Arnold Kling  

Primary Care Doctors vs. Specialists

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The Wall Street Journal reports

primary-care doctors, including internists, family physicians, and pediatricians, are in short supply across the country. Their numbers dropped 6% relative to the general population from 2001 to 2005, according to the Center for Studying Health System Change in Washington. The proportion of third-year internal medicine residents choosing to practice primary care fell to 20% in 2005, from 54% in 1998.

A principal reason: too little money for too much work. Median income for primary-care doctors was $162,000 in 2004, the lowest of any physician type, according to a study by the Medical Group Management Association in Englewood, Colo. Specialists earned a median of $297,000, with cardiologists and radiologists exceeding $400,000.

This is the phenomenon that in Crisis of Abundance I dubbed "premium medicine."

The focus of the story is on how the reduction in primary care doctors hurts the Massachusetts health plan. I think that is almost beside the point. My guess is that this is another instance in which American medical care is allocated at the margin in a cost-ineffective way. If insurance companies were not paying so much of the bill, people would not see so many specialists. Specialist income would decline, and more physicians would stay in primary care.

UPDATE: Michael Cannon comments.

Comments and Sharing

COMMENTS (9 to date)
Mr. Econotarian writes:

This is similar to the IT world. There are lots of high-paid specialist programmers ("10 years of Oracle DBA experience"), but to put together effective projects you need experienced project managers.

A general care doctor should be a project manager, able to identify requirements (symptoms), put together project plans (treatment plans), and to manage the project (treatment).

It should be its own speciality with an accent on "treatment project management" (including six sigma, lean, etc.)

Biomed Tim writes:

I've bought Arnold's book but I haven't read it yet.

Question: Do you guys foresee a subsequent rise in primary care physicians' income?

Brian Moore writes:

I would also add, as a cause, from personal experience, "punishingly hard and long residency programs for people in basic internal medicine". If you want to see your wife/husband/kids, go into a specialty that has a good lifestyle.

jurisnaturalist writes:

We might expect to see specialist's salaries slide some over time as supply rises to meet demand. The misallocation occurs in the way prices for medical care are set arbitrarily.

aaron writes:

The only real way to improve healthcare is to simplify/shorten training, create more schools/expand schools, get more doctors training, get more students in school (reduce cost born by student), and create streamlined specialty programs.

aaron writes:

Oh, I graduated from undergrad back in 2000. Things were BAD then. Students couldn't get jobs, ones who did often had their offers rescinded. Many students sought shelter in Med school and law school, and this continued for several years. May we see a bump in supply, or at least buffering of the decline, of doctors?

Chuck writes:

I don't understand how the free market isn't working the only way it can in the medical field.

Insurance is a natural approach for consumers to health care. I, personally, don't want to have to become an expert in health care so that I can negotiate with my Dr, and I don't want to run the risk of my health costs bankrupting me. (In fact, I don't want my brother-in-laws health care costs to bankrupt me, so I bought HIM insurance.)

If consumers having insurance doesn't create a health care market that works, it seems to me that health care doesn't fit into the market paradigm very well.

shayne writes:

To Chuck:

Classical free market principles are heavily distorted in the health care industry due to the predominance of insurance-based payments - both private and governmental. Note that the nature of any insurance, and health insurance in particular, is to insure against financial loss. More specifically, again in particular with regard to health insurance, it is a guarantee of payment to the service provider. Health insurance doesn't guarantee your health, or even that you will receive treatment - it guarantees that the health care service provider will be paid for the services they render. This system of guaranteed payment for services doesn't exist in classical free markets. I'd love to have such a guaranteed payment umbrella in my industry (IT) - I could invent all manner of newer, better, more specialized services I could provide to my market if I knew I was to be guaranteed payment for them.

Note the incentives that result to both demanders and suppliers in such a market. The supplier incentives are to invent newer, better, more specialized (costly) services and justify each as a "necessity", while the demanders are shielded from the immediate cost effects by the very nature of the insurance (protection against financial loss) - the services and guaranteed payment umbrella propagate the false perception in demanders that health care services are free or of minimal cost.

I try very hard to be positivist regarding economic principles, in order to avoid being perceived as just another policy wonk or advocate. But I do believe that there is a high probability the the U.S. will adopt some sort of national health insurance system (touted as larger risk pool, and subsequently allegedly lower individual costs). The political allure is too great. I know it's net immediate effect will be to create an even larger and more robust version of what I've described above. I render no judgement or advocacy regards such a national insurance scheme - I would merely react to the imposition of such a scheme by buying up every share of publicly traded stock in any company that can even spell health care, precisely because they will be selling into a market that is umbrellaed by guaranteed payment, underwritten by the full faith and credit of the U.S. government. In 4 years or so, I should be able to buy my very own hospital.

Dan writes:

They are paid little because they add little value. I am a doctor, and I'll tell you, the people that do primary care are typically from the bottom of their med school classes. While there are plenty of exceptions - PCP's who are extraordinary physicians, the majority of them are took a less arduous route of trainging and study, and spend most of their day doing paper work and refilling meds and addressing non-acute problems. Any nurse can do 95% of what they do.

Neurosurgeons (and other highly paid specialists) make a lot of money for the same reason Alex Rodriguez makes a lot of money, their are few people who can do what they do (not only technically, but also in so much as enduring an arduous training process). More taking job, providing a more value added service, that is less fungible = higher pay.

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