In medicine, we mostly hear about the huge difference in compensation or pay between different specialties. However, the intra-specialty pay difference in medicine can sometimes be even larger than the difference in inter-specialty pay.
What I mean by this is that the average difference in pay between the highest and lowest compensated pediatrician, for example, can in some cases be bigger than the pay difference between the average pediatrician and the average plastic surgeon.
When most physicians hear this, they react with disbelief. I was skeptical myself. However, you can discover this for yourself looking at any physician job board like this and computing specialty pay ranges.
What does this mean for doctors?
The reason this becomes important is because physicians looking to increase their income tend to get hung up on the idea that their specialty has a lower average pay than another one. They feel that, as a result, there is nothing they can do to increase their pay.
However, this line of thinking completely misses the point. No, you cannot realistically change your specialty (except in rare cases and usually early in one’s career). But that is not the lowest hanging fruit for increasing your compensation. Instead, we should be focusing on how we can move up to the higher paying end of the spectrum within our own specialty.
Let’s start by examining the three biggest reasons for this intra-specialty pay difference.
Two doctors of the same specialty with the same skill set and productivity level will often have a difference in compensation. Is this fair? No, probably not. But it is the reality. And the difference is the way that these two doctors negotiated their contracts.
In my opinion, which is shared by other contract experts, the number one mistake doctors make with contracts is assuming there is no room for negotiation. I’ve talked to way too many physicians who tell me they just signed the contract they were given. By the time they realize they could have asked for more, it’s too late.
The second biggest mistake that doctors make with their contracts is not knowing or understanding their value. We used to have somewhat of an excuse because normative physician compensation data was so expensive. However, this data has been democratized and is now available through multiple services for a nominal fee. So, there is really no excuse now.
Lastly, physicians don’t always understand the unique employment structures that we can negotiate to improve our compensation. We can negotiate structures like PC-employment lite to our advantage.
Most of us look to our clinical work to increase our compensation. It’s where most of us make all or the majority of our money, so that makes sense.
Think about what you do in your job. What is your role? What tasks are your responsibility? How do you create value for your employer or your business?
Now, think about how many other people do that same thing or can do the same thing as you. If the answer is “a lot,” then you want to change this.
In your current position, you may have no leverage or power. If it remains this way, you will continue to be on the lower end of the intra-specialty pay difference scale. If you ask for a raise or cost your business extra money, then your boss may just look for one of the many other people who can do your job — and will do it for your current compensation. Or your patients will just go to one of the many other providers offering the same services for less. Either way, it’s not good for you.
So, you need to focus on altering or evolving or adding to what you offer. Make it more unique. Create more value. Build new skills. Ultimately, you need to make it so that you are doing something that very few other people are doing.
Case example: When I was looking for my first job, I knew what the average compensation was for a new plastic surgeon. This was an important part of knowing my value before entering into contract negotiations. But I also knew that I was worth more money than this average salary. I knew that the value I brought was higher. At first, I knew this intrinsically. We should all believe in ourselves. However, I needed to prove this.
So, I went through my training, my skills, and my accomplishments. I separated out those that few other plastic surgeons possessed or accomplished.
When I met with prospective jobs, I didn’t even mention things that every plastic surgeon can do. What’s the point? I led with and emphasized what I could bring that very few others or no one else could. This includes super microsurgery, robotic surgery, lymphedema surgery, and advanced research.
That’s how I increased my compensation.
- Actively acquire new skills or accomplishments to add value in ways that few others can
- Highlight those unique skills
- Seek opportunities that will value these rare skills
Lastly, geography plays a huge role in compensation within the same specialty.
For pretty much any specialty, you will earn more if you work in Iowa than if you work in LA. For a pretty similar reason as above: more people — including doctors — want to live in LA than Iowa. So, employers in Iowa need to pay more to recruit doctors.
Couple this with the impact of geographic arbitrage (taking advantage of places with lower costs of living), and moving becomes a pretty powerful way to move up on the pay gap spectrum in your specialty.
Why This All Matters
The intra-specialty pay difference in medicine does matter for doctors. Here’s why:
Financial well-being and financial freedom give doctors the ability to practice on our own terms — because we want to, not because we have to. This freedom makes us better doctors, providing better patient care.
The way to build wealth to reach financial freedom is to increase and invest your margin. Your margin is the difference between what you make (your compensation) and what you spend (your expenses). If you increase your compensation, you can accelerate your path to financial freedom.
Why It Might Not Matter So Much
Well, the reason it might not matter as much is because of the second half of the wealth building “margin equation” — what you spend.
What you spend is always 100% in your control. And all doctors, even the lowest compensated doctor in the lowest compensated field, make a high income.
I know I say this from the privileged space of being in a highly compensated field of medicine (plastic surgery). But that does not change the veracity of my previous statement.
So, yes, a higher income will help. But building the basic foundational habits of wealth building will help even more. What I’m saying is that you should focus on moving up the intra-specialty pay scale, but, no matter where you exist on that spectrum, you can reach financial freedom!
Jordan Frey, MD, is a plastic surgeon at Erie County Medical Center in Buffalo, New York, and founder of The Prudent Plastic Surgeon.
Looking to improve your financial well-being? Check out Frey’s online course, Graduating to Success, a comprehensive and interactive 12-module course that helps doctors achieve personal, professional, and financial success during and after their transition from trainee to attending. Or read his best-selling book, Money Matters in Medicine.