Results of our Latest Ophthalmology Income Survey
The majority of respondents reported an increase from 2003 to 2004.
BY JOHN PARKINSON, ASSOCIATE EDITOR

Overall, there appears to be good news in that a majority of the physicians who responded to the latest Ophthalmology Management income survey noted that their incomes increased between 2003 and 2004. However, the current survey shows a mixture of good and bad news. While many ophthalmologists experienced income increases, others physicians noted that factors beyond their control negatively affected their income. Specifically, reimbursements from Medicare and other third-party insurers were the factors most often cited in this area.

Still Coming Back from 9/11

According to the results, the average net income for respondents in 2004 was $411,000. Sixty percent of doctors said this was an increase compared with 2003; 24% said their net income was lower in 2004 than in 2003; and 15% said it was the same.

"I would say a fair chunk of that increase was just from the recovery from 9/11, which started occurring in 2003," says Kropiewnicki. He sees ophthalmology practices regaining business from the slowdown of a couple of years ago.

The three positive factors that ophthalmologists said affected their net incomes most were an increase in cataract surgery volume, Medicare reimbursement increases and increases in reimbursements from other third-party payers. (See "The Positive and Negative Influences on Income," on page 32.) Conversely, the three negative factors that reportedly affected net income and salary most were Medicare reimbursement decreases, other third-party insurance plan reimbursements and increasing malpractice insurance costs.

Although it may seem a bit confusing that some doctors are reporting increases in reimbursements from Medicare and other third-party payers while others are reporting decreases, a closer examination of the numbers shows a large disparity between the positive and negative perceptions. The percentage of doctors who perceive Medicare and third-party reimbursements having a negative effect on their salaries is almost double at 55%, than the number of respondents who said Medicare reimbursement was positively affecting their incomes (29%). The differences between the negative responses and positive responses with regard to other third-party reimbursements is more than double. Fifty-three percent of the respondents said other third-party reimbursements were having a negative effect on their incomes and 24% said other third-party reimbursements were having a positive effect.

Pinto explains that the differences in responses likely come from the complexity of doctors' perceptions. "The feelings expressed by respondents are real, even if not supported by the 2003-2004 changes, which actually saw an increase in Medicare fees," he says. "These feelings are a very reasonable and understandable echo from many prior years of fee cuts, as well as an emerging dread about Medicare fee cuts slated to occur in 2006 and beyond."

Kropiewnicki says so many doctors noted the negative impact of malpractice insurance costs because many ophthalmologists went from paying about $2,000 per year for insurance a few years ago to paying more than $10,000 per year in some cases. This can also be a sticking point when a group practice is in the negotiation process of bringing on a new doctor. "It is becoming more of a cost-sharing [process between] the group and the young doctor," explains Kropiewnicki. He says this creates tension for group practices with both the new doctor coming on board and the senior doctors.

How Ophthalmologists are Spending Their Time

Respondents stated they spend overwhelmingly more time (69% of their time) tending to office visits than any other type of workplace activity or procedure. The next largest amount of time spent in their practices was the "other" category (27%), which included oculoplastics, research, business and administrative activities.

Not surprisingly, after the office-visit and "other" categories, respondents said they spent the most time on cataract surgery (11% of their time) and refractive surgery (4% of their time), the same percentages of time they reported for 2003.

However, increases in cataract surgery volume had different effects for different doctors. While 58% stated that an increase in their cataract surgery volume had no effect on their net income, 35% stated their net income was positively affected by a cataract surgery volume increase. Pinto says the positive effects on income may come from the fact that 27% of doctors who took the survey had been in practice from
1 to 5 years. (See "Years in Practice," page 34.) He suggests that these younger doctors are building their practices, and so they are working more hours and increasing their patient encounters and surgical cases.

Pinto points out that this younger doctor dynamic in the survey makes for an interesting new look at a previously held perception. "A lot has been said about the changing work ethics with the younger generation," states Pinto. "[This survey shows] they are working just as hard as generations ago." Pinto says this can be seen in showing the number of hours respondents are saying make up their weekly work schedules. (See "Hours Worked per Week," page 34.)

Although the largest group (22%) said they were working 36 to 40 hours, the next largest group (20%) said they were working 46 to 50 hours in a typical week. In a tie for third place, 15% said they were working 41 to 45 hours and the other-third place group said it was working 51 to 55 hours. This means at least 50% of doctors are working more than 40 hours a week.

Cataract vs. Refractive

Surgeons who spent more than 50% of their time performing refractive surgery in 2004 tended to earn more than those who spent more than 50% of their time performing cataract surgery. The average 2004 net income for those who spent more than 50% of their time on cataract surgery was $202,000. For those who spent more than 50% of their time on refractive surgery, average net income was $700,000.

Pinto explains that refractive surgery can be more successful than specializing in cataract surgery and geriatric eye care only in certain circumstances.

"Refractive surgery as a business, in terms of profit per surgeon hour, is only more profitable than general/geriatric eye care in those few settings that have a large installed patient base (for alumni referrals), a large urban or suburban market, established branding (to reduce marketing costs), and larger case volumes -- and then only in good years, when consumer confidence is high," says Pinto. This large disparity between the average salaries of doctors spending 50% of their time doing refractive versus cataract surgery in the survey runs counter to what Pinto normally would see in making head to head comparisons, but this could be simply due to the small sample size in this survey.

Future Expectations

While uncertainties and anxieties remain about reimbursements and the perpetual unpredictability of what the future holds for everyone, Pinto believes there are reasons to be optimistic provided you keep up with the times and keep plugging away.

"The aging of the country will vastly increase the customer base and demand for eyecare services over the next 20 years. So long as the twin scissoring effect of fee reductions and cost inflation in your practice can be held back by continued gains in productivity and efficiency, you'll do just fine in the coming years," Pinto says. "But letting your guard down, or backing off just a little in your output, could be very punishing. My most successful client surgeons are taking the current warning signs very seriously, and redoubling their efforts to continuously improve operations. I'm convinced they're going to sail through the next 15 years quite well."

Kropiewnicki sees ophthalmologists as a group willing to adopt new ways to modify their practices and treatments. "Ophthalmologists find a way to do things faster and quicker," explains Kropiewnicki. "New technology has come down, but that's not always the answer. [Ophthalmologists] find ways to be make themselves more efficient." This efficiency translates into successful practices, according to Kropiewnicki.

Based on the survey and these expert observations, it seems that if ophthalmologists continue doing what has brought them success in the past and couple that with a willingness to change with the times, they're looking at a promising future.