For an audio version of this post, please click on the speaker icon (top left).
Everyone loves to see their annual compensation rise.
One of the most popular surveys out there for physicians is the Annual Medscape Physician Compensation Report.
As a physician it is human nature to scan the survey not only to see how your specialty is doing, but also how you rank amongst all specialties.
Of course these numbers are not an exact science, as it is self-reported by the respondents, but it is the best measuring stick we currently have.
I have previously mentioned that specialists typically earn more than generalists in my post, “The Specialty Gap,” which is confirmed by these compensation reports.
The higher paying specialties at the top of the compensation charts typically are specialist that have completed longer residency programs than their generalist counterparts.
Although there are some “down years” where salaries were either stagnant or even slightly less than the prior year, the overall trend has been positive with most medical specialties seeing the average annual income rise.
But too often we are focused on the wrong number, namely our annual income, when deciding if we are indeed earning more money than the past.
What we should truly be focusing on is how the purchasing power of our income has changed with time, not the absolute dollar amount.
If you base your decision solely on absolute numbers, you may be fooled into thinking that we are currently in the “Golden Age of Medicine” as salaries have never been higher across the board.
I hate to burst your bubble, but you would be wrong.
If you factor purchasing power into the equation, I would like to propose the fact that we are in far worse shape than our predecessors.
Just to bring everyone to the same page, purchasing power takes into account inflation.
After the United States went off the gold standard in 1971 and the US dollar became a FIAT currency, the purchasing power of the dollar rapidly declined as we continued to print more and more paper money (in June 2020 the US printed more money than the first 200 years of its existence).
It will be interesting to see what happens to future purchasing power when all the effects of these stimulus packages come to fruition.
The “Tin Age Of Medicine.”
I have previously mentioned that I think the “Golden Age of Medicine” is long gone (I personally believe the decline started in the mid 80’s when medicine started to become more of a bottom line business.
Unfortunately the Medscape Annual Physician Compensation report does not go back to the 1980s (the earliest I could find was 2011 although there may be earlier reports under a different name).
I do have some inside information about what an internal medicine doctor, practicing in the early 80s made.
My father, who passed away at the age of 50 in 1985, was an Internist in Louisiana.
I remember one year he told me that his income from medicine was $220,000 (I can’t remember what year, but likely 1983).
Looking at the Medscape Physician Compensation report for 2020, the average internal medicine doctor makes $251,000.
If you went part of the “absolute dollar” line of thinking, you would come to the conclusion that internal medicine doctors are making more today than they did in 1983.
However you would be in for a rude awakening when you factor inflation/purchasing power into the equation.
Using a handy inflation calculator will show you that a salary of $220,000 in 1983 is equivalent to a salary of $577,792 today!
Going back to the very same Medscape Physician Compensation 2020 Report, the highest paying specialty, Orthopedics, “only” makes $511k.
My dad, as a generalist in 1983, made more, in equivalent dollars, than the top paying specialty in 2021.
I can only imagine what the higher earning specialties in the 80s would translate to in today’s dollar amounts.
To add insult to injury, these medical practitioners did not have to deal with the medical bureaucracy that plagues current practitioners.
There were no phone calls to insurance companies to get peer-to-peer approval for imaging studies.
There was no Electronic Health Records to contend with.
There was no ever-increasing speed on the hamster wheel to try and see more patients to compensate for declining reimbursements.
A physician back then was truly the captain of the medical ship.
You may look at you income, be pleased with the absolute number, and think you are better off than your predecessors.
However it is purely smoke and mirrors as our purchasing power has decreased by so much that even our top paying specialists are making less than generalists of the past.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN
It amazes me that a large portion of the population doesn’t understand the basics of math and what inflation is.
Very true. Inflation is the silent destroyer of wealth. Household incomes may be higher but purchasing power continues to go on a downward trend
Hey Doc, I always love your posts. I have no complaints about physician compensation. My son and his wife are both medical doctors and I would love to see them make big bucks. However if you think doctors are in some way uniquely plagued by corporate and government bureaucracy then I think you might be verging on myopia. I have banking friends, a lot of them, and they’ll be the first to tell you how the regulatory environment of banking has spiraled out of control at a geometric rate. I’m an engineer and where we used to spend our time… Read more »
It is a shame that bureaucratic issues plague all occupations. I just know it from the medical field and can tell you that it is a major source of burnout of docs. One of the points I was trying to make was that people point out that doctors are making more than ever (which in absolute number of dollars is true) but in reality inflation has eroded it away. So dealing with more governmental/insurance crap and making less relatively than docs 40 years ago.
Definitely, that’s agreed. And if you factor in the cost of medical school that has also outpaced inflation its probably even worse than you portrayed it. People always think the other guy has got it made. Doctors can end up quite wealthy but because of the upfront costs and the uncertain future it is a pretty high risk endeavor. I can tell my son in his residency is already kind of worried about his life as an attending.
My daughter still wants to go into medicine (10th grade). I worry what issues physicians will face when she would finish residency. The medical school tuition rate cannot continue to skyrocket like it has or physicians will never be able to pay off med school debt. Every year doctors face reimbursement cuts from Medicare (which then get adopted by the private insurers). This year radiology is “celebrating” because instead of the 10% cut that was planned for imaging studies, they “only” cut it by 4%. So you have to read 4% more studies than you did the previous year to… Read more »
actually you need to read 4% PLUS inflation more studies to achieve equity.
Very true. Even more depressing
It’s possible your dad was making a ton of money by the standards of his time. Around the same time, in a different state, my father was making less, working as a surgeon. He had cut back a little, and was working 4.5 days a week (plus call, of course).
Still, your point about inflation (let alone paperwork) is taken.
That’s a good point that my dad’s income back then may be an outlier. It’s very hard to tell because compensation reports are much harder to come across in that time period. I know my dad read some EKGs on the side but do not think he was doing much more than an average internist in terms of clinical hours and call. Of course have to take all compensation survey data with a grain of salt because it is self-reported and also suffers from response bias. It really is amazing how much the dollar has declined in terms of purchasing… Read more »
Great article! Thanks for sharing!!
Glad you found it of use. Thanks for stopping by