Sunday, August 12, 2007

There is no Direct Correlation Between Devoted Effort and Final Value

As I make my way around the blogosphere and the internet medical community, I consistently hear an argument that is blatantly false. This is the argument that physicians should be well paid because they train for so long and pay a lot of money for the training. This argument is based on a fundamental lack of understanding of basic economics. It is also dangerous, because it detracts from a legitimate understanding within the medical community as to why we are worth a lot of money. In this blurb, I'm going to attempt to tease out the subtle, but extremely important, difference between a truly valuable good and service and a good or service that requires a significant amount of effort to produce.

I majored in Anthropology in college. I once had an advisor tell me that Anthropology had the longest average graduate school period, which is approximately 9 years between receiving ones BA and receiving ones PhD. Anthropology graduate school is a tedious process, one which I was frequently exposed to during my undergraduate training in the discipline. Many graduates would spend years in a laboratory, sorting microscopic pottery fragments that they had spent previous years tediously digging out of the ground in a variety of inhospitable places. This often included sleeping in the dirt, spending all day covered in mud, and exposing oneself to all sorts of vile insects and other not so pleasent creatures. This is the life of many anthropology graduate students. It will be followed by many months typing hundreds of pages explaining the above findings in details after which the graduate will have to defend those tedious notes to a group of people that will attempt to tear him apart.

The first thing that one might notice about this, is that the average time between college graduation and completion of training is the same for an anthropology graduate student and a general surgeon, nephrologist, and a whole host of other medical specialties and subspecialties. As a specialty that is reasonably attainable and representative of what we'll call the "average physician," I'll make most of my future comparisons with Internal Medicine. It is also close to the bottom of the salary scale, so most physicians should find internist income attainable. According to the Allied Physicians salary survey at: http://www.allied-physicians.com/salary_surveys/physician-salaries.htm , the average internist starts at $154,000/year. Since total graduate and post-graduate training in this specialty is only 7 years, this puts the internist $308,000 ahead of the anthropology student in income, more than enough to offset the differences in total debt (which are large, but not as large as many medical students would like to think).

So, what is the average salary of a starting professor of anthropology? In sociology (which is if anything higher paid), average salaries of an associate professor according to monster.com (and academic positions are highly competative) hover around $60,000/year. This is about 40% of the internist, whose position is relatively non-competative compared to those who he is competing against.

So, why is the internist paid more? In fact, why has he consistently been paid more over the course of an ever evolving healthcare system ever since the advent of medicine based on science? It's simple. His services are considered more valuable to more people. As I've said in previous posts, economic value is subjective. Anthropology is a fascinating field, but it's also an esoteric discipline, with very minimal value to the average person.

Physicians are valuable because their position on the supply and demand curve makes them so. In other words, the number of people with physician skills matches a level of demand at a high comparative salary. This isn't to say that the training period isn't important. In fact, the large training period, with all of its expense and effort, is the reason that physicians are less common. This relative scarcity in the face of high demand is what makes physicians valuable. The training period in anthropology training period is also long, and skilled practicioners are also scarce, but the demand isn't there on the other side. Thus, physicians are valuable because they are a scarce commodity in the face of high demand, not because the training period or hours are long.

As a final note, if hard work was the only thing that made workers valuable, we would all look up at mansions owned by farmers, migrant workers, and fisherman. I once worked over 60 hour weeks at a warehouse job in an unairconditioned warehouse here in South Florida. I can assure you that the physical assault on my body was significantly worse than anything that I have encountered in medicine. I was paid $6/hr for that. In fact, were hard work the top mechanism for determining payment, we'd probably all be servants of the Amish. If education were the mechanism, we'd all be watching the Anthropologists drive Ferraris down the street.

To the current or future physician:
The general public could really care less how much effort you've put into your training or the financial sacrifices that you've made. They care that you are a skilled practicioner who can solve whatever problem they present to you with. Complaining that you are underpaid for your time invested will earn you ZERO sympathy in the rest of the world. It should, because it's irrelevant. However, demanding to be well paid because you can provide a valuable skill that is hard to provide is perfectly within your right. In fact, that is the argument made by all professionals. Don't be afraid to demand to be paid for your hard work, but make sure that you're basing your demands on the reasons that they're valid.

15 Comments:

Blogger Someonetc said...

well said. i completely agree.

5:45 AM  
Anonymous md007 said...

Also agreed. I might also consider the following, which you kind of already said, but I wanted to ramble:

Society bases its demand for health services on the perceived value created (in terms of utility, quality of life, etc). I personally think the asymmetry of information (more specifically, the asymmetry in what doctors see that medicine can do and what the public believes doctors can do through medicine) causes excess demand, and this is coupled with the excessive barriers to entering the profession limiting the supply. I think these are the biggest culprits of excess spending and excess salaries (in relation to the anthropologists).

Isn't it possible that if more resources were directed towards anthropological efforts that we would better understand the human condition and improve our quality of life more than if we cured HIV or cancer? I dare to say it is possible.

Interesting blog - I look forward to reading more.

9:32 PM  
Blogger MiamiMed said...

Well, I'll preface everything by saying that anthropologists have found enough places to waste money already, so I don't think we need to give them more, hehe.

Before the days of big government and socialism in medicine, medical doctors still made a lot more money than anthropologists. Frankly, those that tried to heal the sick have always held high places in society from the earliest medicine man to a modern physician. This is because as fascinating as the human condition is, it is irrelevant to someone who is very sick. To most people, health probably comes right after food and shelter. However, the amount of effort that goes into getting modern healthcare far exceeds that which goes into obtaining minimal shelter or food.

I don't think that most salaries are excessive by the way, though I will say that there are some maldistributions of money within the specialties, related to political clout and a whole host of other factors that will be the topic of future posts.

5:20 PM  
Blogger Vijay Goel, M.D. said...

Interesting point. There is, however, a strong correlation between income and ability to attract a significant number of talented people into a field.

This is actually more important from a societal perspective if we see medicine as an art, and not a factory. The factory excels at taking personal initiative and skill out of an equation to allow lower-skilled workers to achieve complex tasks (like building a car) faster and cheaper.

As long as medicine is an art and there is significant knowledge and skill that come with long periods of training (which I don't completely agree with in the form that exists today), you would presumably want more skilled people helping you make important decisions in health.

3:52 AM  
Blogger MiamiMed said...

Thus the higher income for the rare skills.

11:23 AM  
Anonymous Anonymous said...

"Don't be afraid to demand to be paid for your hard work, but make sure that you're basing your demands on the reasons that they're valid."

who exactly should we be making these demands to? most physicians are not paid directly by their patients. the most effective arguments to increase reimbursements will not come from physicians imo.

i would also quibble that there is a direct correlation between effort and final value, just not as strong a correlation as most (physicians) would have you believe. although you chose internal medicine as your example (starting salaries probably should be divided into hospitalists and non-hospitalists because there is no way the starting salary is 150k + for nonhospitalists), they are not as 'competitive' when traditional evaluation systems are used.

lastly, income for most physicians is not a salary, but the leftovers after expenses had been paid. i am not sure you can reasonably make conclusions about relative value bewteen owners and employees.
ymmv

11:53 AM  
Blogger MiamiMed said...

Thank for the reply,

I'd like to say that all economic value is subjective. The demands for salary need to be made to whomever is paying the bills. It's no secret that I don't believe that this should ever be the government. In the modern world, this is the the private payers, the insurance companies, or even the government. The point is this:
You should demand to be paid for your work, and the basis for your demands should be the relatively rare skillset that you can provide. I agree that there is an indirect correlation between effort and value, but this correlation is indirect due to its dependence on the demand for the rare skill or ability that your effort can provide.

I say salary for simplification, but you are right that physicians that own practices would instead have to calculate personal income as gross income minus expenses like all small business owners. Thanks for clarifying.

8:27 PM  
Anonymous Buy xenical ORLISTAT said...

Nice read! I agree with you too.

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