De Beers and Doctors

By Jim McVeagh 01/02/2010

De Beers, the diamond merchants, and specialists in certain disciplines are wealthy for exactly the same reasons. They both have something that is rare. It De Beer’s case, it is diamonds. In the doctor’s case it is his skills as a physician. I earn a salary way above the average for no reason other than that I am hard to replace. A specialist earns a great deal more, simply because he is that much harder to replace than I am.

I make no apology for making such an obvious observation because clearly at least one journalist in the Dominion Post apparently does not understand this. Every year after the DHB annual reports come out, some journalist writes about high doctor’s salaries, as if this is something we should be horrified about.

Annual reports for the 21 district health boards show seven clinicians working in the public health system now earn more than $500,000 a year, including two at Wellington Hospital and one at Hutt Hospital. About 60 others earn more than $350,000.

The average specialist salary in Australia is around $300,000 but specialists in rarer disciplines can command salaries up to $750,000. Australia is our main rival for doctors in the less common specialties. We won’t even mention the salaries commanded in the US. If we wish to retain doctors here, we need to pay these kinds of amounts. Or we could populate our hospitals with Romanian and Ugandan doctors (actually, I have met excellent doctors from both places, but the quality of doctors from these sources is – variable).

Unionists, unsurprisingly, never get this:

Service and Food Workers Union national secretary John Ryall said increases at the top of the pay scale were indefensible when hospital service workers were facing a wage freeze. Hospital orderlies, security guards, cleaners and kitchen workers picketed hospitals last year about health boards’ offer of a 0 per cent pay increase.

“Our members get pretty annoyed when they see on one hand they’re being told there’s no money and on the other hand people on the top ends of the salary band getting wage increases.”

This ridiculous statement is the equivalent of saying that Ferraris should be cheaper because Toyotas are cheap. It makes no sense at all. 2,500 people queued up to apply for 150 (probably low-wage) jobs last week. How many doctors queued up to replace the paediatric oncologists in Wellington? Exactly zero.

If every Service and Food Worker dropped dead tomorrow from some bizarre virus, they could all be replaced by the end of the week by similarly skilled workers. But if just a handful of specialists in strategic disciplines succumbed to the same virus, the Health service would be severely disrupted. This is not for a moment to suggest that those specialists are somehow “worth more” as human beings than service workers, it is merely to illustrate the economic reality that drives doctor’s salaries.

You can rail all you want at doctor’s salaries but a good specialist in a rare field of medicine is as hard to find as a flawless blue-white 50 carat diamond.

Disclaimer: The MacDoctor does not work in hospitals and has no financial interest in hospital salaries. The MacDoctor, regretfully, does not earn anything like the salaries mentioned above   :-(


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