What Women Can Do About the Pay Gap in Medicine

gender pay gap

Where’s the rest of my paycheck? Getty / via

Note: This is a guest post about the gender pay gap in medicine, and what women can do about it, from Travis at Millennialmoola.com. He happens to be my financial advisor, as well as my very patient boyfriend. Anyone who has any student loans should definitely check out his site for a free calculator and some easy-to-digest financial advice. For someone somewhat money-illiterate like me, he has been a godsend.

The following article about income negotiation was especially helpful for me as I was looking for jobs out of fellowship. As a new graduate, I was nervous about negotiating: would I lose the offer if I negotiated? Would I be viewed as greedy? What should I negotiate for (income, vacation)? How much should I negotiate for? In the end, his advice (and the nagging thought that I’d have to shred my feminist card if I didn’t at least try) pushed me to negotiate for a better offer, and landed me where I am today!

Hope this advice helps you too!

What Women Can Do About the Gender Pay Gap in Medicine

Travis, Millennialmoola.com

Full disclosure: I have a strong and vested interest in pay equality for female doctors (I’m dating one). She calls post-surgery patients at 1am to check on them, flies back early from vacation to cover Monday morning clinics, and studies statistical methods on experimental trials in her spare time so she can help better the lives of women. She deserves every dollar that a man would get. However, she, like other women in medicine, can expect to receive only 62 cents for every dollar a man makes (Census Bureau 2010). Another way to view the pay gap is in starting salaries. Female doctors get $17,000 less than men in their first physician job. I want women in medicine to know about the business of medicine so they get a fair deal. Here are a few ways to make sure you earn every dollar you are entitled to at your first job, after years of hard work and training.

If You Can, Seek Out a Job Away From the Coasts

gender pay gap

Best coast? Or maybe not. source

In general, physicians in New York and California might find they are economic second-class citizens compared to the financiers and technology workers that dominate these areas. New York is exciting and eminently walkable. It has an unrivaled restaurant scene and some of the best entertainment in the world. But for these privileges, you pay dearly in starting salary. Because there are so many doctors who want to live there, there is no supply shortage. Also, because of the ease of public transit, there is much higher competition among service providers and hospitals for patients. Hence, the premium you might be able to command elsewhere for a supply shortage is non-existent in NYC.

The same is true in California. Starting salaries in the LA area can be as much as 50% lower than  the Central and Southern US, where the doctor shortage is most acute. There is a reason that movie stars, professional athletes, and tech billionaires flock to the state in spite of its high taxes. California has great weather and is the most important economy in the western half of the United States. It is a lovely place to live and enjoy the outdoors. You will never want for fun things to do in a entertainment-packed region like the Bay Area or Southern California.

The doctor surplus is true for other regions besides NY or Cali. It exists in many of the most popular, desirable places to live around the country on both coasts. Boston and Washington DC, for example, are other areas where you will probably be paid less because more people want to live there.

The difficult financial truth is that the lower salary is only the beginning. Taxes and cost of living are much higher as well. If you have family and friends in these regions, or living in these areas make you happy, that is important to take into consideration. However, if you just happened to do residency or fellowship at a hospital in one of these regions, you will make a higher income if you move to an area of greater need. Currently, that is in the Central and Southern US.

Doximity (essentially the LinkedIn and Glassdoor for doctors) has data that highlights this discrepancy. A private practice doctor in Iowa makes a lot of money, while the equivalent doctor in New York City makes much less. Women in particular may be disproportionately impacted by these geographic trends. I hypothesize that female doctors may choose areas of the country where having females in leadership positions may be more accepted and part of the cultural norm. The regions where the salaries are lower happen to be the most socially liberal areas in the country. A female doctor in downtown Manhattan is unlikely to meet much professional discrimination from colleagues or patients. However, in small-town Alabama, a portion of the patient base might not feel comfortable about a young female doctor giving them treatment. Because of the desire to be more fairly treated in the workplace, female doctors may sort themselves more heavily into socially liberal areas of the country, where there happens to be an oversupply. Additionally, professional women are waiting to get married until much later in life. As a result, professional women have a documented preference for large cities and urban areas, particularly in places like NY, DC, and LA. This clustering effect results in flooding of labor markets with talented doctors, and wages come down.

Regardless of the reasons, women who choose to work in major population centers of coastal regions can expect to make much less than someone doing the same work in Iowa or South Carolina. If you do not have a strong geographic preference for where you want to live, you could make as much as double your income if you choose to live in a different state. If you couple this with low taxes and very low cost of living, you could be choosing between living in a mansion with all your kids’ college tuition paid for in Oklahoma, or working into your 70s in a 1500 square foot house in LA.

Hospitals View You as a Business Decision, So You Should Heavily Negotiate Your Offer

Carnegie Mellon ran a fascinating study on the effect of gender on salary negotiations. Out of the graduating class of college seniors, 57% of the men negotiated their salary, while only 7% of the women negotiated. The starting salaries were over 7% higher for men than women as a result. Interestingly, this difference also mirrored the differences in starting pay between male and female college grads. Perhaps a large chunk of the pay differential in medicine could be eliminated if women asked for more. When I spoke with female physicians, some felt that they should not negotiate for more in a job when they were really happy about the offer they received. Others told me they did not want to make anyone upset with them, potentially risking their job offer.

On a personal note, even as a man, I have been the victim of poor salary negotiation in the past. I was really excited about my first job out of college. When I got the offer on the phone, I let out a joyful whoop while I was speaking with the HR person. I was making a decent base salary for a fresh college graduate, with a signing bonus and performance bonus as well. After I moved to Philadelphia and rented an apartment with some friends from work, I discovered I had left a lot on the table. My roommate told me he asked for a 40% higher signing bonus. At first, they said no, but they called him back half a day later and said yes. He did not risk his offer by this request; in fact, they treated the query with a high degree of professional courtesy. They even expected him to ask for more money, whereas I had been so happy about getting the offer that I had not pushed for more.

Lack of negotiating skill is not limited to one gender. However, I think women tend to get hurt more often in negotiations, not because they do not have this skill, but because they are afraid to assert their worth. Men think less of other people’s feelings and are more aggressive in looking out for their own self-interest. Women do not need to become like men; however, they should look out for themselves. A hospital will happily pay you as little as they can to get you to work for them. They look at each and every employee, especially doctors, as profit-producing machines. You might have heard of RVUs, or relative value units. Medicare uses them to figure out payments to hospitals for thousands of different procedures. A hospital-employed physician might earn $40 per unit for a certain procedure. The hospital, on the other hand, gets paid $65 a unit from Medicare and pockets the difference. Naturally, they will want to pay you the lowest rate possible in order to maximize their profit.

Physicians have a lot more power than they think. If you are the only specialist in town and consider taking your talents to another hospital system, your current employer might be willing to increase your pay to $45 per RVU instead (as they would still be getting a $20 per RVU profit). Hospital administrators are business-minded people first. If you are a hard-working physician and make lots of money for them, you have the right to ask for more.

Seasoned physicians that I spoke to have suggested that the best negotiating tactic is to play one hospital off against the other if you have multiple offers. A friend of mine is looking at a start-up opportunity in a rural area located a few hours away from a large metropolitan center. Right now, the local regional hospital loses all the high-paying specialty surgery cases to the big medical centers in the big city. If they could attract her, it would be a boon to their hospital and its reputation as they would capture market share from their largest competitor. Both the rural health center and the larger city hospital will likely make her offers. Rather than ask for more with no context, she should state her location flexibility and explain that she will choose based on the best opportunity. The one she is more interested in will doubtless make her a much more compelling compensation package. In this case, the large hospital will want to defend market share and the small hospital wants to take away patients from their competitor. All the leverage is in the hands of the doctor here. She could ask for more salary, or even extra days off. Quite possibly, she could get this in a bidding war for her services.

So when negotiating, women should always make sure to ask for more. You will not lose your offer or be looked upon poorly for acting as your own best advocate. Try to apply to several hospitals in a similar geographic area, especially if these hospitals are located in the Southern or Central US. Don’t just ask for more pay. Ask for whatever is important to you. You might end up with an extra week of vacation, a higher signing bonus, more money for professional continuing education, or even research support.

Be Careful Not to Overvalue Perks and Benefits

gender pay gap

Free branded socks are not worth your soul! source

A growing number of hospitals are realizing that women are more willing than men to trade raw compensation for better quality of life. There is nothing wrong with accepting a trade-off of fewer hours or family friendly employment practices for less pay. However, I believe that women tend to overvalue these offerings. Many hospitals offer free childcare, which is a great benefit likely to keep women engaged in the work force. However, if you could make $50,000 more at a similar hospital without this service, and you do not have children yet, you should not be indifferent between the two institutions. Another perk of long-term employment at academic medical institutions is free college tuition for your children. However, if four years of college costs $200,000, giving up even $20,000 a year in extra compensation makes that benefit less profitable unless you have a large family.

Go into negotiations with eyes wide open. When hospitals tout their impressive benefit packages, realize you will only make extensive use of them if you stay employed with their health system for a decade or more. The likelihood that you spend your career at one hospital or private practice is unlikely. Hence, you should not be afraid to ask for more money or other fringe benefits important to you. The reason the hospital offers benefits in the first place is because they cost less than paying employees more. If you do not believe me, look at the backgrounds of people running most hospitals. They have extensive financial and budget management qualifications. These are very smart people looking to retain talent in the least costly way possible. If they can make their employees happy and save money at the same time, they will absolutely do this. So when you get the explanation that they cannot give you any more money because of their strong benefits package, explain that you may not be using those benefits and that you would prefer a higher offer. Let it sit with them for a day or so. The offer will almost certainly stay on the table, and they could very well blink first.

One employer that takes advantage of employees’ preference for benefits is Kaiser Permanente in California. They have a great business model of tilting compensation towards long term benefits. Because of this as well as their placement in the highly desirable job market of California, they are able to get physicians to work for them on the cheap. If you get a job offer like this and it makes you happy, by all means take it. But hopefully, this insight into how hospital leadership thinks can be something you can use for your benefit.

Be Your Own Best Advocate, Or Hire Help to Do It

The average post-fellowship attending might be starting off at $250,000+per year. After years of making pitifully low wages for long hours, this is an eye-popping figure. You might be inclined to be happy and take the first offer. However, know that hospitals are like street vendors in Mexico. They open up with their first offer, which might be a decent deal. That said, if you even try to negotiate with them, they will very likely give you something. Consider this example: if you are not able to negotiate a lower price for one hat, the sellers might sell you two at a lower unit cost. In the same way, a hospital might give you an extra week of paid vacation instead of raising your pre-tax salary.

If you are the kind of person who always buys at list price, don’t fear. There are experienced contract review lawyers and physician-specific compensation consultants out there who will review your contract and even do the negotiating for you. You should be able to obtain their services for $500-$2000, depending on the complexity of the negotiations. If these professionals are able to even raise your salary by a few percentage points or get you extra vacation or benefits, they will have paid for their fee and more. I think most people who simply ask for a better offer will get one. However, if you are afraid to push back or business is not your thing, hire someone and they will do a better job than you could do on your own.

Getting Educated on the Reasons for the Gender Pay Gap in Medicine Is a Great First Step

Hopefully, you have come away from this post with the confidence to go to bat for yourself when your first big job offer comes. Women deserve to make the same amount of money as men for the same work, but even legislation would probably fail to address many of the root causes when it comes to pay for doctors.

Be willing to take a job in a less popular location in the Southern or Central US. Absolutely negotiate for a better offer when the hospital makes its first pitch. Make sure to play hospitals off against each other when you have multiple options in a similar geographic region. Rest assured, they are doing the same thing to you on the other side. Place a conservative value on the fringe benefits offered by hospitals and make sure that you will likely use them if you give up pay for benefits. Finally, if you do not care much for business-related subjects, hire a consultant or attorney to negotiate your contract for you. Women deserve fair pay, but before we make it to a perfect world, use these tips and techniques to walk away with more money in your pocket.

 

Thanks again to Travis at www.millenialmoola.com.

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  1. Great writeup, MM.

    I can say with some certainty that within our small group of anesthesiologists, no pay gap exists. We are all employed and paid at the salary we negotiated with the hospital administration as a group. As you say, negotiation is key, regardless of gender.

    Goegraphic arbitrage can be a real boon to those seeking financial independence, or just looking to get out of debt. I live in the upper midwest, and take full advantage of the better pay and lower cost of living here. In fact, I’ve written about it! http://www.physicianonfire.com/geographicarbitrage/

    Best,
    Physician on FIRE