Study Shows Primary Care Physicians' Incomes Fall

A national study that found that primary care physicians' real incomes had fallen by as much as 10.2 percent between 1995 and 2003 should spur Medicare to implement "timely, accurate" updates for the codes used most by primary care physicians, say researchers at the Center for Studying Health System Change, or CSHSC. Without such updates, Americans may face a shortage of primary care doctors.

The CSHSC tracking report, "Losing Ground: Physician Income, 1995-2003" details findings from the Community Tracking Study Physician Survey. The report notes that physicians overall saw a 7.1 percent decline in real income between 1995 and 2003. Primary care physicians fared the worst with a 10.2 percent decline, and surgeons saw an 8.2 percent reduction in real income. The researchers attributed the decline to the disparity between Medicare's payment increases and inflation. Between 1995 and 2003, overall Medicare payments rose by only 13 percent, while inflation increased by 21 percent.

The report cites "flat or declining fees from both public and private payers" as a "major factor underlying declining or stagnating real incomes for physicians. … While Medicare fees have declined in real terms since the mid-1990s," says the report, "the trend for private insurer payments to physicians has lagged even more."

Insurance companies' fees fell from 1.43 times those of Medicare's fees on average in the 1990s to 1.23 times Medicare's fees in 2003, according to the study.

The report confirms the warnings issued by health economists and the AAFP for years: Medicare and private sector disregard for cognitive skills in favor of procedures could dismantle the foundation of America's health care system by discouraging medical students from entering primary care careers.

"Downward pressure on incomes is also likely linked to the movement of physicians away from primary care -- already lower paying and with steeper income declines -- into certain medical specialties, which offer higher compensation and have kept better pace with inflation," the report states. The result "is likely to be an imbalance in the physician workforce and perhaps a future shortage of primary care physicians and other specialties that provide primarily cognitive services."

The report doesn't surprise primary care physicians, says AAFP President Larry Fields, M.D., of Ashland, Ky.

"Although the data are three years old, the trend is accurate," he says. The report "points out the paradox of (America's health) policy, which should create the type of doctors the country needs for cost-efficiency and quality -- which is primary care -- versus the types of physicians we are producing, who focus on procedures rather than cognitive skills."

CMS, however, has proposed physician payment "that would significantly increase the value of evaluation and management codes, which would ameliorate the trend" seen in the CSHSC report, Fields notes.

On June 21, CMS proposed a 37 percent increase in the work component for physician work relative value units, or RVUs, for an intermediate office visit. The work component for RVUs for an office visit that requires moderately complex decision-making would increase by 29 percent; a hospital visit that includes moderately complex decision-making would rise by 31 percent.

"We need to stay on top of it and not only work with CMS and the government, but also continue our primary sector advocacy to make sure the same changes occur in the private sector market," says Fields.

Continued devaluation of primary care carries real risks for Americans' health, according to years of research by health economists such as Barbara Starfield, Ph.D., professor of public health at the Johns Hopkins School of Public Health, Baltimore.

"Analyses at the county level show lower mortality rates where there are more primary care physicians, but this is not the case for specialist supply," she wrote in "The Effects Of Specialist Supply On Populations’ Health: Assessing The Evidence" in the March 15, 2005, Health Affairs. "These findings confirm those of previous studies at the state and other levels. Increasing the supply of specialists will not improve the United States’ position in population health relative to other industrialized countries, and it is likely to lead to greater disparities in health status and outcomes. Adverse effects from inappropriate or unnecessary specialist use may be responsible for the absence of relationship between specialist supply and mortality."