Monopoly power of the medical school market and high incomes of U.S. physicians

Abstract

We expect the incomes of physicians to remain high in the next decades. Using the latest published physician income data (2015) we calculated the weighted median income of U.S. physicians and the net present value (NPV) of an investment in physician education. We estimated the NPV assuming that the physicians training began in 2007 and their practice would commence in 2015. We estimated the NPV of the lifetime earnings of a physician based on the median income of all physicians in the sample to be between $7.1 and $7.3 million. This finding of high NPV’s is consistent with almost all earlier studies of this kind. Physicians continue to experience relatively high incomes and very slow increases in the number of new graduates. We expect an excess demand for positions in medical colleges to continue. Our findings with respect to the incomes of non-primary physicians (surgeons, radiologist and cardiologists), indicate will continue to be much higher than those of primary physicians. There are strong evidence suggesting this is because of blockages in physician residency openings in these non-primary fields of medicine.