INTERNATIONALCOMPARISONS OF PHYSICIANS’ SALARIES J. Paul Leigh Data from recent international publications are used to analyze physician incomes across countries. US. incomes are the highest among 14 countries, even after adjusting for the average standard of living within each country.
Numerous studies have addressed international differences in expenditures on medical care (1-4). It is well-established that Americans pay dearly for hospital visits, drugs, specific procedures such as appendectomy and bronchoscopy, and medical care in general. Our overall per capita spending adjusted by exchange rates and the percentage of our gross national product (GNP) devoted to medical care is the highest in the world. Despite the research attention devoted to overall spending, little, by comparison, has been devoted to physicians’ incomes. This is fortunate since physicians have the most to gain and the most to lose in the debate over the financing of medical care. No other group of professionals or employees takes as large a share of the 12 percent of our GNP that is annually spent on medical care. In one study, using 1982 data, female physicians were found to earn 12 to 13 percent less than male physicians in the same specialty and with the same experience (5). Another study found incomes to general surgeons and obstetricians/gynecologists increased rapidly while pediatricians suffered a financial loss between 1967 and 1980 (6). But neither study considered international differences. In one of the few international studies, U.S. physicians were found to earn more than Canadian physicians (7). Two recent publications, Health Care Systems in Transition (8) and Financing and Delivering Health Care (9) [from the Organization for Economic Co-operation and Development (OECD)] present international statistics that are useful in the current debate. The OECD publications include international estimates for 24 countries of physicians’ average incomes, average pay for all medical and nonmedical employees, exchange rates, number of physicians per capita, and growth in number of physicians per capita. These data are combined into Table 1. For many countries, statistics on physicians’ average annual salaries are difficult to obtain. The 14 countries in Table 1 had the most complete records. International Journal of Health Services, Volume 22, Number 2, Pages 217-220, 1992 0 1992, Baywood Publishing Co., Inc.
217
doi: 10.2190/8524-35WH-EY0V-6M7A http://baywood.com
218 / Leigh Table 1
Physicians’ salaries: statistical averages across countries“
Average 1986 physician’s income, 1986 U.S. $b Australia Canada Denmark Finland France West Germany Ireland Italy Japan Norway Sweden Switzerland United Kingdom United States
34,191 70,144 39,061 35,558 N.A. 91,244 17,830 N.A. 56,437 31,664 N.A. 118,501 33,615 119,500
Ratio of physician’s income/ average employee compensation in home country currency, 1986 2.26 3.47 2.01 1.82 3.27 (1979) 4.28 1.08 1.10 (1981) 2.46 1.38 1.80 (1983) 4.10 2.39 5.12
Physicians per 1,OOO population, 1981,1982, 1983
Annual percentage growth in physicians per 1,OOO population, 1960-1 980
1.9 1.9 2.4 2.2 2.2 2.4 1.2 1.3 1.4 2.0 2.4 1.6 1.3 1.9
3.6 2.8 4.2 11.6 5.2 3.2 1.4 7.0 1.8 3.2 6.0 2.9 N.A. 1.7
“Sources: Columns 1 and 2, reference 8, Tables 4,65,64, pp. 142,200,201; columns 3 and 4, reference 9, Table 34, p. 73. bIncome figures for 1986 were not available for France, Italy, and Sweden. The figures for the last income year available were used in calculating the ratios in column 2.
Column 1 lists annual physicians’ incomes in 1986, expressed in 1986 U.S. dollars, the latest year of complete data available. These figures were derived by adjusting the OECD numbers according to the appropriate international exchange rate. Physicians’ salaries in the United States are the highest of this group at $119,500; Switzerland is second with $118,501; Ireland is last with $17,830. Because the United States has a very high standard of living with relatively high incomes for many occupations, and because exchange rates are volatile, the numbers in column 1could be misleading. Column 2, therefore, adjusts for the standard of living by dividing physicians’ salaries by average compensation per medical and nonmedical employee for each country, both expressed in the home country’s currency to eliminate exchange-rate calculations. The outcome is that the United States still ranks number one at 5.12; West Germany now places second with 4.28; Italy and Ireland trail with 1.10 and 1.08. The salary numbers in Table 1 have not been adjusted for taxes, but it is unlikely that such an adjustment would alter the ranking. Switzerland and West Germany have strongly progressive taxes. Moreover, taxes per person in the United States are among the lowest in the more developed countries (3). The salaries listed have been adjusted for malpractice insurance premiums, however. Insurance premiums are a cost of doing business and are deducted from business earnings prior to calculating a physician’s average income.
Physicians’ Salaries / 219 The high salaries of U.S. physicians might be justified if their output were high, in other words, if health standards in the United States were also the highest. But if life expectancy or infant mortality is used to measure the overall efficiency of physicians as ultimate managers of our medical system, this does not prove to be the case. A ranking of the same countries in Table 1 would reveal that the United States is fifth from the bottom in female life expectancy, third from the bottom in male life expectancy, and at the top of the list for infant mortality. Statistics in Table 1 also shed light on a related issue. Many investigators believe that the United States has been experiencing a physician glut (10, 11). But according to the most recent statistics from the OECD, the number of physicians per 1,OOO of the U.S. population was 1.9 (column 3). Eight countries in Table 1 had ratios of 1.9 or more during the same time period. Moreover, the rate of growth in the number of new physicians between 1960 and 1980 (again, the latest data available) was small compared to other countries (column 4). The only country with a smaller rate of growth was Ireland. The data in Table 1 have a number of deficiencies. First, income figures from France, Italy, and Sweden were not available for the same comparison year. Second, although malpractice premiums were accounted for in the OECD statistics, U.S. premiums have risen precipitously since 1986. But the most complete OECD data were available from 1986. It remains unknown whether these rankings would reflect incomes in 1991.Third, incomes are annual, not lifetime. U.S. physicians may have incurred substantially more debt in their student years. Finally, if there is a wider range of specialties in the United States than elsewhere, it may be that discussion of an average income for all physicians could be misleading. U.S. surgeons may be paid far more than foreign surgeons, whereas occupational medicine physicians and rheumatologists, for example, may be paid less than their international counterparts (12). Future research will no doubt improve upon the data. The data in Table 1 suggests that U.S. physicians, on average, are paid more than physicians from 13 other countries. These results are consistent with other economic studies that suggest wide and growing disparities between the rich and the poor in the United States when compared with other developed countries (3, 13, 14). But the data are not definitive, for the four reasons cited above. Given the paucity of data and studies, additional research is clearly needed to inform the debate on international comparisons of physicians’ incomes. REFERENCES 1. Glaser, W. A. Paying the hospital: American problems and foreign solutions. Int. J. Health Sew. 21: 389-399,1991. 2. Schieber, G . J., and Poullie, J.-P. Recent trends in international health care spending. Heolih Afi. 6: 105-112,1987. 3. Mishel, L., and Frankel, D. M. The State of WorkingAmerica, 1990-1991, pp. 4%; 232-233. Economic Policy Institute. M. E. Sharpe Inc., h o n k , N.Y., 1991. 4. Newhouse, J. P. Cross national differences in health spending: What do they mean?J. Health Econ. 6: 159-162,1987. 5. Ohsfeldt, R. L., and Culler, S. D. Differences in income between male and female physicians. J. Health Econ. 5: 335-346.1986.
220 I Leigh 6. Burstein, P. L., and Cromwell, J. Relative incomes and rates of return for U.S. physicians. J. Health Econ. 4: 63-78, 1985. 7. Fuchs, V. R., and Hahn, J. S. How does Canada do it? A comparison of expenditures for physician services in the U.S. and Canada. N. Engl. J . Med. 323: 889490,1990. 8. Organization for Economic Co-operation and Development. Healfh Care Systems in Transition: The Search for Eficiency. Social Policy Studies, No. 7. Paris, 1990. 9. Organization for Economic Co-operation and Development. Financing and Delivering HealfhCare. Social Policy Studies, No. 4. Paris, 1987. 10. Kingdig, D. A,, and Taylor, C. M. Growth in the international physician supply.JAM4 253: 3129-3 132,1985. 11. Inglehart, J. Health policy report: The future supply of physicians. N. Engl. J. Med. 314: 86&864,1986. 12. Prashker, M. J., and Meenan, R. F. Subspecialty training: Is it financially worthwhile? Ann. Infern.Med. 115: 715719,1991. 13. Blackburn, M. L., and Bloom, D. E. The Distribution of Family Income: Measuring and Explaining Changes in the 1980’s for Canada and the US.National Bureau of Economic Research, Working Paper No. 3659. March 1991. 14. Smeeding, T. M. Cross-national comparisons of inequality and poverty position. In Economic Inequality and Poverty: International Perspectives, edited by L. Osberg. M. E. Shape, Armonk, N.Y., 1991.
Direct reprint requests to: Dr. Paul Leigh Department of Economics School of Social Sciences San Jose State University One Washington Square San Jose, CA 95192
Numerous studies have addressed international differences in expenditures on medical care (1-4). It is well-established that Americans pay dearly for hospital visits, drugs, specific procedures such as appendectomy and bronchoscopy, and medical care in general. Our overall per capita spending adjusted by exchange rates and the percentage of our gross national product (GNP) devoted to medical care is the highest in the world. Despite the research attention devoted to overall spending, little, by comparison, has been devoted to physicians’ incomes. This is fortunate since physicians have the most to gain and the most to lose in the debate over the financing of medical care. No other group of professionals or employees takes as large a share of the 12 percent of our GNP that is annually spent on medical care. In one study, using 1982 data, female physicians were found to earn 12 to 13 percent less than male physicians in the same specialty and with the same experience (5). Another study found incomes to general surgeons and obstetricians/gynecologists increased rapidly while pediatricians suffered a financial loss between 1967 and 1980 (6). But neither study considered international differences. In one of the few international studies, U.S. physicians were found to earn more than Canadian physicians (7). Two recent publications, Health Care Systems in Transition (8) and Financing and Delivering Health Care (9) [from the Organization for Economic Co-operation and Development (OECD)] present international statistics that are useful in the current debate. The OECD publications include international estimates for 24 countries of physicians’ average incomes, average pay for all medical and nonmedical employees, exchange rates, number of physicians per capita, and growth in number of physicians per capita. These data are combined into Table 1. For many countries, statistics on physicians’ average annual salaries are difficult to obtain. The 14 countries in Table 1 had the most complete records. International Journal of Health Services, Volume 22, Number 2, Pages 217-220, 1992 0 1992, Baywood Publishing Co., Inc.
217
doi: 10.2190/8524-35WH-EY0V-6M7A http://baywood.com
218 / Leigh Table 1
Physicians’ salaries: statistical averages across countries“
Average 1986 physician’s income, 1986 U.S. $b Australia Canada Denmark Finland France West Germany Ireland Italy Japan Norway Sweden Switzerland United Kingdom United States
34,191 70,144 39,061 35,558 N.A. 91,244 17,830 N.A. 56,437 31,664 N.A. 118,501 33,615 119,500
Ratio of physician’s income/ average employee compensation in home country currency, 1986 2.26 3.47 2.01 1.82 3.27 (1979) 4.28 1.08 1.10 (1981) 2.46 1.38 1.80 (1983) 4.10 2.39 5.12
Physicians per 1,OOO population, 1981,1982, 1983
Annual percentage growth in physicians per 1,OOO population, 1960-1 980
1.9 1.9 2.4 2.2 2.2 2.4 1.2 1.3 1.4 2.0 2.4 1.6 1.3 1.9
3.6 2.8 4.2 11.6 5.2 3.2 1.4 7.0 1.8 3.2 6.0 2.9 N.A. 1.7
“Sources: Columns 1 and 2, reference 8, Tables 4,65,64, pp. 142,200,201; columns 3 and 4, reference 9, Table 34, p. 73. bIncome figures for 1986 were not available for France, Italy, and Sweden. The figures for the last income year available were used in calculating the ratios in column 2.
Column 1 lists annual physicians’ incomes in 1986, expressed in 1986 U.S. dollars, the latest year of complete data available. These figures were derived by adjusting the OECD numbers according to the appropriate international exchange rate. Physicians’ salaries in the United States are the highest of this group at $119,500; Switzerland is second with $118,501; Ireland is last with $17,830. Because the United States has a very high standard of living with relatively high incomes for many occupations, and because exchange rates are volatile, the numbers in column 1could be misleading. Column 2, therefore, adjusts for the standard of living by dividing physicians’ salaries by average compensation per medical and nonmedical employee for each country, both expressed in the home country’s currency to eliminate exchange-rate calculations. The outcome is that the United States still ranks number one at 5.12; West Germany now places second with 4.28; Italy and Ireland trail with 1.10 and 1.08. The salary numbers in Table 1 have not been adjusted for taxes, but it is unlikely that such an adjustment would alter the ranking. Switzerland and West Germany have strongly progressive taxes. Moreover, taxes per person in the United States are among the lowest in the more developed countries (3). The salaries listed have been adjusted for malpractice insurance premiums, however. Insurance premiums are a cost of doing business and are deducted from business earnings prior to calculating a physician’s average income.
Physicians’ Salaries / 219 The high salaries of U.S. physicians might be justified if their output were high, in other words, if health standards in the United States were also the highest. But if life expectancy or infant mortality is used to measure the overall efficiency of physicians as ultimate managers of our medical system, this does not prove to be the case. A ranking of the same countries in Table 1 would reveal that the United States is fifth from the bottom in female life expectancy, third from the bottom in male life expectancy, and at the top of the list for infant mortality. Statistics in Table 1 also shed light on a related issue. Many investigators believe that the United States has been experiencing a physician glut (10, 11). But according to the most recent statistics from the OECD, the number of physicians per 1,OOO of the U.S. population was 1.9 (column 3). Eight countries in Table 1 had ratios of 1.9 or more during the same time period. Moreover, the rate of growth in the number of new physicians between 1960 and 1980 (again, the latest data available) was small compared to other countries (column 4). The only country with a smaller rate of growth was Ireland. The data in Table 1 have a number of deficiencies. First, income figures from France, Italy, and Sweden were not available for the same comparison year. Second, although malpractice premiums were accounted for in the OECD statistics, U.S. premiums have risen precipitously since 1986. But the most complete OECD data were available from 1986. It remains unknown whether these rankings would reflect incomes in 1991.Third, incomes are annual, not lifetime. U.S. physicians may have incurred substantially more debt in their student years. Finally, if there is a wider range of specialties in the United States than elsewhere, it may be that discussion of an average income for all physicians could be misleading. U.S. surgeons may be paid far more than foreign surgeons, whereas occupational medicine physicians and rheumatologists, for example, may be paid less than their international counterparts (12). Future research will no doubt improve upon the data. The data in Table 1 suggests that U.S. physicians, on average, are paid more than physicians from 13 other countries. These results are consistent with other economic studies that suggest wide and growing disparities between the rich and the poor in the United States when compared with other developed countries (3, 13, 14). But the data are not definitive, for the four reasons cited above. Given the paucity of data and studies, additional research is clearly needed to inform the debate on international comparisons of physicians’ incomes. REFERENCES 1. Glaser, W. A. Paying the hospital: American problems and foreign solutions. Int. J. Health Sew. 21: 389-399,1991. 2. Schieber, G . J., and Poullie, J.-P. Recent trends in international health care spending. Heolih Afi. 6: 105-112,1987. 3. Mishel, L., and Frankel, D. M. The State of WorkingAmerica, 1990-1991, pp. 4%; 232-233. Economic Policy Institute. M. E. Sharpe Inc., h o n k , N.Y., 1991. 4. Newhouse, J. P. Cross national differences in health spending: What do they mean?J. Health Econ. 6: 159-162,1987. 5. Ohsfeldt, R. L., and Culler, S. D. Differences in income between male and female physicians. J. Health Econ. 5: 335-346.1986.
220 I Leigh 6. Burstein, P. L., and Cromwell, J. Relative incomes and rates of return for U.S. physicians. J. Health Econ. 4: 63-78, 1985. 7. Fuchs, V. R., and Hahn, J. S. How does Canada do it? A comparison of expenditures for physician services in the U.S. and Canada. N. Engl. J . Med. 323: 889490,1990. 8. Organization for Economic Co-operation and Development. Healfh Care Systems in Transition: The Search for Eficiency. Social Policy Studies, No. 7. Paris, 1990. 9. Organization for Economic Co-operation and Development. Financing and Delivering HealfhCare. Social Policy Studies, No. 4. Paris, 1987. 10. Kingdig, D. A,, and Taylor, C. M. Growth in the international physician supply.JAM4 253: 3129-3 132,1985. 11. Inglehart, J. Health policy report: The future supply of physicians. N. Engl. J. Med. 314: 86&864,1986. 12. Prashker, M. J., and Meenan, R. F. Subspecialty training: Is it financially worthwhile? Ann. Infern.Med. 115: 715719,1991. 13. Blackburn, M. L., and Bloom, D. E. The Distribution of Family Income: Measuring and Explaining Changes in the 1980’s for Canada and the US.National Bureau of Economic Research, Working Paper No. 3659. March 1991. 14. Smeeding, T. M. Cross-national comparisons of inequality and poverty position. In Economic Inequality and Poverty: International Perspectives, edited by L. Osberg. M. E. Shape, Armonk, N.Y., 1991.
Direct reprint requests to: Dr. Paul Leigh Department of Economics School of Social Sciences San Jose State University One Washington Square San Jose, CA 95192
