INEKO analysis: Private outpatient cardiologists and gynecologists earn the most, while neurologists and therapists earn the least. The difference reaches 2.5 times.
From an analysis of publicly available data from the Register of Accounting Statements of Legal Entities and data provided by all three health insurance companies, we found significant differences in the income of private outpatient physicians when comparing 19 of the most common medical specialties. In 2017, the equivalent gross salary of cardiologists working in outpatient clinics outside of hospitals was on average 2.5 times higher than that of neurologists. For example, cardiologists, gynaecologists, gastroenterologists and general practitioners for children and adolescents had an equivalent average gross monthly salary of approximately 3,000 euros or more, whereas neurologists, internists, clinical speech therapists, dermatovenerologists, pulmonologists and almost also urologists earned less than 1,700 euros per month. On average, a private outpatient physician had a gross monthly income of 2,416 euros in 2017 (see Table 1).
The data on the average earnings of doctors in various specialties are based on the officially declared income and recorded expenses specified in the accounting reports of suppliers. They therefore do not include, for example, undeclared income (various fees and gifts without a receipt), and do not exclude the effects of tax optimization by inflating expenses or using company assets for personal consumption. According to a sensitivity analysis, where we proceeded from the theoretical assumption that on average 10% of the costs of materials, services and depreciation (telephone, computer, "educational" trip to the sea in the summer, car) were unlawfully included in the company's expenses, we recalculated the income of doctors and found that the average gross monthly income of a private outpatient doctor in 2017 would have increased by 432 euros to 2848 euros.
Table 1: Gross Salary Equivalent and Other Financial Data Per Physician Position in Common Medical Specialties
(N = 3,771 private outpatient providers – legal entities; 2017)
The data on the average earnings of doctors in various specialties are based on the officially declared income and recorded expenses specified in the accounting reports of suppliers. They therefore do not include, for example, undeclared income (various fees and gifts without a receipt), and do not exclude the effects of tax optimization by inflating expenses or using company assets for personal consumption. According to a sensitivity analysis, where we proceeded from the theoretical assumption that on average 10% of the costs of materials, services and depreciation (telephone, computer, "educational" trip to the sea in the summer, car) were unlawfully included in the company's expenses, we recalculated the income of doctors and found that the average gross monthly income of a private outpatient doctor in 2017 would have increased by 432 euros to 2848 euros.
Table 1: Gross Salary Equivalent and Other Financial Data Per Physician Position in Common Medical Specialties
(N = 3,771 private outpatient providers – legal entities; 2017)
(source: INEKO)
Data sources: Financial Statement Register, Ministry of Finance of the Slovak Republic (MF SR); health insurance companies
Recalculations and table: INEKO
It should be noted that the analysis only included outpatient clinics that are legal entities and provide medical care exclusively in one specialty. Interestingly, cardiologists and general practitioners are at the opposite ends of the income ranking, while cardiology and general practitioner outpatient clinics are relatively common in Slovakia. It can be assumed that doctors working in outpatient clinics of this “double combination” will earn on average less than “pure” cardiologists, but more than “pure” general practitioners.
The highest income (revenue), but also expenses per doctor, are accounted for by gastroenterologists, who require much more complex equipment to perform their work than, for example, psychiatrists. If we exclude clinical speech therapists, who do not need to hire a nurse, psychiatrists have the lowest income and expenses. On average, in 2017, one doctor accounted for about 89 thousand euros in revenue and almost 72 thousand euros in expenses. Between 2014 and 2017, the outpatient clinics’ revenues increased by 18.5%, while expenses grew more slowly, by 15.9%. Thus, the outpatient clinics were profitable.
As for profitability, it should be noted that, unlike most public hospitals, private outpatient medical institutions show a positive financial result on average every year. This applies to all specialties. In 2017, cardiologists had the highest profit after tax, while clinical speech therapists had the lowest. General pediatricians demonstrated the highest net profit margin in 2017, exceeding 20%. Net profit margin reflects the profitability of revenue (profit after tax divided by revenue), and in 2017, the average value for all specialties studied was almost 15%.
The highest income (revenue), but also expenses per doctor, are accounted for by gastroenterologists, who require much more complex equipment to perform their work than, for example, psychiatrists. If we exclude clinical speech therapists, who do not need to hire a nurse, psychiatrists have the lowest income and expenses. On average, in 2017, one doctor accounted for about 89 thousand euros in revenue and almost 72 thousand euros in expenses. Between 2014 and 2017, the outpatient clinics’ revenues increased by 18.5%, while expenses grew more slowly, by 15.9%. Thus, the outpatient clinics were profitable.
As for profitability, it should be noted that, unlike most public hospitals, private outpatient medical institutions show a positive financial result on average every year. This applies to all specialties. In 2017, cardiologists had the highest profit after tax, while clinical speech therapists had the lowest. General pediatricians demonstrated the highest net profit margin in 2017, exceeding 20%. Net profit margin reflects the profitability of revenue (profit after tax divided by revenue), and in 2017, the average value for all specialties studied was almost 15%.
When comparing this profitability indicator with other sectors of the Slovak economy, it can be seen that the provision of outpatient healthcare is above average in terms of net profitability. According to the FinStat.sk portal, the average net profitability of companies in Slovakia in 2013-2016 was approximately 4%. According to a study by the IndexPodnikateľa.sk portal, conducted on a sample of 10,000 legal entities, in 2016 the most profitable sector in terms of revenue profitability was the information technology sector (6.5%), followed by the pharmaceutical industry (5.3%). The financial analysis of companies and industries for 2013 from FinStat shows that the average profitability in healthcare was 3.8%, with the top three being telecommunications, finance and IT, with profitability ranging from 9.3% to 7.6%. Healthcare as a whole is being dragged down by debt-ridden and loss-making large public hospitals, and in some years also by VshZP.
The average operating margin, or EBITDA margin, i.e. (earnings before tax + depreciation) / revenue, in 2017 for the studied sample of private outpatient providers - legal entities - was more than 26%. For comparison, the same indicator for the entire Slovak economy in 2013-2016, according to the FinStat portal, was 8.8%.
If we look at Table 2 below, we will see the ranking of specialties by the amount of payments from health insurance companies per doctor. All outpatient providers that signed contracts in 2017 are considered, a total of 10,027 entities, regardless of their legal form (i.e., both legal entities (LE) and individuals (IE) together; note: this is a different sample than the one analyzed in Table 1). Health insurers also take into account the specific costs of each specialty when paying for outpatient medical services, including the need for appropriate equipment for outpatient clinics. Therefore, specialties that require a large amount and/or expensive equipment to do their job logically rank first. At the bottom of the table are speech-language pathologists, who do not employ nurses and therefore have lower payments from insurers. Dentists certainly need various equipment, instruments, and medical supplies, but of all the specialties, they also have the largest direct payments from patients, which is why they may not rank higher in Table 2.
The average operating margin, or EBITDA margin, i.e. (earnings before tax + depreciation) / revenue, in 2017 for the studied sample of private outpatient providers - legal entities - was more than 26%. For comparison, the same indicator for the entire Slovak economy in 2013-2016, according to the FinStat portal, was 8.8%.
If we look at Table 2 below, we will see the ranking of specialties by the amount of payments from health insurance companies per doctor. All outpatient providers that signed contracts in 2017 are considered, a total of 10,027 entities, regardless of their legal form (i.e., both legal entities (LE) and individuals (IE) together; note: this is a different sample than the one analyzed in Table 1). Health insurers also take into account the specific costs of each specialty when paying for outpatient medical services, including the need for appropriate equipment for outpatient clinics. Therefore, specialties that require a large amount and/or expensive equipment to do their job logically rank first. At the bottom of the table are speech-language pathologists, who do not employ nurses and therefore have lower payments from insurers. Dentists certainly need various equipment, instruments, and medical supplies, but of all the specialties, they also have the largest direct payments from patients, which is why they may not rank higher in Table 2.
It is also worth mentioning neurologists, who, as we have shown above, have the lowest gross salary equivalent of all the specialties considered. This is a specialty where the consumption of medical supplies and the use of expensive equipment do not dominate, so this specialty is at the bottom of Table 2 in terms of revenue from insurance companies. It is also true that a comprehensive neurological examination takes a relatively long time for a doctor, which limits the number of patients he can see per day and, consequently, the number of services billed to the insurance company. This may be one of the reasons for the relatively low incomes of these specialists. It is clear that with the increase in chronic diseases, the demand for neurological care also increases, while in some regions of Slovakia the situation with the number of outpatient neurologists is critical, which leads to long waiting times. Insurance companies should consider whether higher fees for services would make the profession of outpatient neurologists more attractive, especially since their salaries are significantly lower than those of their hospital-based neurologist colleagues, where annual salary indexation is guaranteed by law (more on this below).
Table 2: Average annual revenue from health insurance companies per physician
(N = 10,027, all contracted outpatient providers (LE+FL); 2017)
Table 2: Average annual revenue from health insurance companies per physician
(N = 10,027, all contracted outpatient providers (LE+FL); 2017)
(source: INEKO)
Data source: health insurance companies VšZP, Dôvera, Union
Table: INEKO
The following Chart 1 illustrates how much money, on average, a private outpatient clinic per full-time physician received from all three health insurance companies together in one year during the four years observed. Typically, an outpatient clinic employs one doctor and one nurse. It can be seen that outpatient clinics' income from insurance companies has been steadily increasing. Over the four years (2014-2017), the average payments from insurance companies increased by 19.2%. If we were to assume a linear increase in payments from insurance companies, the annual growth would have been approximately 4.5% during this period.
Figure 1: Evolution of annual average private dispensaries' average revenues from health insurance companies, converted per physician rate
(N = 3,771 private outpatient providers - legal entities)
Figure 1: Evolution of annual average private dispensaries' average revenues from health insurance companies, converted per physician rate
(N = 3,771 private outpatient providers - legal entities)
(source: INEKO)
Data source: health insurance companies VšZP, Dôvera, Union
Table: INEKO
One of the reasons why there is a shortage of outpatient physicians in some regions of Slovakia and medical specialties, or many of them are older and young ones are not coming to replace them, may be the fact that nowadays it is financially more profitable for them in most cases to work in a hospital or in an inpatient medical facility. Doctors working in inpatient facilities have for several years (since the protest action of mass layoffs during the Radičová government) had legally guaranteed minimum wage requirements, which automatically increase every year at the same rate as the average wage in the economy. In 2017, the minimum amount of the basic part of the basic salary of a qualified doctor (without allowances for on-call and overtime) was 2,031 euros.
Naturally, the actual income of these hospital physicians is higher, as compensation for duty, paid overtime, work on weekends and holidays, as well as the part of the salary above the legal minimum agreed upon during collective bargaining or on the basis of personal salary negotiations with the management of the institution are added to the minimum wage. Unfortunately, publicly available sources, including the Slovak Ministry of Health, do not have data on the average total wages of specialist physicians working in hospitals. Therefore, we can only compare the salaries of all hospital doctors, including those who are unqualified, who earn significantly less than qualified doctors. In 2017, the minimum salary of unqualified doctors was €1,104, which is €927 less than qualified doctors with specialization (note: the term “attestation” was previously used). We therefore have to settle for “only” statistics from the National Center for Health Information (NCZI), which indicates that the average salary for all doctors working in hospital settings (for public interest work), including compensation for on-call work, is just under €2,600 (see Table 3).
Although physician incomes in the private outpatient sector grew twice as fast in percentage terms as the all-hospital physician group during the 2014-2017 period under review, despite this convergence, the average gross salary of hospital-based physicians remains higher (see Table 3 and Chart 2). Of course, for a greater volume of hours worked. To more accurately compare the income of physicians working in private outpatient clinics (all of whom are qualified) and hospital physicians with qualifications, we need to know the salaries of hospital specialists and the actual income of private outpatient physicians, which includes undeclared income and only actually incurred and justified tax expenditures that are used exclusively for business activities and not for personal consumption.
Table 3: Comparison and dynamics of average monthly gross salary
Naturally, the actual income of these hospital physicians is higher, as compensation for duty, paid overtime, work on weekends and holidays, as well as the part of the salary above the legal minimum agreed upon during collective bargaining or on the basis of personal salary negotiations with the management of the institution are added to the minimum wage. Unfortunately, publicly available sources, including the Slovak Ministry of Health, do not have data on the average total wages of specialist physicians working in hospitals. Therefore, we can only compare the salaries of all hospital doctors, including those who are unqualified, who earn significantly less than qualified doctors. In 2017, the minimum salary of unqualified doctors was €1,104, which is €927 less than qualified doctors with specialization (note: the term “attestation” was previously used). We therefore have to settle for “only” statistics from the National Center for Health Information (NCZI), which indicates that the average salary for all doctors working in hospital settings (for public interest work), including compensation for on-call work, is just under €2,600 (see Table 3).
Although physician incomes in the private outpatient sector grew twice as fast in percentage terms as the all-hospital physician group during the 2014-2017 period under review, despite this convergence, the average gross salary of hospital-based physicians remains higher (see Table 3 and Chart 2). Of course, for a greater volume of hours worked. To more accurately compare the income of physicians working in private outpatient clinics (all of whom are qualified) and hospital physicians with qualifications, we need to know the salaries of hospital specialists and the actual income of private outpatient physicians, which includes undeclared income and only actually incurred and justified tax expenditures that are used exclusively for business activities and not for personal consumption.
Table 3: Comparison and dynamics of average monthly gross salary
(source: INEKO)
Data sources: Register of Accounts (ÚZ), Ministry of Finance of the Slovak Republic (MF SR); health insurance companies; Union of Health and Social Services (SOZ ZaSS), National Center for Health Information (NCZI); Statistical Office of the Slovak Republic
Conversions and table: INEKO
Figure 2: Gross wages of physicians as a multiple of the average gross wage of an employee in Slovakia
(source: INEKO)
Data sources: Register of Accounts (ÚZ), Ministry of Finance of the Slovak Republic (MF SR); health insurance companies; Union of Health and Social Services (SOZ ZaSS), National Center for Health Information (NCZI); Statistical Office of the Slovak Republic
Conversions and table: INEKO
Graph 2 shows how many times more Slovak doctors earn compared to the average worker in Slovakia. Table 4 supplements this information (although with a different methodology and sample - so the value for Slovakia differs from that in Chart 2) in the context of the international comparison, which shows that the Slovak Republic does not deviate from the average.
(source: INEKO)
The purpose of this analysis is not to assert whether outpatient physicians earn a lot, enough, or little, but rather to improve the public debate about health care financing and health care provider compensation. The goal is to reduce information disparities among the various participants in the public debate so that it is more informed by data, argument, and evidence rather than unsupported assertions, myths, and speculation. We also want to continue our previous analysis from August 2011 entitled “How much do Slovak doctors earn?”, where we estimated the incomes of private outpatient doctors to range from 1,050 to 3,200 euros depending on the specialty. Whereas the previous analysis used “only” various expert estimates, the current analysis uses open data from which real data on the activities of outpatient clinics are extracted.
Methodology
The subject of INEKO analysis was not hospital outpatient clinics, i.e. physicians working in hospitals and serving outpatient clinics run by hospitals, as well as outpatient clinics run by physicians as natural persons, as financial data on them are not publicly available. The analysis includes accounting data (ÚZ) of outpatient health care providers who are legal entities (e.g. s.r.o., a.s.) with complete data in the ÚZ Register, who have contracts with all three insurance companies, and whose main economic activity, according to the SK NACE classification, is defined as outpatient activities of general, specialized or dental practice, and who provide health care services in only one specialty. After statistical data cleaning and exclusion of extreme cases (outliers), we worked with data on 3,771 subjects (for 2017), representing 51% of all outpatient providers who are legal entities and 38% of all outpatient providers including those acting as individuals.
Data on revenues, expenses, and financial results were obtained from the profit and loss statements of the individual providers listed in the Docket. In order to calculate the gross salary equivalent per physician rate, we needed data from insurance companies on the average number of rates for each specialty for each provider (by CHI identification number). Also, data from the National Center for Health Information (NCZI) Medical Yearbook of Slovakia on the number of nurses working in outpatient clinics for different specialties were used in the calculation. When calculating the cost of nurse labor, we used data from publications of the Statistical Office of Slovakia (ŠÚ SR). There is no data on the wages of nurses in the private outpatient sector, so we used data for all nurses. In 2017, according to the salary structure sample survey, the average gross monthly salary of a nurse in Slovakia was €868. We assumed that in more profitable specialties nurses' salaries would be slightly higher than in less profitable specialties, so in the model we adjusted the average salary costs of nurses in different specialties based on this assumption.The gross wage equivalent of an outpatient physician, whether the physician owns the dispensary or is simply an employee, we have, in simplified terms, calculated as the sum of the physician's gross wages (after deducting nurse labor costs from personal expenses) and the dispensary's profits converted to gross wages. The gross wage equivalent, as well as data on financial result, income and expenses were recalculated and are shown in the tables and graphs per full-time physician.
Data on revenues, expenses, and financial results were obtained from the profit and loss statements of the individual providers listed in the Docket. In order to calculate the gross salary equivalent per physician rate, we needed data from insurance companies on the average number of rates for each specialty for each provider (by CHI identification number). Also, data from the National Center for Health Information (NCZI) Medical Yearbook of Slovakia on the number of nurses working in outpatient clinics for different specialties were used in the calculation. When calculating the cost of nurse labor, we used data from publications of the Statistical Office of Slovakia (ŠÚ SR). There is no data on the wages of nurses in the private outpatient sector, so we used data for all nurses. In 2017, according to the salary structure sample survey, the average gross monthly salary of a nurse in Slovakia was €868. We assumed that in more profitable specialties nurses' salaries would be slightly higher than in less profitable specialties, so in the model we adjusted the average salary costs of nurses in different specialties based on this assumption.The gross wage equivalent of an outpatient physician, whether the physician owns the dispensary or is simply an employee, we have, in simplified terms, calculated as the sum of the physician's gross wages (after deducting nurse labor costs from personal expenses) and the dispensary's profits converted to gross wages. The gross wage equivalent, as well as data on financial result, income and expenses were recalculated and are shown in the tables and graphs per full-time physician.
Dušan Zachar
INEKO
Many thanks to the health insurance companies Všeobecná zdravotná poisťovňa, Dôvera and Union for their cooperation in developing and harmonizing the methodology and providing statistical data for analysis.
This analysis is part of a project supported by the European Social Fund through the Operational Program “Effective Public Administration”.
INEKO implements thei-Health.sk project, which is financially supported by the insurance company Dôvera, and manages the portal nemocnice.ineko.sk, which is financially supported by the insurance companies Dôvera and Union.
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- The specialty of physiatry, balneology and medical rehabilitation, which is among the top 20 most common specialties, is not included in the analysis for methodological reasons.
- The term “gross wage equivalent” is explained at the end of the analysis in the Methodology section.
- In order to comprehensively assess the financial health of outpatient providers, a much broader range of financial measures should be considered.
- Martin Vlahinsky: What is the reality of “excessive” network profits; INESS blog; eTREND.sk; 9.8.2018
- Vlahinsky, M. (2018).
- Act No. 578/2004 on health care providers, health professionals, professional organizations in health care: the basic part of the salary of a physician with specialization working in a hospital facility is at least 2.30 times the average monthly wage of a worker in the Slovak economy as established by the Statistical Office of the Slovak Republic for the calendar year preceding by two years the calendar year in which the basic part of the salary is assigned.
- Newsletter of the Slovak Trade Union of Health and Social Services (SOZ ZaSS)
This text is a translation of an article from the website blog.sme.sk
The original text belongs to INEKO, the translation was made with care for foreign doctors by Sofiia Zayka.