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Everyone loves to see their annual compensation rise.
One of the most popular surveys out there for physicians is the Annual Medscape Physician Compensation Report.
As a physician it is human nature to scan the survey not only to see how your specialty is doing, but also how you rank amongst all specialties.
Of course these numbers are not an exact science, as it is self-reported by the respondents, but it is the best measuring stick we currently have.
I have previously mentioned that specialists typically earn more than generalists in my post, “The Specialty Gap,” which is confirmed by these compensation reports.
The higher paying specialties at the top of the compensation charts typically are specialist that have completed longer residency programs than their generalist counterparts.
Although there are some “down years” where salaries were either stagnant or even slightly less than the prior year, the overall trend has been positive with most medical specialties seeing the average annual income rise.
But too often we are focused on the wrong number, namely our annual income, when deciding if we are indeed earning more money than the past.
What we should truly be focusing on is how the purchasing power of our income has changed with time, not the absolute dollar amount.
If you base your decision solely on absolute numbers, you may be fooled into thinking that we are currently in the “Golden Age of Medicine” as salaries have never been higher across the board.
I hate to burst your bubble, but you would be wrong.
If you factor purchasing power into the equation, I would like to propose the fact that we are in far worse shape than our predecessors.
Just to bring everyone to the same page, purchasing power takes into account inflation.
After the United States went off the gold standard in 1971 and the US dollar became a FIAT currency, the purchasing power of the dollar rapidly declined as we continued to print more and more paper money (in June 2020 the US printed more money than the first 200 years of its existence).
It will be interesting to see what happens to future purchasing power when all the effects of these stimulus packages come to fruition.
The “Tin Age Of Medicine.”
I have previously mentioned that I think the “Golden Age of Medicine” is long gone (I personally believe the decline started in the mid 80’s when medicine started to become more of a bottom line business.
Unfortunately the Medscape Annual Physician Compensation report does not go back to the 1980s (the earliest I could find was 2011 although there may be earlier reports under a different name).
I do have some inside information about what an internal medicine doctor, practicing in the early 80s made.
My father, who passed away at the age of 50 in 1985, was an Internist in Louisiana.
I remember one year he told me that his income from medicine was $220,000 (I can’t remember what year, but likely 1983).
Looking at the Medscape Physician Compensation report for 2020, the average internal medicine doctor makes $251,000.
If you went part of the “absolute dollar” line of thinking, you would come to the conclusion that internal medicine doctors are making more today than they did in 1983.
However you would be in for a rude awakening when you factor inflation/purchasing power into the equation.
Using a handy inflation calculator will show you that a salary of $220,000 in 1983 is equivalent to a salary of $577,792 today!
Going back to the very same Medscape Physician Compensation 2020 Report, the highest paying specialty, Orthopedics, “only” makes $511k.
My dad, as a generalist in 1983, made more, in equivalent dollars, than the top paying specialty in 2021.
I can only imagine what the higher earning specialties in the 80s would translate to in today’s dollar amounts.
To add insult to injury, these medical practitioners did not have to deal with the medical bureaucracy that plagues current practitioners.
There were no phone calls to insurance companies to get peer-to-peer approval for imaging studies.
There was no Electronic Health Records to contend with.
There was no ever-increasing speed on the hamster wheel to try and see more patients to compensate for declining reimbursements.
A physician back then was truly the captain of the medical ship.
You may look at you income, be pleased with the absolute number, and think you are better off than your predecessors.
However it is purely smoke and mirrors as our purchasing power has decreased by so much that even our top paying specialists are making less than generalists of the past.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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