Letters To The Editor

Astonished by physician hourly rate calculation

David S. Kim, MD, PhD, MBA



Astonished by physician hourly rate calculation 

I always enjoy the articles and incredible insights presented in OBG Management. Some very sophisticated, well-founded ideas are presented in the article on deciding on purchasing medical equipment. Then, however, you get to the calculations: $50 for 30 minutes of physician time!

My plumber charges me $100 for the first half hour of a visit (okay, there are lots of cliched jokes about this), but on average a physician assistant costs almost that much. It is a sad day in the business of medicine when experts value the time of highly educated physicians at $100 per hour. Maybe someday we can expect to be reasonably compensated for our efforts and training. When I advise my colleagues, I calculate their time, depending on their practice model, between $300 and $400 per hour.

Hamid Banooni, MD
Farmington Hills, Michigan


Dr. Kim responds

I thank Dr. Banooni for his comment. I agree that physicians are highly skilled and educated and that their time deserves to be valued at more than $100 per hour. In the article and the example provided, the values (revenues, costs, and so on) were not meant to be exactly representative of the marketplace, but instead were used merely as an example for understanding the calculation tools for purchasing medical equipment. That being said, I arrived at the $100 per hour cost for physician time (included in the variable cost in the Figure, “Breakeven analysis for hysteroscope purchase for use in tubal sterilization”) for 2 primary reasons. First, to simplify the calculation, and second, to use an equivalent universal hourly salary ($100 per hour) for a physician’s comparative labor cost in the marketplace. Currently, the median hourly compensation for an ObGyn laborist is $110 per hour.1 To simplify, I rounded down to $100. I wholeheartedly agree with Dr. Banooni, however, that a physician’s time should be valued higher in society.

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