Highest Paid Doctors and Medical Specialties

What are the Highest Paid Doctors in the US? 

It is very difficult to calculate the average annual income of a US physician. Not only does income depend on the doctor’s specialty, but it is also affected by a variety of factors, such as the state where they practice and their employment status, i.e., do they have their own practice or are they employed by a medical facility or institution? 

Below is a list of medical specialties in the US and their annual average pay, according to the Medscape annual report. Click on the "Income" heading in the table to organize the specialties from highest to lowest income, or vice versa.

How Do Doctors Get Paid in the US?: Employment Status

This is an extremely complicated question. It is especially difficult to determine and articulate how doctors get paid in the United States. As I already mentioned earlier in this blog, US physicians’ income is dependent on many factors including employment status, state of practice, and of course, specialty. Additionally, the healthcare landscape in the United States is constantly changing with the introduction of new bills, laws, and other institutional changes, such as the Affordable Care Act.

Let’s review the different factors that determine a doctor’s income in the United States. 

Private Practice vs Employed Physician Salary

Latest statistics show that self-employed physicians earn more than employed physicians, with self-employed physicians earning an average of $374,000 USD annually and employed physicians earning $344,000 USD annually.

According to a report by the American Medical Association (AMA), the main difference in how doctors get paid lies in the ownership status, or employed vs private practice. The difference is not in income, per se, but how doctors earn their living. For example, physicians employed in hospitals, medical centers, and other similar institutions cite salary as their main mode of compensation. Private professionals can also get paid in salary, but the number of self-employed doctors who are paid by salary is much lower. According to the AMA report, over 46% of employed doctors indicate that more than half of their income is based on salary, while only 25.6% of owners indicate the same.  

The compensation of private physicians tends to rely on their personal productivity. The more they work, the more they earn. However, this is not to say that employed physician’s income does not depend on productivity – it does, but much less than their private counterparts’ income. As expected, financial performance was only important in the compensation of private physicians; but only 10% of private practice owners indicated that it was the sole factor in determining their income.  

Did you know that only 46.7% of doctors in America remain in private practice?

How Do Doctors Earn Their Money?

So, how do private physicians get paid? As with any private business owner, a self-employed doctor’s personal income can be determined after all the other business bills and expenses are paid. The doctor’s office sees patients, documents their visits, bills the patients or their insurance companies, and receives a flow of revenue.

So, let’s say a doctor's office made $350,000 in one year. The cost of running the business is $200,000 (rent, employers' salaries, leases, supplies, etc.) This means that the owner or owners of the practice are left with $150,000 of profit or personal income for themselves, which is then shared between them. 

It is in the best interest of private practices to serve as many patients per day as possible. Their revenue heavily depends on the number of patients they see and bill per day. Simply put, if the number of patients goes down, so does the revenue of a private doctor’s office.  

However, in recent years, private practice has become less popular with physicians in the US. According to recent data from the AMA, only 46.7% of physicians in America remain in private practice. Let's examine the reasons for this phenomenon. 

Running a private business as a physician is no simple task. Most doctors get frustrated and tired of the regulations and responsibilities of managing a multi-million-dollar enterprise. According to the latest research, 21% of polled physicians stated that rules and regulations of the healthcare system are the most challenging part of their job. On top of dealing with employees and paying rent, they have to deal with their patients’ insurance companies and Medicare, as well as malpractice insurance companies covering their business. For many, becoming an employee of a hospital provides peace of mind and a stable income. And even though employed physicians are also expected to demonstrate high productivity, their salaries are technically not dependent on it.

Doctor Compensation and Improving Patient Care

Yet, this too is overly simplistic. US hospitals have created a protection for reduced physician productivity. Many hospitals in the United States have created different pay packages for their employed physicians; this way, the hospitals tried to reward hard work performed by doctors. The work relative value unit (wRVU) system attempts to compensate physicians for extra work or demonstrated enthusiasm, such as seeing more patients in a given day. In this way, the model of revenue and income of private practices is also present in larger institutions – the more patients the doctor serves, the higher his/her pay is.  

Currently, many healthcare systems in the United States are looking to change their pay structures to adapt to certain Medicare rules, but it is difficult to imagine that the US healthcare system will move away from rewarding physicians based on the number of patients they see. However, a lot of attention is also being paid to quality and efficiency, which means that the value of care delivery will also consider more than the number of patients served. As you can imagine, it is extremely difficult to find this balance. As with all business models, pay in healthcare is mostly dependent on productivity. However, the shift in healthcare compensation hopes to align pure productivity with quality of care. 

Here are some tips to pay off your medical school debt fast!

Highest Paid Doctors: Income Difference by State 

The state of practice also influences doctors’ income. You would think that states with the largest populations would see the highest incomes for doctors, but this is not the case. Interestingly, states like New York do not even crack the top 10 states with the highest paid doctors. This may be due to several factors.

Large and economically developed states like New York offer an abundance of healthcare options and tend to have a higher population of practicing physicians, which means that patients have a lot of options when it comes to choosing their healthcare provider. This means that, on average, there are fewer patients per physician. As we already discussed, the US healthcare system is built around earnings based on the number of patients served – which is why states with large populations and abundant healthcare options have a lower average income per physician. 

While states like Wisconsin, Indiana and Georgia are some of the top-earning states for physicians overall. Healthcare options are more limited in these states, i.e., there are not as many doctors, hospitals, private practices, and other medical facilities. This means that there are more patients per doctor.

Now, let’s go over 10 top-earning states for physicians in the US. Click on the "Average Income/Physician" heading in the table to organize it from highest to lowest income, or vice versa.

Highest Paid Doctors: Income Difference by Specialty  

On average, primary care practitioners in the US earn $265,000 USD, while specialists earn $382,000 USD. I have already provided you with a list of the highest paid doctors in the US based on specialty. You can see the table at the beginning of this blog.

Medical Specialties Income

So, why does specialty determine a doctor's income? Simply put, some specialties require more skill, and therefore, more training. For example, as you could see from our list, surgical specialties such as orthopedic surgery, cardiology, radiology, and plastic surgery are some of the highest paid doctors in the US. These specialties are procedure-based and require 5 or 6 years of additional residency training after graduation from medical school. These specialties also tend to demand post-residency, subspecialty training such as medical fellowships. Therefore, these specialists get paid more. 

Primary Care Specialties Income

Primary care specialties such as family medicine, internal medicine, and pediatrics require less training. One can become a practicing family physician after 6 years of medical education and training (4 years of medical school and 2 years of residency). Therefore, physicians practicing in these specialties earn less. The upside is that they have smaller school debt and enter the workforce quicker by spending less time and money on specialty training. This also means that they accrue less debt because they can start paying off their debt earlier.  

When it comes to specialty, you should also consider demand in the healthcare field. An increase in salary or earnings based on specialty often foreshadows a shortage in that specialty.  

Watch this video to find out the easiest and most competitive residencies to match into:

Highest Paid Doctors: MD vs DO

After speaking about specialty, we cannot avoid mentioning the difference in salary between DO and MD physicians. While DO and MD physicians make comparable money when they practice in the same specialty, specialty options are a little bit more limited for DO physicians.

According to the latest Main Residency Match data, DO and MD graduates are equally competitive for primary care specialties like family medicine and internal medicine, with 1,511 DO seniors and 1,484 MD seniors matching into family medicine last year, and 1,688 DO seniors and 3,592 MD seniors matching into internal medicine. However, DOs are less represented in the more lucrative surgical specialties and other competitive specialties such as dermatology residency .For example, 21 MD seniors managed to match a dermatology residency, while only 5 DO seniors matched this same specialty. Another example is orthopedic surgery, with 690 MDs matching vs 119 DOs matching this specialty. 

DO and MD Residency Program Accreditation and Compensation

And while there is still a discrepancy in the numbers, you should know that there has been a big increase in DO representation in surgical and other competitive specialties. This is mostly due to the changes in the accreditation of residency programs. Previously, osteopathic and allopathic residencies were accredited by different institutions: the former was accredited by the American Osteopathic Association (AOA) and the latter by the Accreditation Council for Graduate Medical Education (ACGME). Now, both DO and MD programs are ACGME-accredited programs, which gives osteopathic residency programs the same status and opportunities as allopathic programs.

Additionally, the same accreditation system allows DOs to participate in MD programs (with the condition that they fulfill all the requirements, such as completing the United States Medical Licensing Exam) and for MDs to participate in programs with the “Osteopathic Recognition” designation (also with the condition that they fulfill all the requirements that differ by program).

Simply put, the unified accreditation system is closing the gap between DO and MD medical students and residents. With time, the difference in numbers between DO and MD residents will likely shrink. However, remember what DO stands for - don’t forget that DOs do have a particular philosophy that leads them to pursue primary, non-intrusive medical care specialties. While DOs are certainly capable of becoming surgeons, their tenets still affect their choice in specialties and where they practice. This means that the difference between DO and MD salaries may remain.  

What are the Highest Paid Doctors in Canada? 

Let's review the list of the highest average gross clinical payments by physician specialty in Canada. To calculate the average gross clinical payments made to physicians by provincial or territorial healthcare systems, the Canadian Institute for Health Information (CIHI) divides the sum of all gross clinical payments, i.e., fee-for-service information and alternative payments, by the total number of physicians in a specialty. Click on the "Average Gross Payment" heading in the table to organize the specialties from highest to lowest payment, or vice versa.

We want to emphasize that this is GROSS income. Most physicians in Canada, especially those working fee-for-service, work as independent contractors running their own small business. So, all the costs associated with having a business, typically called overhead costs, are taken out of this gross income. Therefore, the take-home pay can be notably less. These overhead expenditures are similar to those of self-employed physicians in America and include rent, equipment, and staff.

A big chunk of this gross income goes to liability insurance, which all physicians must have. The cost for liability insurance varies by specialty, as do overhead costs. They can be anywhere from 20%-60%. Also note that such physicians do not get taxes deducted, paid parental leave, vacations, benefits of any kind, or retirement contributions. 

How Do Doctors Get Paid in Canada? 

Firstly, Canada does not have many private healthcare institutions. Unlike the US, Canada has a universal healthcare system with a unified payment system for each of the provinces and territories, as healthcare remains the prerogative of provincial governments. Each province oversees its own healthcare system and payments. The income of physicians in Canada certainly depends on the province where they practice.  

Most Canadian physicians are paid based on the services they provide. The fee-for-service program (FFS) amounts to 70% of payments made to physicians by their provincial or territorial healthcare systems. These services are typically divided into 2 categories:

• Consultations and visits
• Procedures

Generally, procedures have higher fees than consultations or counseling, but this is slowly shifting to prioritize preventive care. And even though primary care physicians, like family doctors, perform the greatest number of services and receive the largest portion of the healthcare budget, physicians in other specialties, especially general surgery, earn more because their services cost more. For example, the average cost per family physician’s service is about $50, while a service by a neurosurgeon costs $250. 

Additionally, the CIHI also considers alternative clinical payments in their calculations, such as salary, sessional positions, capitation, etc. This kind of compensation varies by province. 

Another model of payment in Canada is alternate plans. For example, in Alberta, these are called alternative remuneration plans (ARPs). Generally, these combine fee-for-service with some fixed income and help compensate physicians who teach or do research. Typically, when a physician becomes an instructor for residents, he/she sees fewer patients as time is taken by teaching. However, to encourage teaching, this is balanced with some fixed payment in combination with FFS billing. 

The FFS makes up 70% of payments made to Canadian physicians:

Conclusion 

Choosing a specialty, employment status, or state/province in which to practice based on how much doctors are paid is not wise. Remember, money cannot sustain your dedication and passion for medicine.

If you are planning to become a physician in the United States, in many ways, your personality and experiences will determine not only your specialty but your employment status. While some enjoy the autonomy and self-direction of owning a private practice, many doctors prefer the stability and steady income that employment provides.  

While it is difficult to make accurate calculations about what is the highest paid doctor, there is no denying that physicians are some of the highest paid traditional professionals in North America. When you consider physicians’ incomes, you should keep in mind how long it takes to become a doctor – it is a huge investment of your time, money, efforts, and mental health. Most doctors continue paying off their medical school debt long after they graduate, so their generous incomes help them repay what they owe. 

In addition to debt, the vocation of a physician is not for the faint of heart. It involves duties and responsibilities most of us cannot imagine. And while there are a lot of challenges associated with being a doctor, the latest survey done by Medscape demonstrates that 73% of polled physicians would choose medicine again if they were still deciding on a career path.

FAQs 

To your success,

Your friends at BeMo

BeMo Academic Consulting

Sources for income data: Medscape Physician Compensation Report and the Canadian Institute for Health Information

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