Where Is The Healthcare Money Going ?

The article in the Dallas Morning News on Sunday, July 29,2012 entitled “Your Doctor’s Big Fat Paycheck” by Eli Lehrer is misleading. The article ignores the real cause of the rising costs in the healthcare system.

Physicians are the easiest stakeholder to criticize because they are the least organized and least represented. This makes them the easiest and most vulnerable target.

The subtitle is “High wages in the medical sector are the underlying cause of ballooning healthcare costs.”

Eli Lehrer does a disservice to the medical profession as well as to patients. It does not represent the truth-value added effect of a physician's services to patients.

Mr. Lehrer article devalues physicians’ services. He has a lack of understanding of the costs of medical care vs. healthcare.

He quotes the Bureau of Labor statistics saying that primary care physicians earned just over $200,000 a year while specialists earned $355,000 per years in 2010.  The Bureau of Labor Statistics used Medical Group Management Association (MGAMA) data for this estimate.

Those numbers are pretty close to the numbers reported by MGMA physician Compensation and Production Survey for 2011.

The number needs some correction but it is unnecessary to quibble.

The MGMA has a group of consultants that teach physicians how to make more money from the healthcare system.

Physician Compensation

Median compensation levels for primary and specialty care physicians Source: MGMA Physician Compensation and Production Survey: 2012 Report Based on 2011 Data

http://www.mgma.com/physcomp/

http://www.bls.gov/oco/ocos074.htm#earnings

Anesthesiology   $407,292

General surgery  $343,958

Obstetrics/gynecology   $281,190

Internal medicine   $205,379

Psychiatry   $200,694

Pediatrics/adolescent medicine   $192,148

Family practice (without obstetrics) $189,402

 

Quick Facts: Physicians and Surgeons
2010 Median Pay	This wage is equal to or greater than $166,400 per year or $80.00 per hour.
Entry-Level Education	Doctoral or professional degree
Work Experience in a Related Occupation	None
On-the-job Training	Internship/residency
Number of Jobs, 2010	691,000
Job Outlook, 2010-20	24% (Faster than average)
Employment Change, 2010-20	168,300

The MGMA summarize physicians scope of work layman’s terms on its web site.

What Physicians and Surgeons Do

"Physicians and surgeons diagnose and treat injuries and illnesses in patients. Physicians examine patients, take medical histories, prescribe medications, and order, perform, and interpret diagnostic tests. Surgeons operate on patients to treat injuries, such as broken bones; diseases, such as cancerous tumors; and deformities, such as cleft palates.

Work Environment

Many physicians work in private offices or clinics, often helped by a small staff of nurses and other administrative workers. Surgeons and anesthesiologists usually work in sterile environments while performing surgery and may stand for long periods.

How to Become a Physician or Surgeon

Almost all physicians complete at least 4 years of undergraduate school, 4 years of medical school, and 3 to 8 years of internship and residency, depending on their specialty.

Pay

Wages of physicians and surgeons are among the highest of all occupations. According to the Medical Group Management Association, physicians practicing primary care received total median annual compensation of $202,392, and physicians practicing in medical specialties received total median annual compensation of $356,885 in 2010."

http://stanleyfeldmdmace.typepad.com/repairing_the_healthcare_/2011/11/where-is-the-healthcare-money-going.html

 

I am temped to answer Mr. Lehrer’s article point by point. There is so much misinformation and disinformation in this article that it makes Yellow Journalism look tame.

 The more important issues are how much does the healthcare system cost and where is the money going?

 Then, and only then, can we begin to know the underlying cause of the ballooning healthcare cost.

 There are 691,000 practicing physicians in the U.S. Let us assume that the average salary is $250,000 dollars. This is probably a high average number.

The healthcare system costs America approximately $2.5 trillion dollars ($2,500,000,000,000) a year.

691,000 physicians averaging $250,000 equals $172,750,000,000 ($172 billion 750 million dollars).

$172,750,000,000 billion divided by $2,500,000,000,000 trillion equal 6.91% of the healthcare dollars spent for physicians’ salaries.

Let us assume that each practicing physician’s overhead is 50%. This is also a high average. Therefore, physicians’ overhead and salaries are 13.8% of the total healthcare dollars spent.

There real issue in the raising cost of healthcare is where is the 86.2% of the U.S. healthcare costs going?

Mr. Lehrer ignores this issue.

The money is wasted on administrative bureaucracy, healthcare insurance executives’ salaries, hospital administrator salaries and an exorbitantly complex  and expensive pharmaceutical bureaucracy.

Over 20 WellPoint executives make more than 10 million dollars a year with these numbers being stratified upward to over 25 million dollars a year plus bonus and stock options.

Some healthcare insurance executives receive over a billion dollars a year in bonuses and stock options.

Many levels of hospital administrative executive make over one million dollars a year with chief executives making over $15 million dollars a year.

I have been told “it is hard to get good help.”

With these sobering numbers on board the critical question is how much is a physician worth that has the education and ability to save lives?

This is the main reason Mr. Lehrer’s article in the Dallas Morning News is worse that Yellow Journalism.

The editors of the Dallas Morning News should be embarrassed by their publication of this article.

 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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