The average physician has a working lifespan of around 35 years. Some will retire early and work only 25 years, while others will end up with 55 working years under their belt.
I don’t hear or read enough about physician productivity in relation to the physician household – this post is about that.
Physician productivity isn’t meant to be optimized so that we can spend the rest of our time in retirement unproductive. Rather, maximizing (or optimizing) our physician productivity should allow us to produce and give back to society on our own terms.
The US Economy
The US can print its own money which dampens the whole national debt debate. But productivity can’t be faked and there is only so much the Federal Reserve can do to control inflation and unemployment.
We have solid failsafe systems in place to help those who are unemployed or disabled. But if you are able-bodied and you don’t work then you don’t get to earn a livable income.
Therefore, working is mandatory. You can work for yourself and produce goods and services which help grow the economy. Or you can be employed by a company which uses your labor to produce goods and services at a larger scale.
Automation can replace many of the jobs we are already performing. If 30% of the population became unemployed because of automation, the US could pay these individuals money for doing nothing and we would still prosper as an economy. The extra productivity by these machines would make up for the lack of productivity of those 30% who are unemployed.
What is it that physicians produce? What value do we bring to the economy? We might decrease suffering, cure diseases, and increase longevity, but how does this translate to economic productivity?
For the past several decades, physician productivity translates to how few days patients miss from work. We are tasked with keeping the population productive for longer years.
Primary Care physicians prescribe patients ACE-I’s and Statins so that we can keep them working longer within the US economy. We give chemo and remove cancers so that patients can work an extra couple of years at their jobs.
This is why it’s not malpractice to give a patient with URI symptoms unnecessary antibiotics. They aren’t losing productivity time – in fact, the opposite is often true. But if you miss an ACS on a patient, which leads to myocardial disability, you will be held financially or criminally responsible.
As Americans, we have a reputation for working hard and working a lot. Does our productivity represent that? Has our GDP per capita increased or held steady? Sadly, no. Not only has GDP dropped but we are working the same hours and often in worse health.
In medical school, I studied from morning until night while some of my friends studied only 4 hours daily. I was an inefficient studier. Often distracted by side conversations, listening to music, without a good study plan.
The US economy employs some of the hardest working employees, working tons of hours. It has also earned a reputation for being an inefficient economy. One only needs to look at all the paperwork necessary to complete a project. Not to mention, standing in line at the DMV to witness inefficiency at its peak.
The same obese DMV army that a single computer could replace would then need government help because there wouldn’t be any non-government jobs for such individuals.
We don’t automate the DMV in the US because, as a collective, we have agreed that it wouldn’t be right for people to freeload. Tax payers would never agree for certain individuals to sit at home and collect paychecks.
Faking work and being inefficient is another form of freeloading. It’s subtle enough, however, that we are willing to let it go.
Non-producers and producers will always exist side-by-side. The latter will outperform the former. The producers are consuming podcasts, reading blogs, and constantly learning.
Productivity and Work
More work doesn’t equal more productivity. On an assembly line, you can work 3x as fast as another worker but if the speed of the assembly line is the limiting factor, then it’s a wasted effort.
The current US economy is growing in very few sectors because very few sectors allow for increased productivity.
KP is one of the largest HMOs in the country. They churn over many patients and are among the biggest purchasers of wholesale pills and medical supplies.
As a physician in such a system, you can work harder, see more patients, and perform more surgeries. This means that another clinician can get away with doing less. But you won’t make a significant dent in productivity and certainly won’t see a change in your personal revenue.
The incapable person at the DMV who isn’t engaged in her work isn’t a bad person. They aren’t evil or lazy. They are who they are. They are among the few non-producers in the world.
The person taking your call on the phone and taking your order in the drive-through window is also a non-producer. Sure, they are facilitating the production and sale of a product but they aren’t producers.
As soon as the drive-through window person starts producing, they will be moved up to an assistant-manager position. If they continue to produce – as in, provide more value in the same position – they will then move on to manager, district manager, area manager, and up.
Primary care physicians who shuffle patients around from specialist to specialist and just push meds are non-producers.
In the short-term, the insurance companies can bill off the backs of these non-producing physicians and the seemingly sick patients and create more revenue for their company. This is nothing more than shuffling money around – no productivity has taken place, no growth.
In order for the economy to grow, each entity has to produce something meaningful and long-lasting. I have to keep patients truly healthier longer and health insurance companies have to make sure that patients are getting more value from what they are spending on their health insurance premiums.
If the US population lives longer and longer because of the meds and surgeries we are dispensing to them but they are living less and less healthy lives then they cannot be as productive.
Furthermore, if we are creating a huge population of patients who are living longer but spending the majority of their lives in nursing homes and congesting the healthcare system then we are creating negative growth for the economy.
The baseball player who earns $100M makes people wonder why one person with such an inconsequential skill can generate so much income. Simply put, they are producing more and generating more revenue than the primary care physician who sees a patient for hypertension.
On a long enough time horizon, the economy is very well-connected, so nobody will be paid in excess of what they are worth unless laws force the issue. If the law states that minimum wage has to be $15 then even the most unproductive person will earn $15/hour.
Consumers are willing to spend more money watching a baseball game, spend more time memorizing the names of ball players, subscribe to the relevant TV channels, attend sports bars, buy food at these sporting events, and purchase their merchandise than they are willing to spend at a doctor’s office.
Kaiser Permanente might gross $5B annually but has 100,000 employees and insane overhead. The Dodgers might gross the same $5B but only have a few dozen players to pay and far less overhead than KP. This means that each player gets a bigger slice of the same pie.
Private Medical Office
Imagine you are an orthopedic surgeon who can do 10 knee replacements a day versus your colleagues who can squeeze out 3. Working for Kaiser Permanente would not only harm your revenue and decrease productivity but also decrease the US economy’s productivity.
At KP, you cannot perform 10 TKRs because the system isn’t in place for that to happen. Nobody else will want to work as hard as you. Should complications arise, then your high-volume work will be blamed.
But that surgeon can open their own private medical office and contract with a surgery center in order to be more productive, generate more revenue, and, in the long-run, work less.
I started seeing urgent care patients in my second year of residency. Throughout my career, I have seen a high volume of patients in the Urgent Care setting.
Even when I picked up shifts in the Primary Care setting, I would squeeze in 4-6 extra patients for the day. If I were in peds, I would see 2x what other pediatricians saw. When I was in the ER, I would see more than the fastest ER doctors.
It’s not that I worked more than my colleagues. I worked more efficiently. However, this efficiently allowed me to work less in the long-run. My current work schedule of about 1 hour a day is a testament to that.
My Urgent Care shifts usually have been from 1pm-11pm. My ‘work’ was the same regardless of how many patients I saw. Sure, I ran around more than other doctors and typed in more words into the EHR, and communicated with more staff regarding more patients. Regardless, work sequestered 10 hours of my time – not counting my commute.
If I had my own Urgent Care clinic, then I would have produced twice as much revenue and produced twice as many widgets as my competitors. Unfortunately, I didn’t have the entrepreneurial intelligence to capitalize on this fact back in the day.
Shaving Time off of Working Years
I was able to get more per diem shifts, get more overtime shifts, and had an easier time getting new telemedicine gigs because I was a high producer.
This allowed me a little more work flexibility and yes, my income was slightly higher than my colleagues because of my higher productivity.
I was able to shave time off of my working years because I have seen twice as many patients than my colleagues in the same 10 years that I’ve been practicing medicine.
By earning more than my colleagues and having more job opportunities, I have taken advantage of early retirement.
Despite some setbacks, I have even generated some income during my early retirement. This retirement income allows my retirement investments to grow more before I touch them. Even one extra year of compounding returns can make a big difference in the longevity of my retirement portfolio.
Dr. Mo, but how will you contribute to society?!
Others are concerned that I might be unproductive if I retire early. The way I see it, if I have seen twice as many patients as another doctor, then I can work half as many years and we will have produced the same.
Ironically, nobody asks my physician colleague why they have only seen an average of 1.5 patients per hour for the past 25 years of practicing medicine. People are more concerned with the physician who stops working, worried that they aren’t producing.
It’s not intentional or malicious. We don’t have a good way of measuring the productivity of a physician. There are too many factors involved.
I might see 3 patients per hour and order a CT once a month. Another clinician might see 1.5 patients per hour and get 12 CT’s a week.
Then again, I might miss an intracranial bleed or metastatic cancer to the brain. How do you measure productivity? Sustainability? The benefit-harm differential?
I can’t speak for other docs, nor can I do the math to come up with the right physician productivity equation. But I can calculate how much money I earn, how much I keep, how little I work, and how many patients I see.
My productivity as a physician is a factor of how little I intervened in a patient’s health and how much I earned. The less intervention I dish out, the less likely a patient will have complications and need follow-up in the current US healthcare system.
The more money I earn, the less money I need to earn in the future – assuming I keep what I earn.
Lifetime Physician Income
Bear with me, my theory is a work in progress. I have been thinking about a clinician’s lifetime income. What’s the best way for a physician, NP, or PA to maximize their lifetime income? Should they maximize it?
All things being equal (household spending, lifespan, time spent in disability), the physician who has a higher lifetime income should have more options in life. They can retire earlier, they can choose to do the kind of work that they are excited about, and they can donate more money to worthwhile endeavors.
Working for 30 years at $300k/year will likely be less beneficial than working 60 years at $150k.
30 years @ $300k/Yr
I won’t bore you with detailed math. Suffice it to say that when you work a full-time physician schedule for 30 years, you have very little time to yourself.
You’ll spend 70+ hours per week working, commuting, decompressing, licensing, and venting.
By the time we take into account the progressive US tax system and the benefits you lose for being a high-income household, a 30-year career won’t be the best option.
60 Years @ $150k/Yr
In the above example, you’d gross $9M. If you worked for 60 years and earned only $150k a year, you’d gross the same amount. But you’d keep far more of this money.
You would never work more than 20 hours a week. You’d pay far less in taxes. You’d have fewer health issues. You have more time to invest your money and you’d need a lot less invested for retirement because you’d work for far longer.
Your longer work horizon would also allow you to find better gigs. This would allow you to work for a higher hourly wage than your colleagues who stick with the same company their entire 30 years.