flunked his FP PGY-1 year, and so he is now the attending in control of my health. Don't laugh, this scenario is happening in base Family Practice clinics right now across the country. I'll get my own health insurance, thanks.



Fundamentally, money now always beats money later. Joining the military now based on the idea that you think that the retirement benefits 20 years from now will resemble what they are today is a significant risk all on its own, and as deuist mentioned, you CANNOT cash out your equity halfway through. If 10 years from now Congress decides that they can't fund military pensions or Social Security anymore, then 10 of your prime earning years just evaporated and you're SOL.

I argue that in the case of any physician who does not already have significant prior service time logged, the military retirement benefits should not factor into your decision-making about whether or not to join.

 

[countingthedays]

If I were a nurse, the military pension would be pretty enticing. However, I am not a nurse, I am a physician.

Come on guys, have a little more self-respect. After two or three decades working as an attending physician, four thousand dollars a month is not a significant amount of cash. Remember, a top tier private college will cost you about five thousand a month for ONE child.

I didn't go to medical school to become wealthy, but I also haven't made the sacrifices that this profession requires so that I can look at my children someday when they are in high school and tell them that I cannot afford to send them to a good college. Staying in mil med would set me up to do just that (not to mention a lot of other unpleasant things).

The only way that I could possibly see why anyone would think about staying for the pension when starting a mil med career is if you have some prior service. Sure, if you have 16 years in when you finish your HPSP payback, stay for 20. But for the rest of us, the military pension is/should be irrelevant to your decision to stay or go. BTW, if you really want a pension as a physician, consider working for the VA. Not the most lucrative jobs in medicine, but certainly far better salaries and pensions than active duty military nurses, who, again, will get the same pension that you will.

 

[The White Coat Investor]

The pension IS exceedingly valuable. With the pension and tricare your break-even point may be as soon as 6-10 years. An 0-5 pension right now is paying ~$47K+ health care, let's call that another $1500 a month, or another $18K for a total of $65K. That's inflation adjusted. A non-inflation-adjusted single premium immediate annuity right now for a 51 year old yields 5.28%. $65K/5.28%=1.23 Million. Let's add on another 20% for the inflation adjustment, so $1.48 Million. If you're at 10 years deciding whether to stay or go, you've got to consider that you need to save up $1.48 Million in 10 years to be equivalent. What does it take to do that given a 5% real return? About $115K a year. And there's no guarantee you'll get that return.

I know a lot of docs, and not very many saving $115K a year toward retirement.

Military service makes sense financially if you get out early (say 4 years) or if you stay for 20. Anything in between probably isn't a very wise move. Even bailing at 4 years you need to be saving $62K above and beyond what you were saving in the military to have an equivalent pension.

Irrelevant? Hardly.

 

[countingthedays]

The pension IS exceedingly valuable. With the pension and tricare your break-even point may be as soon as 6-10 years. An 0-5 pension right now is paying ~$47K+ health care, let's call that another $1500 a month, or another $18K for a total of $65K. That's inflation adjusted. A non-inflation-adjusted single premium immediate annuity right now for a 51 year old yields 5.28%. $65K/5.28%=1.23 Million. Let's add on another 20% for the inflation adjustment, so $1.48 Million. If you're at 10 years deciding whether to stay or go, you've got to consider that you need to save up $1.48 Million in 10 years to be equivalent. What does it take to do that given a 5% real return? About $115K a year. And there's no guarantee you'll get that return.

I know a lot of docs, and not very many saving $115K a year toward retirement.

Military service makes sense financially if you get out early (say 4 years) or if you stay for 20. Anything in between probably isn't a very wise move. Even bailing at 4 years you need to be saving $62K above and beyond what you were saving in the military to have an equivalent pension.

Irrelevant? Hardly.

That's not too far from what I said. If you are close to 20 when your obligation is up, it often makes sense to extend to 20. Most people in that category have some prior service. However, if you are new to the military via a direct HPSP commission, thinking that you should stay because you want a pension in 20 years is foolish. Compared to the serious factors that a young military physician must weigh when considering whether to make mil med a career, pension should not rank highly when you are 16 to 20 years away from a pension.

And, again, on a visceral level I do think it is rather pathetic that a general surgeon who retires as an O-5 with 20 years service gets the same pension as the O-5 nurse.

Forgive me if I seem cynical, but the Navy doctors that I have encountered who seem most preoccupied with maximizing their O-6 pensions are the dead wood types who haven't seen patients in years and could NEVER cut it in private or civilian academic practices. But perhaps they know this and realize that when they retire from the military they will be.....well, retired and unemployable, living on their $47,000 pensions + health care....yippie!

 

[The White Coat Investor]

That's not too far from what I said. If you are close to 20 when your obligation is up, it often makes sense to extend to 20. Most people in that category have some prior service. However, if you are new to the military via a direct HPSP commission, thinking that you should stay because you want a pension in 20 years is foolish. Compared to the serious factors that a young military physician must weigh when considering whether to make mil med a career, pension should not rank highly when you are 16 to 20 years away from a pension.

And, again, on a visceral level I do think it is rather pathetic that a general surgeon who retires as an O-5 with 20 years service gets the same pension as the O-5 nurse.

Forgive me if I seem cynical, but the Navy doctors that I have encountered who seem most preoccupied with maximizing their O-6 pensions are the dead wood types who haven't seen patients in years and could NEVER cut it in private or civilian academic practices. But perhaps they know this and realize that when they retire from the military they will be.....well, retired and unemployable, living on their $47,000 pensions + health care....yippie!

No, I don't think we're saying the same thing. You're suggesting the break even point is a whole lot closer to 20 than I'm saying. While I agree there are more important issues than the pension, and that pensions shouldn't be based on just base pay, you seem to think a $47K/year inflation-adjusted income stream (it's quite a bit more as an O-6 BTW) isn't worth much. That's just plain wrong. It is VERY valuable, especially in our current low investment return environment. Not only does it start when you retire at 50-55, but it is inflation adjusted, and includes health care. That's worth close to $1.5 Million. If you don't earn it through military service, you have to save it. That's a lot of dough to save for a primary care doc, especially in 5-15 years.

 

[The White Coat Investor]

If I were a nurse, the military pension would be pretty enticing. However, I am not a nurse, I am a physician.

Come on guys, have a little more self-respect. After two or three decades working as an attending physician, four thousand dollars a month is not a significant amount of cash. Remember, a top tier private college will cost you about five thousand a month for ONE child. .

Yes, and you won't be able to afford to send multiple kids to colleges like that whether you are in or out of the military. I plan to retire on about $8K/month (in today's money). Take away retirement savings, taxes, and the mortgage and my family of 5 is living on less than that now. $4K/month would go a long way toward that. I'm not sure how much money you imagine civilian docs are taking home after taxes, but I suspect it is less than you think. When you factor in loan payments and the higher taxes, many docs have trouble saving much of anything for retirement.

 

[notdeadyet]

While I agree there are more important issues than the pension, and that pensions shouldn't be based on just base pay, you seem to think a $47K/year inflation-adjusted income stream (it's quite a bit more as an O-6 BTW) isn't worth much. That's just plain wrong.

The retirement benefit is great, but it's completely useless unless you stay in for 20 years, something that very, very few physicians will do. When someone makes a pro and con list about taking HPSP, retirement is a great one to list in the pro side, with a fat asterisk that says it will probably never happen.

While a military retirement package trumps what you'd have on the civilian side, the civilian side has a big plus that if you switch jobs because of a better offer elsewhere, your retirement savings comes with you. In the military, your retirement is 0 if you leave anytime before 20 years.

 

[AF M4]

No, I don't think we're saying the same thing. You're suggesting the break even point is a whole lot closer to 20 than I'm saying. While I agree there are more important issues than the pension, and that pensions shouldn't be based on just base pay, you seem to think a $47K/year inflation-adjusted income stream (it's quite a bit more as an O-6 BTW) isn't worth much. That's just plain wrong. It is VERY valuable, especially in our current low investment return environment. Not only does it start when you retire at 50-55, but it is inflation adjusted, and includes health care. That's worth close to $1.5 Million. If you don't earn it through military service, you have to save it. That's a lot of dough to save for a primary care doc, especially in 5-15 years.

Enh. I've worked at two university hospitals now (one for internship, one for residency) and both have had 403(b) plans where the university matches the first 9% of your invested paycheck. Free money, it's portable, and it accrues over time instead of being one big YES/NO finish line that you have to cross.

I was an Air Force GMO for 3 years. I wouldn't do 20 years in military medicine for 1.5 million. I wouldn't do 10. A month before I left, my boss jokingly asked how much it would take for me to stay in. I said 500K/year. We both laughed, then I said I wasn't joking: it was the milmed misery premium. She replied that she thought it would be higher, but there was still no way she could swing a GS position for that kind of money.

 

[EMTB2MD]

What if the military included the 'special pay' medical and dental officers get in the retirement calculation? This would make a military retirement much more enticing and also help retain quality physicians. In the current state of our economy I doubt we will see this any time soon but maybe it will change in the future.

 

[orbitsurgMD]

What if the military included the 'special pay' medical and dental officers get in the retirement calculation? This would make a military retirement much more enticing and also help retain quality physicians. In the current state of our economy I doubt we will see this any time soon but maybe it will change in the future.

I doubt it will change in the future either. The line resents the special pays enough as it is; they won't bite on extending those into retirement. If anything, expect more military med positions to be contracted out. The retirement will be Halliburton's 401K, if anything.

 

[Mirror Form]

Is there any data to support this? I don't think that's accurate at all. The Trinity study supports a 4% safe withdrawal rate, which would amount to no more than $80,000 per year or $6,666 per month from a portfolio of mixed stocks/bonds.

From your own trinity link:
"even a TIPS portfolio that yielded only 1.3% real would sustain a 4%, inflation-adjusted, safe withdrawal rate over a 30-year period."

Since most investments yield a lot more than that safely, the 2 million looks much better. You have to consider the interest and the taxes. Beautiful compound interest avoids the tax drag. That means you still have 2 million in your retirement fund after the 80k you made just by breathing. If you only spend 50k one year, the other 30k isn't taxed, and the 50k was taxed at a low capital gains rate. Whereas, your military retirement will be taxed like a salary.

I also think it's quite easy to imagine a 25 year period where 2mil yielded less than 8k per month (or 4.8% net interest per year) after inflation is subtracted. But even putting that quibble aside, your 2mil portfolio couldn't come close to providing an immediate annuity with that sort of payout in addition to guaranteed, heavily-subsidized healthcare for the rest of your life as the Tricare benefit does.

Healthcare is a major benefit of a military retirement . . . provided you're happy with tricare. I don't think I would be. And who knows what it will be like in the future.

Right, but thats one year over the 25+ that matter. Why not also include the losses from 2008 and '09?

The stock market has still done well over the past 25 years. The extra compound interest that I'll get from the extra money I can put into retirement funds early on will eventually be a lot of cash.

 

[schrute]

I think it depends on what your specialty is as well. Again, to reiterate, we're not doing it for the money, but strictly for the sake of comparison, if you're a ROAD specialty doc, or ortho, you're going to bank oodles more in private than the military will ever pay, and if you live relatively within your means, you could easily put away a few hundred k / yr for retirement.
eg. ortho docs in the midwest make a killing; i know several groups that avg 700k on the low end. it's disgusting really. the military can't come anywhere near that.
but if your goal in life is to be comfortable, not a greedy ***** with mini giraffes & direct TV, the military will allow you to be comfortable. relatively speaking, however, you'd take a hit.

ditto what other people said RE being closer to 20 on completion of residency. eg: i'll have 15 (in reserves) after fellowship, and am planning on doing 5 active to finish out my 20...i'll only be 37 at that point with 5 yrs good job experience. i understand that's not typical, but if your situation is similar, sticking out for 20 (even with mostly reserve time) will buy you a car payment, prunes and health benefits.

 

[schrute]

I think it depends on what your specialty is as well. Again, to reiterate, we're not doing it for the money, but strictly for the sake of comparison, if you're a ROAD specialty doc, or ortho, you're going to bank oodles more in private than the military will ever pay, and if you live relatively within your means, you could easily put away a few hundred k / yr for retirement.
eg. ortho docs in the midwest make a killing; i know several groups that avg 700k on the low end. it's disgusting really. the military can't come anywhere near that.
but if your goal in life is to be comfortable, not a greedy ***** with mini giraffes & direct TV, the military will allow you to be comfortable. relatively speaking, however, you'd take a hit.

ditto what other people said RE being closer to 20 on completion of residency. eg: i'll have 15 (in reserves) after fellowship, and am planning on doing 5 active to finish out my 20...i'll only be 37 at that point with 5 yrs good job experience. i understand that's not typical, but if your situation is similar, sticking out for 20 (even with mostly reserve time) will buy you a car payment, prunes and health benefits.

I should add that military retirement is "free," in that you haven't had to pay anything in but time (& I guess lost wages)...ie. it's a % of your previous salary based on time in service & rank. Aside from retirement-fund matching your civilian employer would put it, your civi retirement comes at the expense of current wages.


QUESTION: So, hypothetically, if I went active after fellowship and then did 20 yrs active service, I'd retire from ACTIVE duty at age 53, at which time I'd start collecting retirement, with a combined reserve & active service time of 35 years (15 Guard, 20 active)... The defense.gov retirement calculator says that at age 53, in 2033, even at 06 (though in reality it would probably be more like BG or something command level) I'd start collecting $18,163 / mos. By age 63, it's $25,000/mos (pre tax, inflation adjusted).

Not bad.

EH, probably better off running for Congress and getting on that gravy train.

 

[Chonal Atresia]

Why is it "disgusting" to make $700,000/yr? I'm sure these physicians work hard for there money.

 

[schrute]

Why is it "disgusting" to make $700,000/yr? I'm sure these physicians work hard for there money.

I'm sure they do, and I'm sure anyone who makes that much money earns it and works hard for it. Hell, I'd love to make $700k/yr. But you can't tell me there's nothing wrong with a system that is driven solely by reimbursement stratification.

25 yrs ago, ortho was a joke, and no one did it. Same with anesthesia. Now that these specialties pay booku bucks, they are highly desired. Did all the hard working people suddenly end up in these specialties? ...

Medical schools are full of highly driven type-A personalities...telling most of them they can make >$500k in ortho, derm, gas, rads, ent, et al ROAD and surgical sub specialties as opposed to <$200k doing FP/primary care, coupled with having >$200k in loans, and that's going to drive some decision making...don't tell me it doesn't.

Should you lament that fact someone's making $700k/yr? No. But the disparity in income between specialties is disgusting, and chalking it all up to "hard work" on the part of those raking in ridiculous amounts of money is a farce and ignores the impact the govt & managed care have had.

Not like FPs that make <$200k aren't working hard. (i'm not FP btw) The system doesn't simply reward hard work...it rewards (monetarily) those willing to situate themselves in the position to make the most money.

Example: I could do dermatopathology, work my tail off at a derm lab and pull in close to a 7 figure salary. Yes, it would take hard work and persistance to get there. But in the end it's based on CPT codes & volume: If the reimbursement for skin biopsies is halved by CMS, my income is halved...not like I'm working 50% as hard. If the reimbursement for TKR's went from several thousand dollars to $500, orhto salaries would take a hit. If performing a "procedure" reimbursed half of what it does now, dermatologists would take a hit.

 

[Chonal Atresia]

If you're not happy with reimbursement for your specialty, you can always go back and do a 2nd residency. These doctors did not set reimbursement rates (CMS does this). Good for them for making as much money as they can. We all know that both public and private insurance is always looking to cut ALL PHYSICIAN reimbursement.

 

[DeadCactus]

If you're not happy with reimbursement for your specialty, you can always go back and do a 2nd residency. These doctors did not set reimbursement rates (CMS does this). Good for them for making as much money as they can. We all know that both public and private insurance is always looking to cut ALL PHYSICIAN reimbursement.

Well if physician's aren't happy with reimbursement, they can always go get a second professional degree. 🙄

 

[schrute]

If you're not happy with reimbursement for your specialty, you can always go back and do a 2nd residency. These doctors did not set reimbursement rates (CMS does this). Good for them for making as much money as they can. We all know that both public and private insurance is always looking to cut ALL PHYSICIAN reimbursement.

Well that's pretty much what I just said: physicians didn't set reimbursement, CMS did (though physician lobbying has a huge part in it). But that doesn't mean it's perpetually sustainable (CMS hath the power to give and the power to taketh away).

So gas banks $350k avg...great, good for them. But the fact they can is only because the way reimbursement is currently structured, not because gas intrinsically has a claim to $350k salaries. This is the reason anesthesia is so lucrative, not because anesthesia is so tremendously hard or so much more valuable to medicine and society than, say, psychiatry, or nephrology, or whatever.

Yes, anesthesiologists work hard, and it's hard to get an anesthsiology residency...but if anesthesia paid what it did 20 yrs ago, it wouldn't be hard to get into.

 

[Mirror Form]

Well that's pretty much what I just said: physicians didn't set reimbursement, CMS did (though physician lobbying has a huge part in it). But that doesn't mean it's perpetually sustainable (CMS hath the power to give and the power to taketh away).

So gas banks $350k avg...great, good for them. But the fact they can is only because the way reimbursement is currently structured, not because gas intrinsically has a claim to $350k salaries. This is the reason anesthesia is so lucrative, not because anesthesia is so tremendously hard or so much more valuable to medicine and society than, say, psychiatry, or nephrology, or whatever.

Yes, anesthesiologists work hard, and it's hard to get an anesthsiology residency...but if anesthesia paid what it did 20 yrs ago, it wouldn't be hard to get into.

Anesthesia has always done well, they just have not been hit quite as hard as most other specialities. Supply and demand is one main reason. Surgical centers NEED anesthesia, and good anesthesia makes a big difference. Hospitals and surgical centers will pay for anesthesiologists. Whereas, there are plenty of FP doctors out there, so if one FP doc doesn't want to take a low salary, someone else will.

Also, same thing with those midwest ortho docs. CMS doesn't reimburse more in the midwest then in NYC, yet salaries are quite a bit lower in NYC.

 

[AF M4]

Well that's pretty much what I just said: physicians didn't set reimbursement, CMS did (though physician lobbying has a huge part in it). But that doesn't mean it's perpetually sustainable (CMS hath the power to give and the power to taketh away).

So gas banks $350k avg...great, good for them. But the fact they can is only because the way reimbursement is currently structured, not because gas intrinsically has a claim to $350k salaries. This is the reason anesthesia is so lucrative, not because anesthesia is so tremendously hard or so much more valuable to medicine and society than, say, psychiatry, or nephrology, or whatever.

Yes, anesthesiologists work hard, and it's hard to get an anesthsiology residency...but if anesthesia paid what it did 20 yrs ago, it wouldn't be hard to get into.

Whenever I hear a doc in one specialty mouthing off against the salaries of another, all I hear is the sound of an insecure narcissist punching himself in the face.

And one of the weirdest things about our profession is that when we play this amateur economist game we always seem to go after our colleagues the hardest. "Just because he makes more money than I do doesn't make him smarter or mean that I don't work as hard!" and so on.

I don't know what "intrinsically has a claim to X dollars" means. What's the intrinsic value of a dollar? No one knows; it changes every minute of every day. That's why there's a currency market. What's the intrinsic value of work? How do you define that? In the most simplistic of cases, the assembly line guy who makes 100 widgets should get paid more than the guy who makes 85. But what if the guy who made 85 was making higher quality widgets, or bigger ones for airplanes instead of for cars?

If I happed to be one of those widget-makers, then my answer to the above conundrum is that I want the job of making widgets in general to be the most lucrative in the world, so that we may adjourn the discussion to be settled over aged wine at the Augusta country club. I want the dermatopathologist down the street to be making 100K per peeled-off mole, because I'm pretty sure that if he's making that much for it then I can offer the same but less well-done job for half the price.

I would never argue that doctors of X specialty are being paid too much, because if their salary comes down then it's only a matter of time before they come for mine.

 

[AF M4]

Instead of the Poindexter response, you could have just answered, "Guess you should have gotten better board scores."

😀

Dear god man, the last thing I need is the entire AAFP trying to storm my specialty-funded castle with spears and pitchforks. I just got done rinsing the bones of an entire cadre of MSC butterbars out of the moat.

 

[schrute]

Whenever I hear a doc in one specialty mouthing off against the salaries of another, all I hear is the sound of an insecure narcissist punching himself in the face.

And one of the weirdest things about our profession is that when we play this amateur economist game we always seem to go after our colleagues the hardest. "Just because he makes more money than I do doesn't make him smarter or mean that I don't work as hard!" and so on.

I don't know what "intrinsically has a claim to X dollars" means. What's the intrinsic value of a dollar? No one knows; it changes every minute of every day. That's why there's a currency market. What's the intrinsic value of work? How do you define that? In the most simplistic of cases, the assembly line guy who makes 100 widgets should get paid more than the guy who makes 85. But what if the guy who made 85 was making higher quality widgets, or bigger ones for airplanes instead of for cars?

If I happed to be one of those widget-makers, then my answer to the above conundrum is that I want the job of making widgets in general to be the most lucrative in the world, so that we may adjourn the discussion to be settled over aged wine at the Augusta country club. I want the dermatopathologist down the street to be making 100K per peeled-off mole, because I'm pretty sure that if he's making that much for it then I can offer the same but less well-done job for half the price.

I would never argue that doctors of X specialty are being paid too much, because if their salary comes down then it's only a matter of time before they come for mine.

Good god grow up.

If I wanted to push amnesia juice & halogens for $400k, I would have. This isn't a pissing contest so don't turn it into one. My best mates are all either ortho or gas or derm; I don't particularly care how much they make--I know they make a killing. My point was simply to hone in on the convoluted nature of our payment system, which is the reason behind the sub-specialty boom.

I'm as eager as anyone to secure my finances and establish a retirement, and for the 3rd time, more power to anyone bringing home the salami. But if you honestly can't connect the dots between the ROAD & IM sub-specialty boom and CMS et al, you're an ignoramus: consultations and coordination of care aren't valued as highly as performing procedures.

Back to my original example, I could work in a factory and push derm glass in FL for 7 figures, but CMS decides to cut the 88305 and my only means to compensate is increasing volume. This is what happened to FP over the course of several years.

CMS and insurance companies are the reason FP is so atrocious...not because FP docs don't work hard. Likewise, the opposite is true and ROAD & sub-specialties are NOT atrocious because of CMS and insurance companies...not simply because they merely "work hard."

"I want the dermatopathologist down the street to be making 100K per peeled-off mole, because I'm pretty sure that if he's making that much for it then I can offer the same but less well-done job for half the price."
-- And what happens when the other guy does it for 1/4? 1/10? Typical myopic attitude that is contributing to the race to the bottom.

 

[schrute]

Supply and demand. Every community hospital has an FP program pushing out a dozen FPs every year, whereas the high-earning specialties actually control the number of residents they graduate. Plus the fact that the AAFP participated in the creation of the wonderful job of "FNP", whose practitioners now directly compete with them...

The way you phrase it, you make it sound like a conspiracy. Politicians don't sit around with insurance execs going, "I'm banging a hot Derm resident this week, so let's help that field make money." But if you have a population of proceduralists who are a relatively hard to find on one hand, and on the other a specialty that is considered the go-to place for Carib grads and IMGs, how did you really think that was going to shake out?

Not a conspitacy, just the product of the govt at its finest.

 

[pgg]

Keep in mind $1 today is going to be worth around 50 cents 20-25 years from now (depending on the inflation rate).

Heh. It's going to be a hell of a lot sooner than 20-25 years from now.

Look at the national debt, look at the ongoing budget deficits, look at the current interest rates, look at the Fed buying up gov't debt with QE-created money.

A realistic retirement plan really needs to take a couple of slow, careful steps back from historical data like 11%/yr stock market gains and 3% inflation. Those days of investment safety and predictability are likely over, at least for the next couple decades.

If 10 years from now Congress decides that they can't fund military pensions or Social Security anymore, then 10 of your prime earning years just evaporated and you're SOL.

This is a very real risk.

If you save and invest now, in a way that appropriately hedges for inflation, my personal opinion and prediction is that you'll come out far ahead of the government's "inflation adjusted" pension plans. Take a look at how the government has constantly, progressively, deliberately fudged the formula they use to calculate inflation over the last couple decades. REAL inflation is far higher than the official government numbers.

This is the reason anesthesia is so lucrative, not because anesthesia is so tremendously hard or so much more valuable to medicine and society than, say, psychiatry, or nephrology, or whatever.

These specialty pissing matches are always pointless, but I can't resist pointlessly adding my own 100 mL.

Outside of surgeons, few specialties have the kind of daily opportunities to kill healthy people that anesthesiologists do. Risk always has, and always will, demand a premium when it comes to compensation.

The dip in anesthesiologist pay in the mid-late 90s was a political anomoly, and the 00s rebound past normal was all the more spectacular for it.

 

[AF M4]

Good god grow up.

My point was simply to hone in on the convoluted nature of our payment system, which is the reason behind the sub-specialty boom.

I'm as eager as anyone to secure my finances and establish a retirement, and for the 3rd time, more power to anyone bringing home the salami. But if you honestly can't connect the dots between the ROAD & IM sub-specialty boom and CMS et al, you're an ignoramus: consultations and coordination of care aren't valued as highly as performing procedures.

Back to my original example, I could work in a factory and push derm glass in FL for 7 figures, but CMS decides to cut the 88305 and my only means to compensate is increasing volume. This is what happened to FP over the course of several years.

CMS and insurance companies are the reason FP is so atrocious...not because FP docs don't work hard. Likewise, the opposite is true and ROAD & sub-specialties are NOT atrocious because of CMS and insurance companies...not simply because they merely "work hard."

"I want the dermatopathologist down the street to be making 100K per peeled-off mole, because I'm pretty sure that if he's making that much for it then I can offer the same but less well-done job for half the price."
-- And what happens when the other guy does it for 1/4? 1/10? Typical myopic attitude that is contributing to the race to the bottom.

Myopia? Nah. Just full-blown cynicism in all its Darth Vader-like glory.

Connecting the dots isn't all that hard. I just spent a few years in a GMO clinic cattle-prodding a line of civilian coder hires to find ways to improve our clinic's RVU total without us clinicians working any harder. It worked; aside from a few now-traumatized coders, the docs in my clinic got hassled less by the admin because our totals were increasing, but my colleagues were also leaving earlier every day. We couldn't get paid extra salary in the military for more RVUs, but we could get compensated in time. I could teach a college course on how to legally scratch every last cent out of the system.

We agree in our understanding of the theory, my friend. Where I strenuously disagree with you is in your application of your understanding.

You see, for the docs in my clinic to leave earlier in the day it wasn't just a matter of cranking up the RVUs and then the admin would give us a pat on the back and a wave as we left at 1530. No, if the administrators at my clinic had been fully aware of what we were doing, they still would have been ecstatic BUT they would have still made us stay late because now we could make even more RVUs.

So we had to carefully select those docs who were smart enough to evince the same kind of harried, overworked expressions they had when they were actually being overworked. We needed the admin to remain convinced that we were working our fingers to the bone to create all those RVUs you see, otherwise we wouldn't get our "incentive pay" of extra time to spend with our families.

If, during one of the stand-up meetings, one of the other docs had started talking about how the reason the other docs were pulling down so many more RVUs than him was because of their better coding practices, I had the permission of every other clinician in the room to take him down like an MMA fighter before he finished his sentence.

Do you understand what I am saying and how it relates to how it looks when a physician publicly discusses how other physicians' salaries are determined?