How much money does an anesthesiologist earn?
Let me begin by offering two anecdotes:
- I was an invited visiting anesthesia professor at a major university this year, and following one of my lectures an anesthesiology resident approached me for a discussion. During our conversation he revealed that his student loan debt was $300,000. In 2014 the published average student loan debt for a physician was $183,000. I believe a higher estimate is not unusual, particularly if the student doctor attended private medical school and/or college.
- I recently received an email from a medical student who was considering anesthesia as a career specialty, but his concern was: is the bottom about to fall out for anesthesiologists’ salaries? Should he perhaps avoid a career in anesthesiology?
Each anecdote concerns the issue of how much anesthesiologists earn, and what will that number be in the future?
The good news for the future of anesthesia careers is that the number of surgeries in the United States is expected at increase as the Baby Boomers age. The demand for anesthesia services will grow. Who will provide these services, and what will they be paid?
How much money do anesthesiologists currently make?
If you do a Google search on this question, most of the published answers vary from $275,000 to $360,000 per year.
This sounds like a lot of money, but recall that to reach that salary, an anesthesiologist must finish 4 years of medical school and a 4-year anesthesia residency. At a minimum these young anesthesiologists are 30 years old. The deferred gratification is significant. Had they gone to work after college at age 22 and been promoted in a business job for 8 years, that individual might own a home, be saving for their children’s college educations, and would not have the debt from 4 years of medical school.
Let’s assume an individual does persevere and finish their anesthesia residency at age 30, and is now seeking an anesthesia job with that aforementioned average salary of $275,000 to $360,000 per year.
The first question: is that advertised salary a number prior to deductions for the big three of pension plan, health insurance, and malpractice insurance? If an anesthesiologist earns $300,000 per year, but must subtract these three expenses (let’s estimate pension plan at $45,000, health insurance at $24,000, and malpractice insurance at $20,000) then the income drops to $300,000 minus $89,000 = $211,000 per year, or $17,583 per month before taxes. Subtract again for student loan payments, and the income level continues to decrease. So a critical first question to ask is if the big three benefits are/are not part of the promised salary.
What specific factors determine how high the anesthesiologist’s salary will be? An operating room anesthesia practice is somewhat akin to being a taxi cab driver. You earn income for each ride/anesthetic, and your income depends on how many rides/anesthetics and how long they last. More complex anesthetics such as cardiac cases pay more, but the largest determiner is the duration of time one spends giving the anesthesia care. If you work in a physician anesthesiology practice where an MD stays with each surgical patient 100% of the time, then the only way to increase income is to do more cases or more hours. If you work in a practice which utilizes an anesthesia care team, where one physician anesthesiologist may supervise, for example, 4 Certified Registered Nurse Anesthetists (CRNAs), then a physician’s income is increased because he or she is billing for and supervising care for multiple concurrent surgeries.
Different payers pay different sums per unit time. The top payers are insured patients of less than Medicare age (<65 years old). Among the lowest payers are uninsured patients (who often pay zero), Medicaid and Medicare patients, and Worker’s Compensation patients. Medicare patients routinely pay only 13-20 cents on the billed dollar, and Medicaid pays even lower, so a practice heavy with Medicare and Medicaid patients will compensate their anesthesiologists poorly. Insurance companies (i.e. Blue Cross, Blue Shield, Aetna, United Healthcare) pay whatever rate they have contracted with that anesthesia group. If a particular insurance company pays a low rate, an anesthesia group may refuse to sign a contract with that insurance company. This leaves the anesthesiologist out-of-network with that company, which can mean a higher payment or co-payment for the patient as a result of the insurance company’s refusal to negotiate a fair reimbursement.
Just as taxi cab drivers are being supplanted by Uber and Lyft, cheaper models of anesthesia care are popping up, and the penetration of these models into the future marketplace is unknown. One model is having a CRNA do the anesthetic independently without any physician anesthesiologist present. This is currently legal in 27 states (see map). At the current time, in my home state of California, independent CRNA practice is legal, but the penetration of this model in the marketplace is very minimal. The Veterans Affairs hospitals are currently pondering a move to allow CRNAs to practice independently without any physician anesthesiologist present. You can expect to see a higher penetration of the anesthesia care team, where one physician anesthesiologist may supervise, for example, 4 CRNAs, and a decrease in practices where an MD anesthesiologist stays with each patient 100% of the time.
To be blunt, my impression is that the future marketplace is unlikely to pay for a physician anesthesiologist to do solo anesthesia care for each and every surgical patient.
In the current marketplace a young graduate anesthesiologist may enter one of several different models of anesthesia practices. Each has a different level of salary expectation. The various models are listed below, in roughly a higher-income-per-anesthesiologist to lower-income-per-anesthesiologist order:
- A single-specialty anesthesia group that shares income fairly. This group may be as small as 5 or as large as hundreds of physician anesthesiologists, with or without additional CRNAs. Such a group usually has an exclusive contract with a hospital or hospitals to provide all anesthesia services, which can include trauma, obstetrics, and 24-hour emergency room coverage. A very large single-specialty anesthesia group may contract with many hospitals in a geographic area. In a single-specialty model, that single-specialty group receives all the anesthesia billings, and the income is divided, usually in some form of “eat-what-you-provided” formula. Those MDs who worked the most receive a proportional increase in their income. A new MD may have a one-year try-out before they become a partner, after which they are entitled to an equal income per unit time. This model where anesthesiologists are partners, is typically more lucrative than models where the anesthesiologists are employed by another entity. A survey by Medscape on anesthesiologists’ salaries in 2016 showed that male self-employed anesthesiologists (model #1) earned an average income of $413,000, while male anesthesiologist employees (see models #2 – #8 below) earned an average income of $336,000.
- A single-specialty anesthesia group in which a chairman (or a small oligopoly of MDs) collect the money, and then employ and grant a salary to everyone below them in the company. New hires are paid less, often with no potential to increase their income. This type of system preys on junior anesthesiologists.
- A multispecialty medical group. A multispecialty medical group has a bevy of primary care physicians who refer internally to their specialist surgeons, who then utilize their internal group of anesthesiologists. This is a secure job for anesthesiologists because the stream of cases is guaranteed by the physicians within their multispecialty group. A disadvantage is that incomes from lower paying specialties (primary care MDs) and higher paying specialties (i.e. cardiologists, surgeons, and anesthesiologists) are pooled. The lower paying specialists usually have their salaries raised, and the anesthesiologists will be subsidizing them.
- An HMO. In California the Health Maintenance Organization (HMO) Kaiser Permanente has a large share of the marketplace. The entity known as the Permanente Medical Group is the multispecialty integrated medical group which works at the Kaiser hospitals and clinics. The reimbursement model will be similar to that described in #3 above.
- University anesthesia groups. A university employs MDs as a multispecialty medical group, and the model is similar to #3 above. A difference is that university groups have various taxes and fees on their income that go to the betterment and growth of the medical school and the university hospital system. In addition, some university hospitals provide care to indigent populations that may have higher percentage of poor payers such as Medicaid or uninsured patients.
- National anesthesia companies. In this model, a national company obtains the anesthesia contract for a hospital or multiple facilities, and then that national company hires and employs anesthesiologists. The company bills for the anesthesia services provided, pays their employee anesthesiologists whatever sum they’ve agreed to pay them, and the difference between the received monies and the owed salaries is profit that goes to stockholders of the national company. This model is problematic for our specialty, because a percentage of the anesthesia fees goes to stockholders who had zero to do with performing the professional service.
- Veteran’s Affairs (VA) hospital anesthesia groups. At the present time, VA hospitals are staffed by anesthesiologists who are employees of the VA system. As mentioned above, there are politicians pushing for the VA to allow CRNAs to practice independently, unsupervised by physician anesthesiologists. The American Society of Anesthesiologists is opposed to this change, believing that our veterans deserve physician anesthesiologists.
- Locum tenens assignments. These are part-time, week-long, or month-long anesthesia duties, paid for at a daily rate. A typical fee for a full day’s work may be a pre-tax payment of $1200/day (not including the big three of pension, health or malpractice insurance).
As stated above, the good news for the future of anesthesia careers is that the number of surgeries in the United States is expected at increase as the Baby Boomers age. The demand for anesthesia services will grow. The unknown fiscal factors for the future of our specialty are:
- What will insurers/Medicare/Medicaid/the Affordable Care Act pay for these anesthesia services? Will a single payer government health plan ever arrive, and if it does what will anesthesiologists be paid?
- Who will be giving these services? Physician anesthesiologists, anesthesia care teams involving physician anesthesiologists plus CRNAs, anesthesia care teams involving physician anesthesiologists plus Anesthesia Assistants, or independent CRNAs?
- The American Society of Anesthesiologists is attempting to rebrand the practice of anesthesiology with the concept of the Perioperative Surgical Home (PSH), in which physician anesthesiologists are responsible for all aspects of preoperative, intraoperative, and postoperative medical care for patients around the time of surgery. This expanded role includes preoperative clinics and postoperative pain control and medical management. To what degree can/will the PSH change the job market for graduating anesthesiologists?
In any case, as I wrote on the Home Page of theanesthesiaconsultant.com website, “the profession of medicine offers a lifetime of fascination, and no specialty is more fascinating than anesthesiology.” If a college student or a medical student is truly interested in a career in anesthesia, I remain encouraging to them, regardless of these uncertainties regarding the future.
Introducing …, THE DOCTOR AND MR. DYLAN, Dr. Novak’s debut novel, a legal mystery. Publication date September 9, 2014 by Pegasus Books.
On October 2, 2014 THE DOCTOR AND MR. DYLAN became the world’s #1 bestselling anesthesia Kindle book on Amazon.com.
To reach the Amazon webpage to purchase The Doctor and Mr. Dylan, click on the book image below:
In this debut thriller, tragedies strike an anesthesiologist as he tries to start a new life with his son.
Dr. Nico Antone, an anesthesiologist at Stanford University, is married to Alexandra, a high-powered real estate agent obsessed with money. Their son, Johnny, an 11th-grader with immense potential, struggles to get the grades he’ll need to attend an Ivy League college. After a screaming match with Alexandra, Nico moves himself and Johnny from Palo Alto, California, to his frozen childhood home of Hibbing, Minnesota. The move should help Johnny improve his grades and thus seem more attractive to universities, but Nico loves the freedom from his wife, too. Hibbing also happens to be the hometown of music icon Bob Dylan. Joining the hospital staff, Nico runs afoul of a grouchy nurse anesthetist calling himself Bobby Dylan, who plays Dylan songs twice a week in a bar called Heaven’s Door. As Nico and Johnny settle in, their lives turn around; they even start dating the gorgeous mother/daughter pair of Lena and Echo Johnson. However, when Johnny accidentally impregnates Echo, the lives of the Hibbing transplants start to implode. In true page-turner fashion, first-time novelist Novak gets started by killing soulless Alexandra, which accelerates the downfall of his underdog protagonist now accused of murder. Dialogue is pitch-perfect, and the insults hurled between Nico and his wife are as hilarious as they are hurtful: “Are you my husband, Nico? Or my dependent?” The author’s medical expertise proves central to the plot, and there are a few grisly moments, as when “dark blood percolated” from a patient’s nostrils “like coffee grounds.” Bob Dylan details add quirkiness to what might otherwise be a chilly revenge tale; we’re told, for instance, that Dylan taught “every singer with a less-than-perfect voice…how to sneer and twist off syllables.” Courtroom scenes toward the end crackle with energy, though one scene involving a snowmobile ties up a certain plot thread too neatly. By the end, Nico has rolled with a great many punches.
Nuanced characterization and crafty details help this debut soar.
LEARN MORE ABOUT RICK NOVAK’S FICTION WRITING AT RICK NOVAK.COM BY CLICKING ON THE PICTURE BELOW: