Compared to most people, physicians make a lot of money. The average primary care physician made $195,000 in 2014, and the average specialist made $284,000, according to a salary survey by Medscape.
But many doctors say that when you take into account the extensive education and training it takes to become a physician (40,000-plus hours), combined with the long hours, those salaries don’t tell the whole story. In fact, when you consider student loan debt and malpractice insurance, which can cost $50,000 or more per year, some doctors say those salaries cover just more than a livable wage.
That’s why many of them turn to part-time work or other activities to earn cash on the side. According to the Medscape report, earnings for activities besides patient care in 2014 averaged $6,000 for radiologists and $29,000 for orthopedists, with other specialties falling somewhere in between. Here are some ways your doctor may be earning money on the side, and how that might affect your care.
Speaking for Pharmaceutical Companies
Many doctors earn money from pharmaceutical companies for speaking formally about a specific drug, either to a group of patients or to other doctors. Device makers may also pay doctors, often surgeons, to speak about a device such as a hip implant or a pacemaker.
A common speaking fee is $1,000 per talk, though many make more than that. If the talk is not near the doctor’s home location, then airfare, food and lodging are often provided in addition to the base fee. Most doctors speak on more than one occasion for the same drug or device.
This kind of work can earn a doctor who keeps at it a lot of money. ProPublica, a nonprofit social justice newsroom, has been tracking payments made to doctors from pharmaceutical companies since 2010. According to their publicly searchable database, some doctors made more than $100,000 in a single year for speaking engagements.
The Centers for Medicare and Medicaid Services also publishes all payments over $10 made from medical companies to doctors and hospitals under the Sunshine Act, part of the Affordable Care Act. According to that database, the highest payment made in the category of “compensation other than consulting,” which includes speaking fees, was $4.25 million in 2013. That category includes other educational services, so it may not necessarily be a speaking engagement.
Consulting and Honoraria
Doctors who aren’t interested in public speaking may offer their expertise directly to pharmaceutical companies or professional groups. Physicians may advise on clinical trial design for drugs or on the specifics of an implantable device or surgical tool, and are compensated for their time. “Honoraria” payments are like consulting fees, but are generally one-time compensation for advice on a panel or a professional survey about a new drug or device.
According to CMS data, the highest payment for consulting in 2013 was $1 million, and the highest single payment under honoraria was just over $51,000. These are by no means typical fees, however. Consulting fees were mostly between $5,000 and $20,000 for 2013. The vast majority of honoraria payments were less than $7,000 in 2013, and nearly half were less than $1,000.
The common concern with speaking, consulting and honoraria is that doctors could become too close to one pharmaceutical company. A doctor who knows a lot about Drug A because he is a paid expert on it may be less likely to consider Drug B for the same condition, even though it may have more benefit to the patient.
However, a financial link between a doctor and a pharmaceutical company isn’t evidence of wrongdoing or bias. CMS states on its website: “Just because there are financial ties doesn’t mean that anyone is doing anything wrong. Transparency will shed light on the nature and extent of these financial relationships and will hopefully discourage the development of inappropriate relationships.”
CMS also urges patients to discuss with their doctors any relationships they might have with pharmaceutical companies. If you know what companies and drugs your doctor is closely tied to, you can ask why he or she has so much faith in those products, and be aware of when to ask about alternatives.
Clinical Research
The last type of work for pharmaceutical companies on this list is much more heavily controlled, and takes a lot more work. Clinical research, the investigation of the safety and effectiveness of yet-unapproved drugs and devices, is primarily done at large universities with extensive staffs. However, many physicians in private practice make use of their facilities to conduct a research trial or two alongside treating their regular patients.
When a physician decides to conduct research for the first time, the entire staff working on the trial needs appropriate training, and the clinic is typically inspected for suitability. The clinic receives a payment to get started, along with any necessary materials and a supply of the drug or device being investigated.
All of that has monetary value, but the unapproved drugs and devices don’t have market value, so specific amounts get difficult to track. And because much of that money often helps sustain the medical practice or facility, it’s hard to know how much is going into a doctor’s pocket.
That also means, however, that research payments are some of the largest in the available databases. Several doctors and institutions in the ProPublica database received more than $3 million in a given year from one or more pharmaceutical companies, and 500 payees on the list received more than $485,000 in one year.
As with consulting and speaking relationships, you may want to talk to your doctor about any current research participation. By discussing your doctor’s research interests, you can learn about emerging treatments, possible trials and where your doctor’s passions lie.
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How Doctors Make Money from Drug Companies originally appeared on usnews.com
