Physicians Upset About Nurse Anesthetist Incomes

KevinMD blogged about the high incomes of Certified Registered Nurse Anesthetists (CRNA's). It seems that salary estimates vary significantly depending on the source.

One survey performed by a website gives a range of salaries broken down by work setting. They run anywhere from $88,000 in a private practice/office setting to $116,000 in "other" (whatever that is).

The American Medical Group Association survey notes an average salary of over $143,000 for 2006. No information is given the distribution of salaries.

This data for 2006 comes from a survey performed by a locum tenens company. It suggests that the average income is over $164,000. Notably, 6% of respondents claimed an salary between $230,000 and $250,000 and another 6% earned over $250,000. These number don't include bonuses. The survey participants are apparently all locum tenens practitioners (temporary workers). These numbers may be higher than might be expected among all CRNA's many of whom presumably trade job security for lower incomes.

The reason I'm writing about this is that some doctors are apparently upset with these numbers noting that many CRNA's appear to make more than the average primary care physician (PCP) and have much less formal education.

In fact, Kevin's blog mistakenly states that only two years of college are required to be a CRNA. However, according to the American Association of Nurse Anesthetists, a 24 to 36 month training program is required at a Master's level (which requires the equivalent of a Bachelor's degree). The total training therefore requires six to seven years of college/graduate school. Obviously, this is still significantly less than the eleven or so years required to be an internist, family practitioner or pediatrician.

It is understandable that physicians might be upset to discover these numbers and some have even asked 'what can be done about this inequity?' However, this perceived "disparity" is really a reflection of an often misunderstood concept of economics. The price of labor (or of any good or service) is arrived at by a balance of supply and demand in a free market. If supply is low or demand is high, the price rises. As supply rises or demand falls, the price falls.

That's just the way it is! In a free market, buyer and seller both freely enter into an transaction the price of which is determined by the above interplay.

What people don't get is that the price of something is independent of the expense and effort that went into creating that thing (except to the extent that greater expense and effort tends to lower the supply of that thing). The result of this often painful reality is that great effort may be expended in producing something but if no one wants it, its price will inevitably be low.

This explains why movie stars make more than teachers: extraordinarily high demand, relatively low supply of talented stars. It also explains why some products fail despite extraordinary labor, capital and effort that may have been required to develop them. Supply may be tight, but if demand (perceived desirability) is low, the producer won't be able to sell them at a price that is high enough to recover the expense of producing it.

And it seems to explain why CRNA's may make more money than some doctors notably primary care doctors. The number of years of training is essentially irrelevent to price determination. If the value of a PCP is unappreciated by the consumer (and indirectly by third party payers) then his or her reimbursement will be low compared to the value of a CRNA. From the point of view of the physician, this may not seem fair. Unfortunately for them, in this setting it's the public who decides how high to value the PCP.

I think that there's pretty good empiric evidence that although patients in general like their PCP's, they don't want to pay them much. Even minimal increases in co-payments for primary care doctors dramatically reduce doctor visits. I've personally seen this in reverse when I worked in an office setting. A managed care insurer unilaterally dropped PCP co-pays from five dollars to zero. Amazingly, that small difference caused utilization in our office to explode for members of that health plan.

Five lousy dollars had such an impact in patients' willingness to see us!

Of course the arguments I've made assume a free market. This is of course a question open for discussion in the healthcare setting. But right now, the current market we have is closer to being "free" then the healthcare system almost anywhere in the developed world.

ONLY when patients decide that they value their PCP's more will PCP reimbursement and incomes rise. Until then, nurse anesthetists who facilitate lucrative surgeries will have greater value in the open marketplace.

So if you want to pull down a huge income, work on your jump shot or your singing or your airway management technique until you've established a skill people REALLY value.

More on this topic here.