The Business of Healthcare
by James C. Sherlock
Virginia is among the richest states in the country.
We are ranked ninth among states with the highest median household income in the 2019 (latest) Census Bureau American Community Survey. Virginia median household income was $74,222 and the U.S. as a whole was $62,843.
But Virginia has a Certificate of Public Need (COPN) law among the most stifling of competition in the nation. The law itself and the regional monopolies created combine to suppress both opportunity and income for healthcare professionals.
The monopolies don’t just control the healthcare delivery market, they also control the labor market.
This essay will illustrate the effects of COPN and COPN-generated monopolies in depressing wages, and thus on the willingness of medical professionals to practice here. And then show you those lower wages don’t save consumers a dime.
Overview of the environment for physicians. Virginia is ranked by WalletHub, which considered 19 key metrics, as 37th overall among the best states to practice medicine in 2021.
The American Academy of Medical Colleges for a 2018 report calculated
“the number and percentage of physicians who completed medical residency training from 2008 through 2017, were not currently active in any GME program, and were practicing physicians in or out of the state of residency training”.
The results for over 130,000 physicians showed that over 54% of them were practicing in the state of their residency. That same report showed that Virginia retained 47.7%. Only 14 states and territories (of 52) ranked lower.
California, a non-COPN state, led at 77.7% retention. The three largest states without COPN laws — California, Texas and Florida — are among the seven states with over 60% retention.
Hospital wages in Virginia compared to other states – 2018 data. So let’s look at the mean annual wages by occupation and drill down to those wages for medical personnel employed by hospitals in Virginia to see the effects of regional monopolies on income, and see why some of those residents and other medical professionals seek greener pastures.
I will list hospital Mean Annual Wages by occupation based on a 2019 assessment by the Bureau of Labor Statistics. It contains a massive database of every state, every type of employer and every type of employee for every employer. (If you go to May 2019 and click on Sector 62, you will get the baseline spreadsheet from which I derived the following statistics for hospital employers in each state.)
Remember, the statewide mean annual wages calculated for the Commonwealth include the both the numbers and the wages of the very highly paid healthcare workers in Northern Virginia.
There are 75,230 hospital employees in Virginia classified under the major class Healthcare Practitioners and Technical Occupations. The mean annual wages of that class of workers in Virginia ranked 30th among the states (50 states, D.C. and Puerto Rico). Virginia’s wages for Healthcare support occupations ranked 34th.
Virginia hospitals ranked 49th among states for the wages paid to the members of the subclass Physicians, All Other; and Ophthalmologists, Except Pediatric,
For psychiatrist employees, Virginia hospitals ranked 32nd. Registered nurses, 27th. Licensed Practical and Licensed Vocational Nurses – 31st.
Physician income overall regardless of employer – 2020. I will offer a couple of examples of the dual effects of the low hospital wages and COPN restrictions on the incomes of physicians statewide regardless of employer.
The hospitals’ low wages and the inability of surgeons to open their own ambulatory surgical centers because of COPN combined to drive down the median wage for a surgeon in Virginia in 2020 to $228,310 compared to a nationwide median of $251,650.
Anesthesiologists in Virginia earned a median $253,150; nationwide the figure was $271,440.
Note: Breaking news: Virginia ranks 38th in Physician Assistant salaries.
Healthcare Spending. So, you say, tough for the healthcare professionals, and maybe we don’t have as many as we need, but at least Virginians are getting a break on healthcare costs, right?
Wrong.
The World Population Review has published a study of per-capita health care costs by state 2021.
“Health care spending per capita in the data provided in this article includes spending for all privately and publicly funded personal health care services and products, including hospital care, physician services, nursing home care, and prescription drugs.”
Top ten:
- Maine ($10,559)
- Colorado ($10,254)
- Texas ($10,190)
- California ($9,859)
- New York ($9,851)
- New Jersey ($9,778)
- Nebraska ($9,589)
- Oregon ($9,551)
- Kentucky ($9,531)
- Virginia ($9,462)
The national average is $7,893.
Summary. Those are real data. Virginia is among the ten richest states in the union with among the ten highest per capita healthcare costs.
Yet healthcare professionals who work for the COPN-granted and protected regional monopoly healthcare systems are significantly underpaid compared to their peers in other states. And many physicians don’t have the opportunity to work for themselves because the COPN system, controlled by the monopolies, won’t let them open their own businesses.
That same system denies them the medical technology they need to practice their professions, forcing them to send patients to the monopolies for testing and imagery and use monopoly facilities for procedures.
If you think the independent insurers benefit from COPN, how would you like to enter price negotiations with monopolies? I have watched insurers work for years to get it repealed.
Then where does all the money go? The monopolies. And from them to the politicians.
That is how COPN works. Enjoy.
