Physician Pay in Peril?

It’s unlikely that a large number of people are concerned about physician reimbursement, but there are reasons one should be. Gone are the days when physicians graduated with little or no debt. The average newly-minted American graduate can expect to have a six figure debt – many ranging between $150,000 to $250,000. Couple higher debt with lower physician pay and one has a recipe for decreased access to care.

One force conspiring against physician pay is inflation. Government officials and the Federal Reserve Bank report muted inflation and fret over the possibility of deflation. (They must not be filling up their gas tanks or paying utility bills.) Deflation would occur if there were more economic tumult to come, but aren’t there “green shoots” in the economy? A recovery would portend inflation as the economy heats up. I am not an economist, but the expansion of our nation’s monetary base along with extensive government borrowing should eventuate inflation, possibly hyperinflation – more dollars supplied = less demand. Physicians may find themselves marooned with contracts that do not adjust for cost of living increases due to inflation. This could force physicians to move more towards a cash-on-the-barrel model or retainer-based concierge model, decreasing access to healthcare for those unable to foot the bill.

Healthcare Reform envisioned by the current administration in Washington proposes cuts in fees to physicians and hospitals, so pay cuts plus an inflationary cycle in our economy could be a one-two punch for physicians. Of course, this is in the setting of mandates for physicians to spend money on electronic medical records for their offices as part of the recent stimulus package. Hopefully, our political leaders at all levels will recognize that Medicare and Medicaid reimbursement schedules will have to be malleable enough to adjust for inflation or we could see our best and brightest young people avoiding careers in healthcare.