The Pareto Principle says that, for many events, 80% of the effects can be attributed to 20% of the causes. This is true about the cost of healthcare both from the demand side where most of the need for services is in the last years of life and from the sickest part of the population and from the supply side where most of the physician expense is concentrated among several specialties. (Inpatient treatment and specialty drugs are large components of medical spend too but since NetMinder is all about networks, we’re going to concentrate our analysis on physician specialties.)
We analyzed five national commercial medical networks using NetMinder. The 10 specialties that make up the bulk of these networks are counseling, family practice, general practice, internal medicine, nurse, ob-gyn, optometry, physician assistant, pediatrics, and social work. They represent 55-67% of each network. It’s no surprise that primary care physicians make up the bulk of these networks – everyone needs one, even when there’s no gatekeeper, because consumers generally don’t know exactly what’s wrong when they go to the doctor. Another reason for this might be that competition for patients in some markets is fierce leading some types of providers such as optometrists, counselors, and social workers to look for ways to market their practices.
However, these specialties are not among the top-earning specialties.
In 2014, the New York Times reported the top-earning medical specialties are orthopedics, cardiology, anesthesiology, radiology, dermatology, plastic surgery, urology, gastroenterology and ophthalmology. The article goes on to say “Physicians in those fields typically earn more than $350,000 annually, according to American Medical Group Association, a trade organization. In many specialties, income has risen more than 10 percent since 2011, according to Medscape, a Web company that follows the industry.” The top-earner specialties make up 12-21% of the commercial medical networks we analyzed.
Two of them – internal medicine and family practice – are in the top 5 for Medicare cost.
In 2012, Bloomberg analyzed Medicare payments to individual providers by specialty. This list represents 60% of expenditures, and 34-62% of the commercial medical networks we analyzed.
Source: Centers for Medicare and Medicaid Services, Bloomberg
Without network constraints and as the largest insurer, it stands to reason that the specialty types Medicare pays the most will be similar to the specialty types that earn the most. Five specialties – orthopedics, cardiology, radiology, dermatology, and ophthalmology – are in both lists. These five specialties represent 10-15% of the commercial medical networks we analyzed.
Take a look at our whitepaper, All Provider Networks are not Created Equal, for more about how to take the composition of a network into account when you are comparing networks.
Networks are built to meet the needs of the members who use them so we’d expect variation in the types of specialties that make up the bulk of each one. Do you have enough of the right type of providers in your network to support the demand? Which specialties are over-represented? Which are under-represented?