3 Biggest Reasons Intra-Specialty Pay Difference Is So Huge in Medicine

In medicine, we mostly hear about the huge difference in compensation or pay between different specialties. However, the intra-specialty pay difference in medicine is actually way larger than the difference in inter-specialty pay.

What I mean by this is that the average difference in pay between the highest and lowest compensated pediatrician is most often bigger than the pay difference between the average pediatrician and the average plastic surgeon.

When most physicians hear this, they react with disbelief. I was skeptical myself. However, you can discover this for yourself looking at any physician job board like this and computing specialty pay ranges.

What does this mean for doctors?

The reason this becomes important is because most physicians looking to improve their compensation tend to get upset and hung up that their specialty has a lower average pay than another one. They feel that, as a result, there is nothing they can do to increase their pay.

However, this line of thinking completely misses the point.

No, you cannot realistically change specialties (except for very rare cases and usually very early in one’s career). But that is not the lowest hanging fruit in terms of increasing your compensation.

Instead, we should be focusing on how we can move up to the higher paying end of the spectrum within our own specialty. And that is what I want to shine a light on here.

To do so, let’s start by examining the 3 biggest reasons for this intra-specialty pay difference…

3 big reasons intra-specialty pay difference is so huge in medicine

In no particular order…

1. Contract negotiation

Two doctors of the same specialty with the same skill set and productivity will often have difference compensation. Is this fair? No, probably not. But it is reality. And the difference is the way that these two doctors negotiated their contracts.

In my opinion, that is shared by other contract experts, the #1 mistake that doctors make with contracts is assuming that there is no room for negotiation. I’ve talked to way too many physicians who tell me that they just signed the contract they were given. And by the time they realize they could have asked for more, it’s too late.

The second biggest mistake that doctors make with their contracts is not knowing or understanding their value. We used to have somewhat of an excuse because normative physician compensation data was so expensive. However, this data has been democratized and is now available through services like CompensationRx for a nominal fee. So there really is no excuse for any of us now.

And I can tell you that I personally used CompensationRx when negotiating my latest contract in the past year (2023). And knowing that data allowed me to negotiate and finalize a higher compensation.

And lastly, we don’t always understand the unique employment structures that we can negotiate as physicians to improve our compensation. We can negotiate structures like PC-employment lite to our advantage.

2. Skill development

Clinically is where most of us will look to increase our compensation. It’s where most of us make all or the majority of our money. So it makes sense.

In your job, think about what you do. What is your role? What tasks are your responsibility? How do you create value for your employer or your business?

Now, think about how many other people do that same thing or can do the same thing as you.

If the answer is “a lot,” then you want to change this.

In your current position, you have no leverage or power. You will be on the lower end of the intra-specialty pay difference scale if you stay like this. If you ask for a raise or take more money out of your business as the owner, you’ll be in trouble. Your boss will just look for one of the many other people who can do your job and will do it for your current compensation. Or your business customers/patients will just go to one of the many other providers offering the same services for less. Either way, it’s not good for you.

So, you need to focus on altering or evolving or adding to what you offer. Make it more unique. Create more value. Build new skills. Move to a new area.

Ultimately…make it so that you are doing something that very few other people are doing.

Case example

I’ll use myself. When I was looking for my first job, I knew what average compensation was for a new plastic surgeon. This was an important part of knowing my value before entering into contract negotiations.

But I also knew that I was worth more money than this average salary. I knew that the value I brought was higher. At first, I knew this intrinsically. We all ~~should~~ believe in ourselves. However, I needed to prove this.

So, I went through my training, my skills, and my accomplishments. I separated out those that few other plastic surgeons possessed or accomplished.

When I met with prospective jobs, I didn’t even mention that things that I could do that every plastic surgeon can do. What’s the point? I led with and emphasized what I could bring that very few or no one else could. This includes super microsurgery, robotic surgery, lymphedema surgery, and advanced research.

And that’s how I increased my potential compensation.

Put simply:

Actively acquire new skills or accomplishments to add value in ways that few others can
Highlight those unique skills that are rarely possessed
Seek opportunities in need of these rare value-adding skills and accomplishments

3. Geography

Lastly, geography plays a huge role in compensation within the same specialty.

For pretty much any specialty, you will earn more if you work in Iowa than if you work in LA. For a pretty similar reason as above: more people – including doctors – want to live in LA compared to Iowa. So employers in Iowa need to pay more to recruit doctors there to treat patients in their community.

Couple this with the impact of geographic arbitrage (my experience with geographic arbitrage is recounted here) and moving becomes a pretty powerful way to move up on the pay gap spectrum in your specialty.

Why this matters

Well, the intra-specialty pay difference in medicine does matter for doctors. And here’s why:

Financial well-being and financial freedom gives doctors the ability to practice on our own terms, because we want to, not because we have to
Financial well-being and financial freedom therefore make us better doctors, providing better patient care
The way to build wealth to reach financial freedom is to increase and invest your margin
Your margin is the difference between what you make (your compensation) and what you spend (your expenses)
If you increase your compensation, you can therefore accelerate your path to financial freedom

If I recall the laws of logic that I learned in 9th grade, this all holds true…

Why it might not matter as much

Well, the reason it might not matter as much is because of the second half of the wealth building “margin equation” – what you spend.

Because what you spend is always, at all times in your life, 100% in your control. And all doctors, even the lowest compensated doctor in the lowest compensated field, make a high income.

And I know I say this from the privileged space of being in a highly compensated field of medicine, plastic surgery. But that does not change the veracity of my previous statement.

So, yes, a higher income will help. But building the basic foundational habits of wealth building will help even more. What I’m saying is that you should focus on moving up the intra-specialty pay scale. But, no matter where you exist on that spectrum, you can reach financial freedom!

3 action items to get on the higher end of the intra-specialty pay difference spectrum

And if you are looking for a concise guide to taking massive action on your way to financial freedom as a doctor, check out my best-selling book, Money Matters in Medicine!

What do you think? Why is the intra-speciality pay difference in medicine so great? Where do you land on the spectrum? How did you get there? Let me know in the comments below!