A number of trends in today's evolving healthcare landscape, from declining reimbursements to administrative burdens to burnout, may have a negative impact on your pocketbook.
Having a high student loan burden and long training periods can delay your ability to earn a high income, and the uptick in nonphysician providers delivering medical care and declining reimbursement rates can decrease both job opportunities and pay rates for physicians.
It may be worthwhile to advocate for measures that protect you from unpaid administrative duties and to practice self-care to prevent burnout and improve your career longevity.
One of the benefits of being a physician is the profession’s high earning potential. Whether you are still in training or already making a high salary, it’s important to be mindful of healthcare industry trends that can affect your compensation over time.
High cost of medical education
The cost of going to medical school has increased exponentially over the past 30 years. Even when you account for inflation, the cost of going to medical school is drastically higher now than it was 10 or 20 years ago.
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Due to this increase in cost, many medical students rely on loans to pay for their education. Studies show that the average physician graduates with over $200,000 in student loans, with some people amassing student debt of $300,000 to $400,000. With such high student loan burdens, physicians have become less optimistic in their ability to repay their loans themselves, with many relying on federal student loan programs for forgiveness.Related: 4 steps for repaying your student loans
Unfortunately, the type of jobs that qualify for these loan forgiveness programs (nonprofit hospitals, academic centers, and affiliated clinics) pay physicians much less than they could make in other jobs.
In short, the rise of medical education has caused physicians to take lower paying jobs that qualify for loan forgiveness programs, which may impact a physician's total compensation.Related: Physician compensation 2023: The good, the bad, and the ugly
Length of training
Unlike nonphysician providers, such as nurse practitioners or physician assistants, the length of training required to become a medical doctor is much longer, especially if you choose to undergo additional training through a fellowship.
"While fellowship training may increase your earning potential in some fields, this is not true for all specialities."
— Lisha Taylor, MD, MPH
Some physicians who go through more training actually make less money than they could have made if they had not done it at all. However, some of this training is now mandatory for physicians in certain fields. For example, a few years ago, pediatricians who wanted to work in pediatric hospitals only had to finish medical school and a 3-year residency program—but this has changed. Now, they also have to do 2 additional years in fellowship training, in which they are paid a lower wage.Related: Retirement investing: Everything you need to know
Many other pediatric specialists see lower pay than those who did not pursue fellowship.
"My point? The length of your training has an impact on your compensation, with more training not necessarily reflecting more money."
— Lisha Taylor, MD, MPH
The rise of nonphysician providers
Nonphysician providers have become more abundant across practice settings. A 2023 study published in BMJ found that a fourth of US healthcare visits are delivered by nurse practitioners, physician assistants, and other nonphysicians—increasing from an average of 14% to 26% during the study period (2013 to 2019). For some conditions, these percentages were much higher (eg, 41.5% of visits for respiratory infections were conducted by nonphysicians).
Although nonphysician providers are hired to increase access to care and relieve the burden on doctors, this strategy has not always been successful.
"As nonphysician providers gain more autonomy, health systems are now seeing them as a way to provide patient care at a lower cost."
— Lisha Taylor, MD, MPH
Instead of hiring two doctors, a hospital may hire one physician and one nonphysician in order to decrease costs.
As nonphysician providers become more abundant, opportunities for board-certified physicians in some practice settings may decrease, and so may the ability for physicians to negotiate higher salaries and bonuses.
For example, many urgent care clinics are now staffed by nurse practitioners instead of physicians. Because these clinics may be able to care for the same number of patients, they hire fewer physicians—and pay the physicians they do hire less.Related: 12 compensation types beyond salary to negotiate in your contract
Decline in reimbursements
When physicians see patients they bill for the encounter and the clinic gets reimbursed a certain amount by the patient’s insurance company. In some specialties, insurance companies have tried to decrease costs and increase profits by reimbursing physicians less for certain services.
For example, instead of paying the clinic $100 for an office visit, they may negotiate a rate of $80. Each time they lower the reimbursement, the clinics and hospital systems have lower profit margins. Many of them choose to decrease physician pay as a result.
For doctors who work in private practice or own their own business, the declining reimbursement rates also decrease revenue and, correspondingly, the amount they can afford to pay staff and themselves.
Increases in unpaid labor and administrative burdens
Along with direct patient care in the form of clinic appointments, surgical procedures, and hospital visits, physicians are also tasked with an overwhelming number of administrative duties, which usually cannot be completed during the patient visit. This means any time they spend on administrative work is less time they can spend in patient care, which directly decreases their revenue.
While some doctors are given administrative time each week to complete these tasks, many others are expected to complete them during their free time. This increase in unpaid labor and administrative duties negatively affects physician compensation and revenue.Related: Investing 101: 5 steps to build passive income
The prevalence of burnout
Physician burnout results from an increase in patient expectations, a rise in work responsibilities, and declining reimbursement rates. As a result, many doctors have decided to work less or quit medicine altogether.
Those who quit or cut back tend to experience a decrease in overall compensation and find they have trouble meeting their financial obligations or repaying student loans. Mitigating the effects of burnout is paramount to maintaining good compensation trends, ensuring those who want to are able to work full time, and therefore not see a reduction in compensation.
What this means for you
Be mindful of all these healthcare trends that could affect your compensation. While disappointing, being aware of these changes can make you better prepared and give you more time to implement strategies that help you fight against them.