Why do physicians in New Hampshire make more than in its neighbors?
May 31, 2016 5:30 PM   Subscribe

Looking at this recent report, New Hampshire ranks second-highest for physician salary. Yet other Northeastern/New England states dominate the lowest-salary states. Certainly New Hampshire is more rural overall than, say, Rhode Island, but compared to "low-salary" Vermont?
posted by Seeking Direction to Work & Money (10 answers total) 2 users marked this as a favorite

I would assume without specifics that there are some very well-paid physicians and specialists at Dartmouth and yet that makes no sense when you look at the salaries in Massachusetts. It may be that NH is a weird combination of low-population (so not a lot of physicians overall) and some well paid folks in the Dartmouth universe which makes the averages lean towards the high side whereas Massachusetts just has a lot of doctors so it cancels out the Ivy League Effect. VT and RI have some of the highest physicians per capita of any state.
posted by jessamyn at 6:05 PM on May 31, 2016 [3 favorites]

I don't have sources, but I'm a physician who has worked in multiple northeastern states. Generally, where supply is high, salary is low. The greater Boston area has an overabundance of physicians for its population and is a desirable place to live. Where there are renowned academic centers (like Harvard, or Yale which is in Connecticut) they generally pay lower as well - all academic jobs pay less than private jobs, but 'big name' academic centers in desirable locations pay even less because people want to work there. Also, physicians who are employees of large companies generally make less than those in private practice (for example, the vast majority of physicians in Rhode Island are employed by Lifespan, a company that owns the practices affiliated with Rhode Island Hospital and pretty much has a monopoly in the state on healthcare, and chooses to pay and treat its employees poorly).

I'm not sure exactly what the deal is in New Hampshire but my guess is that there are fewer physicians employed academically (Dartmouth Hitchcock is the only academic center and it is a smaller hospital than UVM or Maine Med), and fewer physicians employed by large companies like Lifespan.

I doubt it has anything to do with the requirements for a license, because by far the majority of physicians complete an entire residency (post graduate) training program which is a minimum of 3 years. There are very very few physicians who try to hang out a shingle without being residency trained or board certified in a specialty.
posted by treehorn+bunny at 6:23 PM on May 31, 2016 [12 favorites]

Also, a license is sort of expensive relative to other costs in life, but most physicians could recoup the costs of any state's medical license in a few hours or 1 day of work even in Rhode Island....
posted by treehorn+bunny at 6:25 PM on May 31, 2016

There may be some self-selection; NH has no tax on earned income at all, whereas VT has a rather high income tax (>8%). NH also has a significantly higher ratio of specialists to primary care docs (2:1 vs 1:1; source); primary care tends to pay less.
posted by en forme de poire at 6:29 PM on May 31, 2016

(Oops, I totally looked at the wrong column. Their ratios are actually nearly the same so that second part's not it, sorry!)
posted by en forme de poire at 6:31 PM on May 31, 2016

Part of it is that the insurers themselves pay less for medical services than MA than insurers in neighboring states. This may be due in part to legal regulations in MA, but also the large number of doctors gives the insurers leverage when negotiating their in-network reimbursement rates. Also, the cost of doing business (office space, staff salaries) is high, so less money is left over for physician salaries.

By contrast, legal regulations are probably much lower in NH, and with fewer doctors, reimbursement rates are higher and fixed costs are lower.
posted by deanc at 6:49 PM on May 31, 2016

I can't tell you whether this explains the difference or not, but for-profit hospitals are not legal in Vermont (source) and they are legal in New Hampshire. Since many for profit hospitals allow physicians to hold partial ownership, that may explain things. Also, for profit hospitals have a strong incentive to provide more care (rather than better care) which can lead to very high levels of physician compensation (see this Atul Gawande article for one case). You'd need a lot more data to know whether this is the right explanation.

You can also look at some of the research on the difference in the prices hospital charge private insurers. I suggest the Healthcare Pricing Project. In the first paper from this project, the researchers find that "Being for-profit, having more medical technologies, being located in an area with high labor costs, being a bigger hospital, being located in an area with lower income, and having a low share of Medicare patients are all associated with higher prices." You'll have to dig a little deeper to get at the relationship between higher hospital prices and physician compensation.
posted by cushie at 6:50 PM on May 31, 2016

MD salaries are heavily dependent on the desirability of the geographic area and the demand for the specialty in that area. More desirable area=lower pay, less desirable=higher pay. In demand specialty=higher pay, low-demand specialty=lower pay. Generally, urban areas are more desirable than rural areas, but that isn't always true. And between rural areas there is still a spectrum of desirability. Vermont is likely a more desirable rural area than New Hampshire, so New Hampshire hospitals and clinics need to pay more to draw MDs, especially in high-demand specialties like dermatology and anesthesiology.
posted by scantee at 7:09 PM on May 31, 2016

I haven't poked in the data sources, but are we 100% sure that this is measuring wages paid from organizations based within the state, or just the earnings of doctors who are residents in the state?

The reason I ask is that there are a great many people in New Hampshire who work in MA, ME, or VT and live over the border in NH because they do not have to pay income tax. This creates a pronounced draw effect in many fields. Many places in Rockingham County, NH, are within one hour of downtown Boston; it has the highest per capita income in the state, well above median, and is also the 58th wealthiest county in the entire US, which is something considering the relative poverty of much of the rest of the state and the more-expected locations of the other high-ranking counties. The area offers a high quality of life and a large stock of luxury housing, restaurants, etc. If it's possible that some of the wages being tracked here are actually coming from out of state, it could be just this relocation effect.
posted by Miko at 7:22 PM on May 31, 2016 [2 favorites]

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