Should procedural specialists be the highest earning doctors in the nation?

Jun 21, 2021

Data shows that procedural specialist doctors earn more per year than many other professionals in Australia and that the highest earning doctors in Australia are surgeons and anaesthetists, earning almost twice what general practitioners (GPs) earn. Why is this so and can it be justified?

Increasing disparity in the earnings of specialists and GPs is reducing recruitment of doctors into general practice. A recent release by the Australian Tax Office highlighted concerning aspects about the funding of Australia’s health care system

Some procedural specialists may argue that their high incomes are justified by their long years of training on low pay, their level of skill, their level of responsibility and the hours worked. Some of these factors may have a degree of validity but they don’t tell the whole story.

While it is true that their training is long, medical and surgical specialist trainees are well paid nowadays. Interns (first year medical graduates) start at an average annual salary across Australia of $76,500, supplemented by payment for overtime. Thereafter salaries rise sharply as the average annual salary for registrars (trainees) is said to be $173,771.

Neither do specialist doctors work especially long hours. Data from 2018 showed that average hours worked per week by specialists was 42 hours and by GPs was 37 hours while registrars worked the most hours at an average of 46 hours per week. The lower average hours worked by GPs almost certainly reflects the part-time work of women GPs with children to care for.

In addition it should be noted that general practice is now a specialty with similar training and examination requirements to other fields of medical practice and that GPs need to have a broader range of diagnostic and patient management skills than do most specialists. GPs too carry serious responsibilities. For GPs working in rural or remote areas, many have to have a range of procedural skills.

None of the above factors seem to explain why general practitioners earn on average about half what procedural specialist doctors earn. The explanation lies within our Medicare system which brings us to the second recent news item: the announcement by the Federal Government of changes to Medicare resulting from a five year study called the Medicare Benefits Schedule Review.

The report received some favourable comment but it is not yet clear how much of this far-reaching report will be acted upon by Government. Already there has been a report suggesting that Government is ignoring some recommendations.  While the MBS Review contains recommendations in regard to block funding of some services and in regard to out-of-pocket expenses, the Review was not directed towards remedying the problems discussed here.

A generation or two ago GPs earned at least as much and generally more than did specialists. What happened to change this balance? The answer lies in the original Medibank and its successor Medicare and the formula (the concept of the most common fee) used to decide what rebate would be paid for the fee that any doctor charged, based on surveys of actual fees at that time. The original schedule favoured procedural work and this discrepancy has increased over time, especially where technical improvements have allowed many procedures to be done more efficiently.

Medicare in our view is the most vital component of Australia’s mixed public/private health care system and must be preserved – but it also needs to be reformed in a manner that seeks to correct the distortions that have crept in. To date any attempt to rebalance the inequities inherent now in Medicare has failed. Thus GPs who are the backbone of Australia’s good health care system remain undervalued while many but not all specialist services are overvalued.

There is evidence that these distortions are changing the career choices of new medical graduates such that there are too many graduates applying for the high income specialties and too few wishing to become general practitioners, leading to shortages beyond the major metropolitan areas. While there are many personal factors that may influence a doctor’s career path, there is good reason to believe that potential earning is a dominant one and that this can be fixed.

The distortions in favour of procedural medicine based on Medicare rebates have been recognised for nearly two decades.

One of the recommendations of the 2005 Productivity Commission report on Australia’s Health Workforce was that ‘the Department of Health and Ageing should investigate the extent of the bias in the Medical Benefits Schedule in favour of procedures over consultations and how any significant bias should be addressed.’

The real need is for Medicare rebates to be higher for GPs and lower for procedural specialists, but introduced in a manner that will not lead to higher out-of-pocket costs for patients.

The task given to the Productivity Commission in 2005 was huge and the time it was given to prepare its report was rushed. With the exception of the national scheme for the registration of health professionals, few if any of its recommendations have been acted upon.

It is time to give the Productivity Commission a new referral to take on the task that it asked of the then Department of Health and Ageing; i.e. to ‘investigate the extent of the bias in the Medical Benefits Schedule in favour of procedures over consultations and how any significant bias should be addressed.’

Such a study should also be invited to examine whether the earning differentials between various groups of doctors are justifiable and are in the best interests of the health care system and patients.

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