Physician income continued to climb in 1996 with employed doctors seeing a significant gain, according to the latest figures from the American Medical Association.
Employed physicians saw their median incomes climb 4.4% in 1996, following a 4.6% increase the previous year. Self-employed physicians' incomes, meanwhile, dipped slightly after a large 13% hike in 1995.
For all physicians, the average net income in 1996 rose 1.8% to $199,000. Median net income for all doctors rose 3.8% to $166,000.
Recent concern about a possible physician glut, which would drive down incomes, "doesn't make sense," said John Paulk, regional director of recruiting for Irving, Texas-based Merritt, Hawkins & Associates, a healthcare staffing firm.
As consumers become educated about managed care, they have insisted on access to physicians. "They will not accept a midlevel provider," Paulk said. "They'd rather go to a physician than they would anywhere else."
The numbers are from the AMA's annual telephone survey of about 3,000 nonfederal physicians.
The two-year rise in median net income followed an abrupt 3.8% drop in 1994. In releasing the latest data, the AMA countered the notion that physicians are again fattening their wallets.
The AMA said physician incomes failed to keep pace with inflation over a three-year period. From 1993 to 1996, median net income increased an average of 2.1% annually, compared with an average 2.8% increase in the Consumer Price Index, according to the AMA. That translates to an annual decline of 0.7% in real dollars, the AMA said.
The AMA also said national spending on physician services was eclipsed by spending in other areas of healthcare in 1996. Expenditures for physician services rose 2.9% in 1996, the smallest increase for any category of professional services reported by HCFA.
In the same year, spending increased 3.4% for hospital care, 6.2% for home health, 4.3% for nursing homes, 9.2% for prescription drugs and 6.4% for dental services, according to HCFA.
The gains for employed physicians are significant because while they earn less, their numbers are growing. According to the AMA, 38.8% of physicians were employed in 1997 compared with 38.1% in 1996. Over the same period, the number of self-employed physicians dropped to 56.6% from 57.7%, and the number of independent contractors increased to 4.7% from 4.2%.
Employed physicians tend to be younger, and they work an average of five hours less per week than self-employed doctors. Most receive noncash benefits that are not reported in net income.
Physician frustration with operating practices, including higher overhead, as well as the drive by physician practice management companies and hospitals to create large, market-dominating medical groups have increased demand for employed doctors.
"More of an opportunity (in medical groups) and frustration with running practices have doctors seeking the employment," said D. Ted Lewers, the AMA's secretary/treasurer.
Group practices employed the most physicians-11.1%-followed by state and local governments with 9.6%, private hospitals with 7.3% and academic institutions with 7%. Only 2.7% worked for HMOs.