Working for Free: The Economics of Being a Primary Care Physician

Assume a business day of 8 hours. For each hour a family/primary care physician can see 3 patients at 20 minutes each. During each 20 minute visit a doctor has to review a patient’s history, listen to the patient’s complaint or reason for the visit, make a clinical diagnosis on how to best treat the patient’s problem, and assess the patient for signs of any other disease process. All this must be carefully notated in the patient’s chart to track progress and to document the visit for insurance purposes and in rare cases, legal actions.

So the doctor sees 24 patient’s in a day. Assume each patient’s insurance is billed $100 for the visit. Of that $100 the doctor’s practice expects to receive (including patient co-pays) $50. 50% of that $50 is kept by the practice to pay for overhead (medical assistants, receptionists, nurse practitioners, building costs etc). That leaves the doctor $25 per patient.

3 patients an hour means $75 hour, and that equals at 2000 hours a year, $150,000. This is a good wage by most standards. The problem is that doctors don’t work 2000 hours.

As well as seeing 24 patients, the doctor is responsible for managing physician assistants and nurse practitioners. He or she is ultimately responsible for the treatments made by these mid-levels and can be held accountable by the medical board and in court for any mistakes they make. This usually means monitoring what the mid-levels are doing, reviewing their charts, and assisting with their treatment options. This supervision is completely unpaid; the doctor is not reimbursed for his or her time.

Throughout the day test and lab results from current patients arrive on the doctor’s desk. S/he must review these and sign-off on them, adjusting medications or marking for follow-ups as needed. This work is unpaid.

Each refill request made by a patient must be reviewed and signed off by the doctor. He or she is not paid for this work.

20 minutes is not enough time to adequately document a patient’s chart. A doctor will often make quick notes during the patient visit and complete the chart after visiting hours. Charts for those with complex problems and chronic conditions can take upwards of 30-60 minutes to document each visit – all done for free.

When all is said and done, a doctor will spend 8 hours with patients and an additional 4 hours on unpaid tasks, resulting in a 12 hour day. 12 hour days result in working 3000 hours a year*. At $150,000 year (the extreme high end of PCP salaries by the way – the average is more like $125,000), that’s $50 an hour. This is still a good wage, but to receive it a doctor must have done the following:

  • Received a 4 year degree.

  • Applied to and been accepted to a medical school program. This process is highly competitive and takes at least a year. There is another year delay between acceptance into medical school and actual attendance.

  • Graduated medical school in 4 years.

  • Completed a 1 year internship.

  • Completed a 2-3 year residency.

It is impossible to work during medical school, so those 4 years of lifetime earnings are lost. During internship and residency, doctors earn $30-35k year. Although the 80 hour week is officially frowned upon by residency programs, interns and residents continue to work these hours. For argument’s sake let’s assume a 60 hour week at $30,000. That’s $10/hour for the first 3 or 4 years of work. In my area cashiers at Wal-mart earn that, do not work more than 40 hours/week and do not have to worry about making a mistake that kills someone.

The average undergraduate finishes college with $23,200 of student loan debt. The cost of applying to medical school, something that isn’t often mentioned, is significant. Figure an additional $5-10k for school applications and interviews, MCAT test and prep, and travel. The average medical school debt is $156,456 – but this assumes the loan amount is paid back immediately upon graduation. No intern working 60 hours a week for $10 an hour can afford to pay that loan back, so the loan is capitalized during residency and soars. That $180,000 in student loan debt can quickly become $300,000 after interest is incurred during the loan forbearance. Student loan repayments are also taxed**, meaning that a physician earning $150,000 will pay 28% tax on his or her loan payments. He or is she is paying $5,600 to the IRS as well as $20,000 a year to the student loan servicing firm, thereby turning that $300,000 loan into a $384,000 one after taxes.

Just for kicks, let’s figure that into our $150,000 salary. So let’s assume loan payments of $20k yearly.
Salary***: $150,000
Taxes: -$42,000 (28% bracket – Federal only)
FICA:  -$8,796 (6.2% on $106,800 + 1.45% on $150,000)
Loans: -$20,000
Total: $79,204

And remember: that’s for 12 hour days – not 8.

One would do better as a plumber or in a slew of clerical and office jobs.

And politicians wonder why there aren’t more primary care physicians?

Anything that is free will be abused; therefore the non-patient unpaid activities by primary care physicians have exploded because there is nothing to keep them in check. Patients will not accept charges by a doctor for paperwork or prescription refills, and most doctors aren’t willing to pass on this cost directly to their patients anyway. Likewise insurance companies refuse to pay for the time spent doing paperwork viewing this as part of the original bill; yet insurance companies and Medicaid/Medicare routinely audit charges and payments made to providers, basing payment solely on the time spent with a patient and the clinical diagnosis of the ailment. Anything that strays from the norms set by the insurance company or Medicaid/Medicare auditor is immediately flagged for fraud and the practice is subject to penalty.

This raises another issue with reimbursement: Medicine is the only business where the consumer (the insurer) sets the price for the services provided. If one goes to a salon for a haircut, one does not decide the fee the stylist receives; if one did it would be expected that he or she would pay as little as possible for the service.  Doctors may bill for a procedure, but the insurer can pay whatever it believes fair. Doctors are forced to accept the payment and bill the patient for the amount not covered by insurance, or stop accepting insurance from the insurer. This is difficult to do with most private insurers, and illegal with Medicaid and Medicare.

*I forgot to include after hours call. Call schedules can vary from practice to practice, with some practices requiring a physician to cover a week of phone calls every month or two to as much as once every four days demanding in-person hospital admissions. This time too is unpaid but has been left out of this analysis due to the lack of available statistics.

**Student loan interest is tax deductible only up to a cutoff of $75k or so, well below the salaries earned by PCPs.

***Primary Care Physicians are increasingly paid using RVU’s, a system formulated by Medicare and followed by many insurance providers and healthcare systems. In a nutshell this system is a productivity based system in which doctors are paid by the complexity of the visit, the skill treatment requires, and the time expected for treatment as determined by the insurer NOT the provider. Salary is commensurate with the number of RVU’s a physician bills for during a given month minus practice overhead (overhead averages 50-75%). The RVU system requires a doctor to meet his or her RVU quota in order to obtain his or her agreed upon salary; if he or she fails to meet that quota, he or she receives less than that salary.

In this respect physicians are paid more like hourly wage workers whose pay packet directly correlates to the time spent on the job. Work less and one is paid less. Similarly a physician can see fewer patients, but will receive a smaller paycheck at the end of the month.

A doctor might rationalize spending 10 minutes more per patient, believing that the time is necessary to provide decent care. This extra 10 minutes per patient lowers a doctor’s productivity by a third, and ultimately results in a similar-sized hit to his or her paycheck – bringing it down in our above example from $150k to $100k. A doctor might also take a different tact, spending 10 minutes less with each patient in order to increase his productivity by seeing 6 patients instead of 3 per hour. The problem is that the short visit limits the number of RVUs he can bill for that visit. Attempts to bill a 10 minute visit as a 20 minute visit constitute fraud and may result in criminal prosecution or loss of license. Less time spent per patient can indeed result in a higher salary but open the physician up to missed or improper diagnoses and treatments that could result in poor patient outcomes and possible legal action.

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  1. Debbie Right Truth:

    Exactly right, and this is why you will have fewer going into family practice, or even opening offices. This is also why my hubby has been doing strictly ER work for the past 15 years. No office overhead, no after hours phone calls, no home visits, (we’ve had people come to our house looking for him to see them, one time they even sent the police to our house to see if we were there, because we refused to answer the phone on his day off), no billing, no record keeping, no collections.

  2. Scott Kirwin:

    Funny you mentioned home visits. I’ll be driving Dr. Wife 150 miles roundtrip on Sunday to a dying woman for a homevisit at her place in the mountains. It will take 3 hours, and though the Wife will be able to bill for the visit, it’s Medicare and will barely cover the gas.

    But the woman is dying, and the Wife is her doctor, so off we go.

  3. Rene:

    My Primary Care doctor gets $160 per visit. If I get 10 minutes with him, I’m lucky. usually 5 minutes.
    My ‘specialist’ gets $250, same for him and more like five minutes. and now I believe he’s really not even interested in hearing my symptoms, dismisses them as just getting old.

  4. Debbie Right Truth:

    Rene: You need to get another doctor. They are not all like the one you have now.

  5. Scott Kirwin:

    I’m familiar with doctors who do that; I’ve even heard worse. Debbie is right; you need to find another doctor.

    As for the $160 charge… It’s possible that the practice bills that – but it’s hard to imagine they receive that. For example, Blue Cross often includes a billed column in their statements, followed by a paid column. In your case the practice would bill $160 but be paid $80. Of that $80 the doctor might see $20-40.

    As for the time… It sounds to me like your doctor is billing you for 15 minutes then spending 5 with you and 10 on documentation. That way he won’t have a pile of charts waiting for him at the end of the day. While this makes for efficient time management, Dr. Wife believes it makes for terrible medicine.

  6. vinny:

    As a hospitalist, it’s not as bad. I see fewer patients per day but they tend to be more complicated. The main drawback is dealing with hospital bureaucracy and idiotic administation directives.

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    Sobering reality check for those of us not in the medical field. Linked at my place.

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  13. NavyOne:

    Scott, this is excellent. I have returned to your site several times to read it. As the son of a Navy doc, I used to listen to my father talk about patients that he saw for free. Not because he wanted to, but because the system demanded it of him. . . V/R, NavyOne

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  15. gypsydan:

    This is similar to what is done to school teachers. Yes, we work 185 days a year in the classroom but the hours are more like a primary care doctor. Beyond teaching there is staff meetings that are mind numbingly idiotic, district teachers meetings that are there only so district officials can feel important, consultant meetings with retired administrators that have nothing better to do and have never seen a classroom full of kids for over 20 years, state testing set, running, tear down, after school tutoring for free, calls home in the evening to parents who do not care, then come grading papers and recording grades, being duped by state and federal programs that promise pay for extra work and then suddenly have no money ( MAA program), and the endless meetings with parents who still want to be children themselves, welfare parents that want to get everything handed to their children because of government entitlements, reports to doctors on students on ADD, ADHD meds, and required additional learning for district programs that are generally useless, and finally after school activities to help keep kids out of crime. All of these are unpaid and under appreciated. I do not get to deal with a student for 10 minutes or 20 minutes in a class of 40+ students they each get about 30 seconds of personal attention and make that 60 classes and up to 200 students in a 6 class day they get less attention than they get at a primary care office. I understand and have great sympathy for primary care physicians because my days are very similar. Oh yes I forgot lunch is always working and there are no breaks like you get in other jobs. So I fully understand.

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  20. Ken:

    The cheapest doctor I see charges $450/hour, and he’s only a physicians assistant! Another one I see, a Lyme disease specialist, charges $700 an hour. I estimate my Beverly Hills dermatologist grosses over $1000/hour as do most surgeons. She has 10 waiting rooms and spends about 5 minutes with each patient, and doesn’t take insurance, a practice which is becoming more common with a lot of in-demand doctors. And it’s hard to get an appointment with these people and you often have to wait hours in the waiting room.

  21. Scott Kirwin:

    Beverly Hills. Thanks for letting me know what the rates are like there. Please be very careful applying anything in Beverly Hills to the rest of the country. For all intents and purposes it may as well be Mars given how little it has in common with anywhere else.

    You mention an important point: boutique medicine. Boutique medicine, also known as Concierge Medicine, is the practice whereby patients pay a doctor a set fee per year. In exchange the doctor limits his/her patients and spends as much time as needed with the patient. Doctors like it because they can get away from the paperwork necessary to bill insurance companies; patients like it because they have a physician always “on-call.”

    The downside is that most people cannot afford the annual fees necessary. Rates that I’ve seen listed in physician publications vary from as low as $2000 to as high as $10,000 per year. That’s a lot of money for all but the wealthiest to spend on a doctor’s services they may or may not need in a given year. Many doctors also have ethical issues limiting their practice to the wealthiest individuals in society. It may seem naive on my part, but all the doctors I have met over the past 10 years entered medicine because they wanted to help people; those that wanted to make money gravitated towards business during the Bull Market in the 1980’s and ‘90s.

    We live in one of the poorest counties in North Carolina – the polar opposite of Beverly Hills. Boutique Medicine wouldn’t work here because there simply aren’t enough wealthy people in the area to support such a practice. I will admit that the idea of Dr. Wife receiving a fixed salary and having a fraction of the paperwork does appeal to me though. Thanks for writing.

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  23. Mark B:

    What many Primary care doctors are doing is going entirely private with a subscription service. 500 patients or less pay $1000 to $1500 per year. No insurance involved with those costs. He sees 16 patients a day, half appointment, half for walk in that day. He can see over 300 patients a month so he can follow those with chronic ailments and treat the new and acute cases.

  24. Scott Kirwin:

    This sounds delightful. Unfortunately we live in a rural area and came here because we had been told that doctors were needed in the area. They are – just those willing to see 30 patients a day for $120k/year. This area could not support even a fraction of the size of that boutique practice. If I find otherwise, I would push Dr. Wife to do it.

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