More doctors: what will they cost? Physician income as supply expands

F. A. Sloan and W. B. Schwartz

During the 1970s, expenditure for physicians' services rose by $12.7 billion (in 1979 dollars), but only about one fifty of this amount could be attributed to an increase in number of physicians relative to population. Other factors, chiefly demographic changes and greater insurance coverage, were responsible for the bulk of higher expenditures. Despite the growth in number of physicians, real income of individual physicians remained virtually constant. Maintenance of real income was not, however, appreciably dependent on physicians inducing an unwarranted demand for their services. We predict that as the physician supply expands by 25% to 35% during the 1980s, real payments to physicians will increase by some $14 to $20 billion (1979) dollars. As in the past decade, however, only about one fifth of the amount will be attributable to an increase in physician supply. Gross income of individual physicians is likely to ri se by 10% to 15% (in 1979 dollars) over the decade, but net income probably will show little increase or may even fall slightly.