How wage-setting in health care limits pay and scares away doctors

How wage-setting in health care limits pay and scares away doctors

Physicians are rightly frustrated with the number of individuals and businesses that do not provide direct medical care to patients but take advantage of our services. Salary suppression is one of the many reasons doctors are abandoning traditional medicine and seeking other careers. Although physicians have seen their salaries increase over the past 20 years, this has not matched the rate of inflation. For example, Medicare reimbursement lags inflation by more than 20%. The reality is that doctors are being asked to work harder without seeing salaries increase accordingly. This makes us think: is there a collusive effort in health care to keep doctors’ salaries low while forcing us to take responsibility for the practice of medicine?

Insurance companies, government entities, and other healthcare actors can work together to prevent doctors from earning competitive salaries that match our education, training, and expertise.

Is there wage fixing in health care?

Collaborating against doctors to pay them less would be a serious accusation against all parties involved in our healthcare system. Wage fixing is a violation of Federal Trade Commission (FTC) law and is a crime. Should we consider an indictment against those who work to limit and suppress physician compensation? Investigators are unlikely to find binding agreements between entities to support an indictment, but let’s outline some of the things we might consider in our pursuit of the healthcare industry in this hypothetical case.

Hypothetical Case #1: Physicians (Plaintiff) vs Healthcare Industry (Defendant)

In this hypothetical case, American doctors are accusing the healthcare industry of setting salaries to prioritize financial gain over appropriate compensation, which violates antitrust laws and the FTC law and is subject to penalties and disqualifications. fines. Wage fixing in health care has been used to artificially suppress the labor market, reduce competition among employers, and potentially increase employer profits at the expense of physicians.

The arguments against the health industry

Argument #1: Physician compensation is unique in that it is federally limited based on fair market value (FMV) to prevent fraudulent behavior under the Stark laws. Healthcare organizations determine FMV through market analysis and benchmarking, comparing physician compensation in the same specialty and region. However, this approach may be flawed because it allows establishments to work indirectly with each other to limit wage increases in response to demand, workload, and inflation.

Argument #2: Physician compensation is limited by state legislatures and courts that continue to allow health care institutions to enforce “non-competition” clauses. Physician contracts that include non-competition clauses are an unfair practice by medical institutions that limit compensation. Non-competition clauses for physicians reduce job opportunities, decrease mobility, and decrease bargaining power to limit compensation.

Argument #3: The national physician compensation surveys from MGMA, SullivanCotter, AMGA and Gallagher are based solely on data submitted by health care facilities without physician input. This lack of physician involvement raises concerns about the authenticity of the data obtained. This allows facilities to potentially collude and limit physician compensation without considering actual salary, work environment, hours, and workload.

Argument #4: Antitrust laws prevent compensation investigations by physicians who share salary information among physicians because it may be considered wage fixing. However, medical institutions may share physician salary data to establish benchmark data for compensation purposes, raising questions as to why physicians cannot host their own surveys.

Argument #5: Healthcare facilities continue to work with staffing agencies to avoid increasing physician compensation, despite revisions to the Stark Act of 2020. The revised laws defined “reasonable business,” which allows medical facilities to contract directly with physicians if it serves a legitimate business purpose, even if it does not yield a profit. However, medical institutions continue to rely on expensive management companies and recruitment agencies to avoid overpaying physicians who work directly with them.

Argument #6: Physician compensation is limited by state legislatures that allow for the expansion and autonomy of the role of NPs and PAs. As the number of NPs and PAs increases, they will compete with physicians for certain job opportunities and patient care responsibilities. This will create more competition for doctors, reduce their bargaining power and limit their ability to negotiate higher compensation. Additionally, physicians are consistently expected to supervise NPs and PAs without commensurate compensation, which is unprecedented in most other industries.

Argument #7: Medicare is reducing physician reimbursement rates, with a 2% drop in 2023 and a projected 1.25% drop in 2024. In addition, a significant portion of Medicare funds is channeled through large nonprofit insurance companies. non-profit organizations, such as United Healthcare, Molina and Humana, rather than directly to physicians.

Argument #8: VUR as a reimbursement method to limit physician compensation by Medicare and insurance companies is flawed because it does not always match the complexity of patient care and time spent with patients. Additionally, Medicare and insurance companies may decrease the value assigned to a VUR each year, resulting in lower reimbursement for medical services.

Argument #9: Insurance company reimbursement rates for medical services favor the health care facility over the physician providing the service. Facility fees for patients are much higher than physician fees for outpatient examinations and procedures.

Argument #10: The amount of work doctors do without pay would be considered unacceptable in most other professions. They attend numerous meetings throughout the day and work after-hours to meet their documentation obligations, but their pay does not increase accordingly.

Argument #11: In some cases, physicians are constrained by legal and ethical obligations to provide free care to patients without reimbursement. What other industries require companies to provide services without reimbursement?

Closing speech

Post-COVID, doctors are expected to see more complex patients and work longer hours, but the healthcare industry is failing to compensate them appropriately, unlike other industries and to inflation. Our hypothetical collusion case against the healthcare industry demonstrates how physician compensation is capped and suppressed to benefit others. Such collusion could have serious consequences for the quality of patient care, as it could exacerbate the shortage of doctors resulting from health leaders’ lack of respect for the profession.

Aaron Morgenstein is a board-certified orthopedic surgeon and founder of, a completely transparent and free marketplace for physicians to find new clinical and non-clinical opportunities to improve work-life balance. Contact Aaron here.

Corinne Sundar Rao is a board-certified internal medicine physician and founder of Legacy Physicians, which helps hospitals find well-qualified physicians at far lower overhead than they would pay recruitment agencies. She can be reached on LinkedIn and Facebook.

Allison Nazinitsky is an infectious disease physician.

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