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Economic Boom a Bust for Physician Income

Average Physician Income Dropped Between 1995 and 1999, as Other Professionals' Earnings Rose

News Release
March 26, 2003

FURTHER INFORMATION, CONTACT:
Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.— Average physician net income from the practice of medicine dropped 5 percent in real dollars between 1995 and 1999, while other skilled professionals’ average income increased 3.5 percent, according to a national study released today by HSC.

The growth of managed care in the mid-1990s likely played a role in declining physician income by holding down spending on physician services through discounted fees and restrictions on the use of care. However, the decline in physician income slowed between 1997 and 1999 as managed care restrictions eased and both the volume and price of physician services increased.

"The real-dollar decline in physician income may help explain why physicians have objected so strongly to Medicare payment reductions and why a smaller proportion of physicians is providing charity care," said Paul B. Ginsburg, Ph.D., co-author of the study and president of HSC, a nonpartisan policy research organization funded exclusively by the Robert Wood Johnson Foundation.

"The downward trend in physician income represents a dramatic shift from 1991 to 1995, when physicians’ income growth exceeded inflation, and income for other professional occupations lagged the cost of living," said co-author Marie Reed, M.H.S., an HSC health research analyst.

The study’s findings are detailed in a new HSC Data Bulletin—Behind the Times: Physician Income, 1995-99. The study is based on results from HSC’s Community Tracking Study Physician Survey, a nationally representative survey involving about 12,000 practicing physicians.

Despite the decline in inflation-adjusted net income, medicine remains one of the highest paid professions in America. More than half of all physicians earned more than $150,000 in 1999, while average physician net income was about $187,000, the study found. Specialists typically earned considerably more than primary care physicians, with specialists earning an average $219,000 in 1999, compared with $138,000 for primary care physicians.

Primary care physicians’ income took a bigger financial hit than specialists’ between 1995 and 1999. Internists, pediatricians and other primary care practitioners saw their net income decline by an average 6.4 percent, adjusted for inflation, compared with 4 percent for cardiologists, surgeons and other specialists.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.

 

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