Myths and Facts About Orthopedic Surgeon Compensation

In medicine, one of the most divisive issues is compensation—not only its size but also its source.

Suppliers of medical devices, regulators and critics of surgeon compensation programs are all guilty of using compensation rates (and only compensation rates) to explain both good and bad physician behavior.

As if allowing physicians to earn fees for anything outside of patient care would adversely affect that care. No compensation for inventions. No compensation for administrative skills. No compensation for distribution skills.

How a physician earns a living is increasingly subject to regulatory and physician community review, criticism and even control.

Two announcements regarding orthopedic surgeon compensation—one on the last day of September and one a month earlier—offer startling new information about orthopedic surgeon pay and how ineffective it is at delivering job satisfaction or even performance.

The first announcement was the release of the Medscape Physician Compensation Report for 2014 which looked at 25 physician specialties and ranked them in order of both compensation and job satisfaction.

The second announcement was CMS’ (Centers for Medicare and Medicaid Services) release of the physician payment data base which had been collected as part of the Sunshine Act.

56% of Orthopedic Surgeons Would Not Go Back Into Medicine

Which physicians make the most money by specialty? Orthopedists. Which physicians are the second LEAST likely to choose medicine as a career? Orthopedists.

(See the chart at the end of this article.)

Every year Medscape conducts a survey of 25 medical specialties and collects data regarding compensation and whether these top medical professionals would choose medicine as a career again.

The results are startling and unexpected.

At an average annual compensation of $413, 000, orthopedic surgeons beat out their colleagues in cardiology, urology, gastroenterology and 21 other specialties as the highest paid specialty physicians in medicine.

But, when it comes to who would chose medicine again, the internal medicine physicians are the most satisfied with their career choice (despite a “mere” $188, 000 average annual rate of pay).

Only plastic surgeons are less happy than orthopedic surgeons (at $321, 000 in annual pay). Out of 25 specialties, orthopedic surgeons rank 24th in terms of the percentage who would choose medicine again as a career.

Fifty-six percent of orthopedic doctors would not go back into medicine.

The survey by Medscape showed that doctors in seven of the ten lowest paid specialties were among the top ten MOST likely to select medicine as a career.

Why?

Perhaps one explanation for the counter-intuitive Medscape survey results is that the highest paid physicians are also the group most targeted by regulators, watch-dog groups and even, more often than might be expected, their own colleagues.

Scientists who study human behavior and the effects of compensation on job performance, happiness or motivation have been saying for literally decades that money is a notably weak and flawed motivator of human behavior.

Scientific studies of pay and work behavior show unequivocally that the connection between pay rates and behavior is not cause and effect.

What the Scientists Say

Dr. Timothy Judge, business professor at the University of Florida and his colleagues from Rollins College, University of Arizona, Jacksonville University and California State University San Marcos reviewed 120 years of research from 92 quantitative studies reviewing 15, 000 individuals and 115 correlation coefficients found that the association between salary and job satisfaction is very weak.

The reported correlation (r = .14) indicated that there is less than 2% overlap between pay and job satisfaction levels.

Even worse, the correlation between pay and pay satisfaction was only marginally higher (r = .22 or 4.8% overlap), indicating that people’s satisfaction with their salary is mostly independent of their actual salary.

When these same researchers looked at group-level (or between-sample) comparisons—similar to the Medscape survey—they found that “Employees earning salaries in the top half of our data range reported similar levels of job satisfaction to those employees earning salaries in the bottom-half of our data range” (p.162).

Another survey, this time from the Gallup Polling organization, reported no significant difference in employee engagement by pay level. These results were based on 1.4 million employees from 192 organizations across 49 industries and 34 nations.

The most famous study, now a classic piece of research in employment and labor science, was carried out by Dr. Edward Deci and his colleagues. The scientists analyzed results from 128 controlled experiments.

They found that pay type of incentives—whether marshmallows or dollars—reduced intrinsic motivation. The researchers found that for every standard deviation increase in reward, intrinsic motivation for interesting tasks decreased by about 25%.

When rewards are tangible and foreseeable (if subjects know in advance how much extra money they will receive) intrinsic motivation decreases by 36%!

Another recent study, this one by Yoon Jik Cho and James Perry (Yonsei University in Seoul and Indiana University in Bloomington) looked at over 200, 000 U.S. public sector employees and documented that employee engagement levels were three times more strongly related to intrinsic than extrinsic motives.

They also found that employees who are intrinsically motivated are three times more engaged than employees who are extrinsically motivated (such as by money).

The fact is: money is one of the least effective motivators for job performance and there is strong evidence that it will demotivate.

And here’s the irony. Despite the abundance of research, companies, regulators and even physicians themselves still hold to this notion that compensation rates will affect physician behavior.

Not so. The keys to physician behavior—including device utilization, medical decision making and so forth—are such intrinsic factors as autonomy, respect and power—all of which are under attack in this compensation debate.

$3.5 Billion Paid to Surgeons

And then this headline came out on September 30, 2014.

As most medical device companies know, they are required to document all payments to physicians—even as little as $10—and submit that data to CMS as part of the agency’s ongoing effort to increase transparency and accountability in health care.

The data program, called Open Payments, was created by the Affordable Care Act. It collects consulting fees, research grants, travel reimbursements, and other payments which medical device manufacturers and pharmaceutical companies make to physicians and teaching hospitals.

This first round of data was just released and it detailed 4.4 million payments from companies to 546, 000 individual and almost 1, 360 teaching hospitals and covered, essentially, 5 months of payments.

This data will be released on an annual basis and starting with the June 2015 report, will have 12 months of data.

“CMS is committed to transparency and this is an opportunity for the public to learn about the relationships among health care providers, and pharmaceutical and device companies, ” CMS Administrator Marilyn Tavenner said. “This initial public posting of data is only the first phase of the Open Payments program. In coming weeks, we will be adding additional data and tools that will give consumers, researchers, and others a detailed look into this industry and its financial arrangements.”

The agency was careful to say that these payments from medical manufacturers’ payments and health care providers do not necessarily signal wrongdoing. While the agency would like to discourage inappropriate relationships it does not want to harm beneficial ones.

So CMS is working closely with companies and physician groups to better understand the current scope of the interactions among physicians, teaching hospitals, and industry manufacturers. CMS encourages patients to discuss these relationships with their health care providers.

Manufacturers submitted data to CMS this summer and CMS performed initial matching to aggregate payments to a single physician or teaching hospital. After the data were collected and displayed, registered physicians and teaching hospitals had the opportunity to review payments reported about them and dispute information they believed inaccurate.

More than 26, 000 physicians and 400 teaching hospitals registered in the Open Payments system to review payments attributed to them.

Because of questions about the accuracy of the data, about 40% of the records published were de-identified. The data, however, will be fully identifiable in 2015 after the reporting entity submits corrected data, and physicians and teaching hospitals have a chance to review and dispute.

Over time, CMS expects to make enhancements such as introducing new tools to allow for easier data searches. This improved search functionality will allow users to more easily review payments received by their personal physician, or search on criteria such as specialty, location, or types of payments received.

The data is available for public review at: http://www.cms.gov/openpayments/index.html

Beatings Will Continue Until Morale Improves

The divisiveness over physician compensation will continue as long as everyone at the “healthcare table, ” except the physician, is expected to act in their own best financial interest.

We learned from CMS, $3.5 billion has now been paid to physicians by companies over a 5 month period. The agency added charitably in their press release that the fact of a payment is not necessarily evidence of “wrongdoing.”

True.

In fact it isn’t evidence of anything…except possibly the fact that they just don’t get the role of compensation in the lives of today’s physician.

Medscape’s Salary Review Table: