Why Salaries Are Downstream and Powerful vs Powerless is Upstream

There are certain people who pay attention to salaries and benefits as shaping physician specialty choice. There is a correlation, but correlation is not causation. I look at these are great distractions. What's behind the salaries and benefits is more important. And what drives this from upstream is even more important.

The real force, the major influence, is the financial design - revenue, cost of delivery, complexity. Behind this is powerful vs powerless.


There are more than salary and benefit factors at work in career choice. And beyond the areas obvious to medical students and residents, are the upstream forces. This should be quite obvious in health care where the largest and most organized have the greatest influence regarding the payment design. They design themselves the most lines of revenue, including lines of revenue such as graduate medical education, research, patents, corporate ventures,  and foundation support that others do not receive. They can use their size and power to pay less to payers and demand and get regular increases in payments. 

They are also powerful enough to prevent any real reforms - such as higher payments for cognitive vs procedural charges. A select group of advisers is shaped by institutions, associations, corporations, and foundations on their way to greatest design influences.

The following graphic is from Get Beyond Salaries to Understand



Procedural, technical, most specialized, most specialty hospital services are paid at the highest levels. This is what allows highest paid salaries and benefits and most team members. These are practices that also have least overhead or share overhead. They also have lowest complexity due to more team members to share the load and less complex interactions with people - or even few at all.

Basic, office, cognitive, primary care, women's health, mental health, and basic surgical services are paid least. They can afford the fewest and least skilled team members (few RNs remain in primary care, high turnover, losses to practices best paid). They have the most complex interactions made worse by innovations.

Revenue - The smallest and basic and least organized practices get treated worse by insurance payers. They practice where the patients with the worst public and private plans are concentrated. They are paid 15% less for the same office codes. They also have 10% lower collection rates. These revenue deficits are only part of the problem. 

The theme is powerful, largest, most organized vs the rest.

Costs of delivery - are also a major part of the problem. The costs of overhead are highest for areas such as primary care and women's health. 

These costs have increased the most - particularly for HITECH, MACRA, and PCMH - and with 30 - 100% greater costs per primary care physician for the smaller practices or anyone not largest and most organized. 
  • HITECH hardware, software, maintenance, and security hits the smallest hardest. MACRA is less than $40,000 a year per primary care physician for the largest and much more for the smallest. 
  • PCMH costs are $40,000 per PC doc per year for the largest and those most organized can get grant funding (which runs out). 
  • The smallest have to pay over $80,000 per PC doc per year which is why only 30% can afford to participate (and PCMH does nothing for outcomes, as with other innovations and incentives). 
The US has experienced the most rapid collapse of small, independent, and most needed practices in its history - by design. The largest can cherry pick the ones that look good financially to them, and leave the rest behind. Get bigger or close is the design.

The most organized demand and get discounts for supplies and other payables. Those not largest have to pay more to suppliers

But not all is well with the most specialized and highest paid. There is more to be gained for the largest systems by replacing them as much as possible with NP and PA. NP and PA paid 15% less made less sense, especially in practices already paid least. NP and PA also get better salaries and benefits and can save systems money - by being subspecialized. This is why NP and PA are adding more new specialties with more added to each specialty - with primary care, women's health, mental health falling to lower and lower proportions.

Surgical residents finishing initial training in general surgery, ortho, urology, ENT, ob-gyn face the choice to go on to take one or more fellowships. They chose to take a lower salary for a few more years for a very good reason.
  • General surgical specialties are all fading by 2 to 3 percentage points on average each year from 2005 to 2013 for active general specialty workforce in each area in my studies comparing the Masterfile versions for the 2005 and 2013 versions.
  • The oldest general specialists are concentrated in the counties lowest in concentrations - indicating the least replacement.
Note that this decision to take a lower salary for a few years works out well for teaching hospitals that can generate much revenue during their fellowship training. 
 
The financial design is so much more influential with regard to the major decisions made - especially by those focused on dollars.

Those not as focused on the dollars and focused on service - are left behind by the designers at every major change - 1990s, 2010s, etc.

The Republic cost cutting and the Democratic regulatory costs act together to defeat care where most Americans most need care. Even worse, current Republicans are doing the cost cutting and are increasing the regulation - just like 2010 Democrats did cost cutting and costly regulation. Those losing the most are unified by those

Powerless vs Powerful
  • Small hospitals
  • Small practices
  • Workforce in 2621 counties lowest in MD DO NP PA
  • Red Counties
  • 60 Blue Counties rural and with minorities as the majority population
  • Rural health (for 75% of the rural population)
  • Urban health (for 32% of the urban population)
  • Primary care, basic, cognitive, office
Half of Americans, especially those in Red Counties and the 60 Blue rural counties with lowest concentrations, continue to lose the most by design (Medicare, Medicaid, public insurance, Veterans, high deductible, denials, delays, poor treatment of patients by insurers, taking advantage of those with mental health issues...)


Runaway health care costs represent a serious and worsening problem. 


Runaway health care costs are hurting investments that could be made to improve health and other outcomes. The higher costs deplete federal, state, local, employer, and family budgets.



There are many ways that the powerful help shape designs that result in few who do well and most who do less well.



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