Physician Assistant Compensation Exceeds $100,000, but is Lower in States with Greater Restrictions

Physician Assistant Compensation Exceeds $100,000, but is Lower in States with Greater Restrictions

In addition to rolling back medical licensing requirements for doctors and nurses and allowing more spots in medical school and hospital residency programs, expanding the role of physician assistants is a promising tool to bring down the cost of healthcare in the U.S.

Physician assistants (PAs) are similar to doctors in that they have received medical training and must be licensed, but instead of going through the traditional medical school and residency career path, they have generally completed their training in two to three years. (One interesting factoid: the PA curriculum was designed after the “fast-track” training of doctors during the Second World War).

Across the U.S., the scope of practice laws that determine what medical professionals can and cannot do generally restrict physician assistants’ ability to perform tasks independent of  doctors. These restrictions, writes Bruce Jaspen in Forbes, drive down PA salaries by artificially decreasing the value these professionals can contribute.

The American Academy of PAs says PA median base salaries rose nearly 3% to $105,000 last year from $102,000 in 2016 as states lift restrictions and regulatory hurdles to allow physician assistants to work more “collaboratively” with physicians as the team-based approach to healthcare takes hold.

“State laws that create barriers to PA practice are associated with lower base salaries for PAs,” the report said.

For example, states where scope of practice is “determined at practice level,” the mean pay was $4,000 higher, or $108,722  , than states that didn’t allow the private practice to determine a PA’s role, according to the new report. And when there was no requirement that a physician sign a chart known as the “chart cosignature” the mean salary was $2,000 higher, or $108,225.

Why is this the case? Aren’t licensing restrictions supposed to increase the wages of licensed professionals?

Broadly speaking, yes. When you decrease the supply of something, you increase prices (all else being equal.)

If, on the other hand, you impose restrictions on what professionals are allowed to do, you artificially decrease the value PAs can contribute (called marginal product in economic jargon), decreasing salaries.

For more specific recommendations on how to better utilize PAs, check out this Hamilton Project report by E. Kathleen Adams and Sara Markowitz on removing anticompetitive barriers for PAs advanced practice registered nurses.

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By |2018-08-08T07:16:00-07:00August 8th, 2018|Blog, Occupational Licensing|