Higher fees paid to physicians are a key reason for greater U.S. health care spending when compared with other nations, according to a study published Sept. 8 in the journal Health Affairs.
There is also a greater pay differential between primary care and specialty care in the United States than in certain European countries, Australia, and Canada.
"Our findings as a whole suggest that the observed price differences are not entirely a consequence of differences in underlying practice costs or in the tuition costs of medical education," said Miriam J. Laugesen of Columbia University and her Columbia colleague, Sherry A. Glied, who is currently on leave at the U.S. Department of Health and Human Services (HHS).
They offered several potential reasons for U.S. physicians’ greater incomes. One possibility is that physicians are reflective of a certain strata of U.S. society: those who are more highly educated and skilled and tend to be more highly paid. But higher fees paid by private insurers in general, and for hip replacement surgery in particular, seem to be major contributors as well, they concluded (Health Aff. 2011;30:9 [doi: 10.1377/hlthaff.2010.0204]).
To examine whether higher prices in the United States are responsible for the greater level of health spending in this country, the researchers analyzed fees, incomes, and spending for primary care – defined as general and family practice, internal medicine, pediatrics, and ob.gyn. – and for orthopedic surgery, specifically, hip replacement.
Data on U.S. physicians and fees were compared with similar information for Australia, Canada, France, Germany, and the United Kingdom. All of these countries continue to use some kind of fee-for-service reimbursement, which allowed for closer comparisons.
Overall, physician income was highest in the United States. Primary care physicians earned about $186,000 before taxes and after practice expenses. Australian physicians earned the least, $92,000, while primary care physicians in the United Kingdom earned close to their U.S. counterparts at $159,000.
Using the fee paid for an 11- to 15-minute office visit for an established patient, the authors determined that public payers reimbursed only $34 in Australia. The highest rate was in the U.K., at $66. In the United States, physicians received an average of $60 per visit from public payers; Canadian physicians received about $59.
The authors calculated that U.S. primary care doctors earned about one-third more than their counterparts in the other nations, primarily because they receive a greater share of their reimbursement from private insurance than do primary care physicians in the other countries.
Of the physicians studied, U.S. orthopedic surgeons were the highest earners: $442,000 after expenses and before taxes. French surgeons earned the least at $154,000, while surgeons in the United Kingdom earned $324,000.
For orthopedic surgery, the public pay rate was lowest in Canada at $652 and highest in the United States at $1,634.
The authors found that private insurance for hip replacement in the United States paid about $4,000 per procedure – more than twice as much as the private rate in any of the other countries studied.
The research "really does a nice job of just very methodically walking through the steps to show that the physician fees and incomes are much higher in the U.S. and that that’s at the heart of why we spend more on physician services," Chapin White, a senior health researcher at the Center for Studying Health System Change, said in an interview.
It would be improper, however, to think that physician fees are solely to blame for higher health care spending in the United States, said Mr. White, noting that physician expenditures are a small slice of the health pie.
By detailing the difference between specialist and primary care pay in America, and the vast difference between payments for hip replacement surgery in the United States and other nations, the authors also showed a fundamental flaw in the payment system, he continued.
U.S. primary care doctors’ income was only 42% of that earned by U.S. orthopedic surgeons. The authors speculated that this is because private insurers in the United States have been more successful in negotiating lower fees for primary care than for orthopedic surgery.
In Canada, France, and Germany, the pay gap was smaller: primary care physicians earned 60% of their surgery colleagues.
The pay gap between primary care and hip replacement surgery "is where the blinking red light is, that something is out of whack in the U.S.," Mr. White said.
The research also shows that "it’s not at all the case that primary care is underpaid, but more that the surgeons and specialists are overpaid," he said.