Secret #11 Doctor pay is not the reason why healthcare is so fucking expensive.
From 11 Secrets of the Healthcare System Exposed
I’ll just give you two reasons from my experience, although it’s much more complicated than this.
Reason #1: The explosion of middle-management people between you and your doctor and above your doctor that need to be paid. I include insurance companies as another middle-entity that needs to extract profit. For every doc in the system, there’s about 10 administrative people*, including people who tell your doctors and nurses what to do. You can Google specific insurance and hospital CEO salaries at your own leisure. No doctor salary comes remotely close.
As of 2019, each primary care doctor in the system generated on average, $2.1 million in NET revenue for their employer per year, PER PCP**. Based on Medscape’s report, the average primary care gross salary in 2019 was $237K, or only about 11% of the net revenue they generate for their employer. That’s not even the take-home pay after 24-35% in federal taxes (married vs single brackets) and any applicable state taxes.
I’m curious what the gross revenue was, since physician salary is on the expense side of the equation. So how much do physicians’ salary account for in the overall healthcare spending? I can’t find any updated statistics that’s not a decade old, but historically it’s been 8.6%. Less than TEN PERCENT. Remember for every doctor, there’s 10 other non-clinical people to pay for. Admin roles and salaries may range, however, this article shows an interesting graph revealing how much CEOs and administration made back in 2013. Why does a hospital administrator make more than a doctor? For what?
Still think doctors are overpaid? Let’s take the reported average full-time family physician salary of $255k in 2022. Calculate for working 50-60 hours a week and you’ve got a range from $106 - $89 per hour, pre-tax. Ummm… every hair colorist/stylist I’ve been to on the west coast charges this much per hour, or more. Lawyers charge more per hour. CPAs charge more per hour. So do plumbers. I’ve seen health coaches and acupuncturists charge more per hour. A Hydrafacial costs more per hour. You all follow influencers, YouTubers, and other content-creators who out-earn a neurosurgeon. Top real estate agents can crush a doctor’s salary with one sale. You get the drift?
But alas, physicians are still considered such expensive labor, so much that certain startup CEOs, that I won’t name, and who don’t know shit about practicing medicine and clearly has disdain for doctors, are on a mission to amortize (even further devalue) human physicians with AI and tech. They also imagine doctors having 5,000+ patients. What the fucking fuck? Do you want a doctor who has 5,000 other patients? As if you didn’t already feel like “just a number” in our current system already. I’m digressing.
Reason #2: No transparency in the cost of tests and services when insurance is involved, so anything can cost anything. You can’t negotiate or know how to shop around for best prices.
I’ll give you a personal example. I had a cervical polyp found on a routine Pap smear exam a few months ago. The location of this polyp required an ultrasound before the follow-up visit to remove the polyp. No biggie, I know they’re like 99% benign.
However, I was told that my high deductible Aetna plan probably won’t cover the ultrasound and it was unclear if cost of the polyp removal and pathology would be covered. The office said I wouldn’t know until I get a bill in the mail. Awesome. How much would all of this cost? No fucking clue.
Here’s what a benign cervical polyp costed me in 2022:
Copay for the initial Pap smear visit: $45
Bill in the mail for the initial visit with a NP: Aetna paid $381. I still owed $42
Pelvic ultrasound - Cash price: $321, or with Aetna: $427 for the same test. Cash price wins.
Copay for follow-up visit $45.
Urine pregnancy test before polyp removal: $20.
Bill in the mail for the follow-up visit with procedure: Aetna paid $375. My $45 copay actually counted towards the cost of this visit. I still owed $199.
The pathology bill: Insurance paid $133, I owed $55.
My total out of pocket expense: $727
Total Aetna paid: $889. To clarify, paid to the NP’s employer, not to the NP.
Overall cost: $1616. For a benign cervical polyp!
Again with the transparency issues - the bills never state the total cost at the top, just a breakdown what insurance paid and what you owe. I called the billing office to verify that my entire follow-up office visit did indeed cost a random $619 total.
Basically, it’s no secret that everything is inflated through insurance. The system bills insurance way more than a test, procedure, or service needs to costs to ensure they reap the maximum reimbursement, which is smart, but then the rest of the unreimbursed inflated cost gets passed onto you. If you offer cash to a lab or radiology company, they typically charge less than they would bill insurance. Honestly, dealing with insurance is so annoying that I don’t blame them for charging more for the hassle, but why not cut out the middle-man when you can?
I should add, doctors and clinicians are completely BLINDED to the cost of anything. There is no such thing as a price-list hanging in the office or in Epic next to the billing codes. I’ve only seen price transparency with DPC offices and other practices that avoid insurance. In fact, DPC practices can negotiate dirt cheap prices for labs and basic prescriptions out-of-pocket.
How to ameliorate healthcare costs in America?
Obviously, nobody has figured that out, but I suspect pushing for price transparency and amortizing hospital administration and CEOs with AI and tech might help.
I think the real question is, how to change the unhealthy culture of Americans to prevent expensive chronic diseases to begin with? It’s a cultural issue on many levels - unhealthy, and even toxic cultures at work, at home, the education system, the farming and food industry, etc. I don’t think it’s a coincidence that Americans wait in line for care like they wait around the block for In-N-Out***. There has to be a concerted effort from multiple levels outside of the functionally dysfunctional sick-care system to move the needle.
But fundamentally, health-care starts at home with the daily practice of you taking care of you.