Sunday, July 24, 2011

What are doctors worth?

US doctors have historically been among the best paid members of a community. One list puts surgeons ahead of CEOs, while another study (based on BLS data) shows medical and dental professionals best represented among the top 25 professions.

However, in countries where government runs and controls healthcare, the premium for doctors is not so high: doctors are paid like government professionals rather than self-employed small business owners. A NYT report puts doctors’ pay in some of the Scandinavian countries at half that of the US. Not surprisingly, many economists expect that (for good or for bad) if the US system continues to evolve towards the European model, doctors’ salaries will do likewise.

Now a Business Week report suggests the premium for doctors in China is ridiculously low:
A newly qualified doctor makes about 2,000 to 3,000 yuan ($309 to $464) a month, while a one-bedroom apartment in Dalian, a city of 6 million people, goes for 2,000 to 2,500 yuan. Typically three or four newly qualified doctors will rent a flat together to defray their costs, Mao says.

Shi Yingkang, dean of the West China Medical School at Sichuan University in Chengdu and vice-president of the Chinese Medical Doctor Assn., says half his students spurn local hospitals for better-paying jobs overseas or in drug sales. “To them, the pay does not match the effort put in,” explains Shi, who says pharmaceutical reps can earn two to three times more.
In fact, the article is about how the doctors are quitting their practice to become sales reps for Western pharma companies, including Pfizer, Sanofi and Bayer. An estimated 30-40% of sales jobs in China are staffed by doctors, with pharmacists and nurses also being targeted.

I would be curious to see how the salaries of Chinese doctors compare to party officials, entrepreneurs or software engineers. But with the state in full control of this segment of the economy, it’s not like they have a choice — other than to join the pharma companies or emigrate.

BTW, it had occurred to me that top US sales reps might be paid so generously that they are paid better than doctors. Certainly I’ve met B2B sales representatives who are paid $100k, $200k or more. But according to, the median compensation (salary+commission) for pharma sales reps with 20+ years experience is only $125k.

Still — as with any government policy to set salaries — there are important questions about what is a fair price for doctors. The medical profession is highly skilled, with long training required and a need to attract the most talented people. Even for systems that set pay by central planning (rather than the market), one would expect doctors to command a salary well above average.

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