Annual Income Survey: What's Your Status?
Our data reveal practice financial situations from golden to lackluster -- to melting down.
BY CHRISTOPHER KENT, SENIOR ASSOCIATE EDITOR

In the midst of tumultuous political changes and economic uncertainty (not to mention a steady stream of new technological and drug-related options) many practices hit new earnings highs in 2002. However, others didn't fare as well. Reported changes in personal income between 2001 and 2002 ranged from a drop of $600,000 to a gain of $2,000,000. (Nine percent of those responding reported an income drop of at least $100,000; an equal number saw their income grow by $100,000 or more.)

Of course, different ophthalmology specialties have different earnings potentials. Also, individual doctors face local circumstances that also have a huge impact on earnings from year to year, and some deliberately cut back on income late in their careers.

To help clarify how some of these factors came into play, we organized the survey results in a number of different ways. We also invited Mark E. Kropiewnicki, J.D., LL.M., a principal consultant with The Health Care Group, Inc., and a principal and president of Health Care Law Associates, P.C., (located in Plymouth Meeting, Pa.) to comment on the results.

The Big Picture

Here's how the numbers looked, comparing different subgroups:

Salaried vs. non-salaried. As you might expect, salaried M.D.s, on average, earned less than their non-salaried counterparts: $242,000 compared with $367,000 (about 33% less). The salaried number can be broken down further:

• the average income for salaried M.D.s associated with an academic institution (12% of the salaried group) was $176,000.
• The average income for the 17% employed by a business was $337,000.
• The average income for the remaining 70% employed by an M.D. or group practice was $229,000. (Half of this group reported being in practice 14 years or longer.)

• 54% earned more in 2002
• 18% earned the same
• 28% earned less

Among non-salaried MDs:

• 45% made more
• 19% made the same
• 36% made less.

(For a comparison by earning range, see graph below.)

Solo practice vs. group practice. On average, those in solo practice did a little better than those in group practice in 2002. Solo practitioners earned an average of $345,000, up $43,000 from 2001. Doctors in group practices earned an average of $303,000, up $7,700 from 2001.

• 48% earned more than the year before
• 14% made the same
• 38% made less

Of doctors in group practices:

• 47% made more than the year before
• 22% made the same
• 31% made less.

Note that although the average income for those in group practice was slightly lower than those in solo practice, they were less likely to suffer a drop. Also, a look at the comparative earnings in each range shows that more group practitioners fell into the higher income brackets. (See graph, page 30.)

Mark Kropiewnicki comments: "The numbers in the lower ranges tend to favor the solo practice doctors, but 21% of the group practice doctors are making more than half a million, whereas only 11% of the solo doctors are. The reason is probably that a good group practice can afford all the technology needed to bring in more patients and charge more money, whether it's a specific laser or a surgery center. Some group practices also include retina, glaucoma or cornea specialists, and they can afford to do refractive surgery on a large scale; they can have one refractive surgeon and a general ophthalmology team supporting him or her. These doctors are going to make more money."

Breaking the Numbers Down

How did ophthalmologists fare by years in practice? Both the number of hours worked and salary tended to peak about mid-career. (See chart, below.)

Kropiewnicki says this make sense. "It takes a while for new doctors to get going; they're learning the ropes and building a reputation. By mid-career they're at their peak. Once the kids are off to college and school is paid for, they can afford to take it a little easier, do less surgery, perhaps partially retire. The numbers seem to bear this out."

We also analyzed the data by income range to see if there were any clearcut correlations to years in practice, hours worked per week, or change in income between 2001 and 2002. Those in the higher income brackets did tend to have been in practice longer, but there was no clear correlation between income and number of hours worked.

However, when responses were organized by average change in income, a clear pattern emerged, reinforcing the notion that it takes money to make money: Only the group netting less than $100,000 in 2002 showed an average drop in income, and the average income gain tended to increase with the income bracket. For example:

• Those in the $100,000 to $199,000 range averaged a gain of $1,700.
• Those in the $200,000 to $299,000 range averaged a gain of $7,500.
• Those in the $400,000 to $499,000 range averaged a gain of $30,000.
• Those who made more than $600,000 averaged a gain of $231,000.

Looking at the data by region and by size of the community the practice is located in also showed interesting differences. (See chart below.)

Kropiewnicki points out that doctors earning less in the Northeast is fairly common. "More doctors want to live and work in the Northeast, so the ratio of doctors to population is much higher. That keeps prices down and increases competition for patients."

Cataract and Refractive Surgery

Doctors performing cataract or refractive surgery dealt with many changes in 2002. We looked at how offering these procedures affected surgeons' income. (See graph, page 69.) On average, doctors deriving more than 50% of their income from cataract surgery did well in 2002, as did doctors deriving more than 30% from refractive surgery. However, many in these groups took a loss.

Kropiewnicki comments: "The top cataract doctors are often known as the best of the best; it may be easier for them to compensate for reduced reimbursements by increasing volume. As far as the refractive surgery numbers, these doctors were hit hard by 9/11, as well as facing increasing competition from low-priced surgery centers; it's no surprise that many of them lost income. In fact, it's amazing that so many reported positive numbers."

We also compared the fortunes of those who said they changed their mix by performing more or less of these two procedures:

• 15% of respondents performed more cataract surgery in 2002 than in 2001. On average this group lost $35,200 in income, but two out of five doctors in this group did see their earnings increase.
• 16% performed less cataract surgery in 2002. On average, their income went up by $14,600, although about one-third of these doctors earned less in 2002.
• 10% of respondents said they performed more refractive surgery in 2002. Their income rose by an average of $10,900. However, one third of these doctors earned less than the year before.
• 11% said they performed less refractive surgery in 2002. These doctors had an average income drop of $40,700, although about one out of four in this category did earn more in 2002.

Dealing with External Circumstances

We asked doctors to rate their feelings about a few of the most-often-cited factors affecting their incomes. The results, shown in the chart below, suggest that there was an almost equal level of dissatisfaction with the economy and with insurers -- including Medicare. More than half of all respondents said all of these had a negative impact on their practices, and one out of five doctors labeled the effect "very negative." (For more detailed comments, see "Putting It Into Words".)

A Tough Group to Beat

With a fair number of ophthalmologists feeling the weight of a faltering economy, and more Medicare cuts likely in the years ahead, how does the future look? Kropiewnicki is optimistic.

"Regardless of what happens with reimbursements, I've found that ophthalmologists are very good at finding ways to keep their net incomes steady -- or increasing," he says. "These are very smart people who always find ways to do things better, more quickly and more efficiently. And today there are all kinds of new technology and different techniques to take advantage of.

"Ophthalmologists as a group probably have more ability and desire than any other medical specialty I've seen. Even though lower reimbursements may lie ahead, the vast majority of ophthalmologists will figure out ways to overcome the cuts."