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Battered by Inflation, Physician Pay Isn’t What It Once Was

Op-Med is a collection of original articles contributed by Doximity members.

Physician pay growth has lagged behind inflation over the past six years, resulting in an overall decline of $18,468 in real compensation, according to surveys of more than 190,000 U.S. physicians. 

The Doximity survey results, based on self-reported physician compensation from 2017 through 2022, show that average nominal compensation has increased by 2.7% each year, compared with an average inflation rate of 3.8% over the same six-year period, per the U.S. Bureau of Labor Statistics Consumer Price Index (CPI). This gap was most pronounced in 2022 when nominal compensation fell 2.4% against a backdrop of 6.5% average inflation, resulting in an 8.9% decrease in physician purchasing power.

All told, the average nominal physician compensation rose to $391,127 in 2022, up 14% from $343,179 in 2017. Yet when adjusted for inflation since 2017, the average real compensation in 2022 was $324,711. That change amounted to a nearly $20,000 decrease in purchasing power over the past six years. 

Specialty, Type of Practice, Location

Out of 44 medical specialties, nearly all saw a decrease in real compensation from 2017 to 2022. 

Annual increases in physician pay did not measure up to inflationary pressure, with real compensation falling the most in hematology (-$82,483) and allergy and immunology (-$52,864). Plastic surgery had the highest growth in real compensation ($1,137), and it was the only specialty that had its average pay exceed inflation.

Procedural specialties seem to be the most resilient to inflation during the six-year period. Indeed, seven out of the top eight specialties with the least negative change in real compensation were procedural. Ob/gyn (-$35,823) was the only procedural specialty that was outside top 20 in real compensation growth.

Primary care real compensation, in contrast, changed by an average of -$19,223 per year compared with -$11,571 in procedural specialties, widening the pay gap between these groups. In 2022, the top six highest paid specialties were procedural, whereas all of the primary care specialties sat in the bottom 15, which may contribute to the higher levels of burnout reported in primary care.

One exception to the predominance of procedural fields was preventive medicine (-$6,858), which had the third highest real compensation increase among all specialties. Expanded coverage of preventive services and government-driven initiatives may have contributed to the specialty’s development in recent years. Radiation oncology (-$10,109) and radiology (-$10,307) were also among the top 10 specialties in real compensation change. 

Compensation growth varied for different practice types as well. Despite typically higher pay at group and solo practices, the average real compensation between 2018 and 2022 fared better at hospitals and health systems. (Compensation data by practice type was unavailable in 2017.)

Average real compensation change was -$4,481 at multispecialty groups, -$6,070 at single specialty groups, and -$4,799 at solo practices, compared with $7,069 at hospitals and -$63 at health maintenance organizations. The higher growth rate at hospitals correlates with the ongoing escalation of health care consolidation, which has been linked to swelling prices. 

In general, practice types typically associated with the lowest pay saw the largest decrease, including those in academic (-$13,619) and government (-$11,295) settings. Urgent care centers were the exception, having the highest compensation growth rate ($11,753) across all practice types, despite its relatively lower reported compensation. The rapid growth in urgent care may reflect its widening role in patient care, particularly during the COVID-19 pandemic.

Average real compensation decreased in each of the metro areas examined, with no metro having a growth rate that met or exceeded the average rate of inflation. Compensation growth from 2017 to 2022 ranged from a low of -$70,857 in San Antonio to a high of -$3,585 in the Cincinnati area.

There was no strong association between compensation growth and individual metro population or pay. Average change in real compensation ranged widely at some of the largest metros, including in the Atlanta (-$17,046), Philadelphia (-$18,354), Houston (-$18,991), Boston (-$28,094), Chicago (-$29,615), Miami (-$29,669), Los Angeles (-$37,627), and New York (-$37,991) areas.

In addition to inflationary pressures, impending Medicare payment cuts in 2023 (2%) and 2024 have compounded worries over deflating physician compensation. 

Nearly 100 organizations penned a joint letter to Congress decrying the payment cuts and related fiscal challenges as “systemic issues [that] will continue to generate significant instability for health care professionals moving forward, threatening patient’s timely access to essential health care services.”

Individual physicians and society leaders, including American Medical Association President Jack Resneck Jr., MD, have also lamented the “broken” payment model and the lack of annual inflation-based updates.

“It just doesn’t make any sense,” Dr. Resneck wrote in an article. “This stands in stark contrast to the routine, automatic, yearly increases given to hospitals, skilled nursing facilities, and others who bill Medicare.”

He outlined the potential benefit of incorporating a variety of tailored payment models and incentives based on a physician’s specialty and practice, as well as the need for a financially viable fee-for-service model.

“Physicians deserve payment models that recognize and invest in their contributions in providing high-value care to patients,” he said. “We need to fix what’s broken in health care — and it’s not the doctor.”

Illustration by Jennifer Bogartz

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