Published by Lookforzebras
The healthcare system in each country directly impacts the compensation difference between US and Canadian doctors. On average, US physicians earn between $260,000 and $324,000 annually, while their Canadian counterparts receive around $206,000 to $261,000. However, the gap in Canadian Physician Salary vs US has narrowed in recent years. U.S. salaries are often higher due to the private insurance-based healthcare model, where doctors bill for each service rendered. This system allows them to charge higher rates for specialized treatments.
In contrast, Canada’s single-payer healthcare system sets standardized rates, which limits income variation across the country. Additionally, U.S. doctors face higher administrative costs, including malpractice insurance, while Canadian doctors benefit from publicly funded malpractice protection. Despite the higher potential earnings in the U.S., many Canadian physicians choose to stay in Canada. Lower administrative burdens, a more predictable income, and other quality of life factors often influence their decision.
Over the years, the gap in doctor’s salaries between the two nations has gradually reduced. While it may seem like a no-brainer to decide based solely on headline salary figures, it’s important to look deeper. These figures represent the average gross pay doctors receive in each country and do not account for various deductions.
In this article, we will explore the key considerations related to the wage gap. Additionally, we will shed light on why many Canadian doctors choose to stay in Canada despite the potential for higher earnings in the U.S. So let’s get right into it to see what the differences, pros, and cons of each system are.
Differing Medical Systems
Canada uses a single-payer healthcare system that provides universal healthcare coverage for medically necessary services. This system is based on need rather than the ability to pay. Doctors in Canada are required to bill their services to provincial health authorities at standardized rates. While these rates differ from one province to the next, they are mainly stable.
On the other hand, American doctors bill health insurance companies for each procedure and treatment they administer. Patients will need to settle additional costs not covered by the health insurance.
This difference in the billing process is a key factor affecting doctors’ earnings between the two nations. For example, when a Canadian doctor treats a patient for a broken arm, the government sets a predetermined cost for the treatment. This ensures that the pricing remains consistent and standardized across the healthcare system. Therefore, the doctor cannot change that amount in any way.
If the same treatment is administered in the US, doctors can set their own markup for their services, as there is no set charge. Health insurance companies tend to cover up to a certain percentage markup. The patient will be liable for any balance.
Differing Specialization
Yes, specialization does play a critical role in pay differences. It’s important to remember that salaries in medicine exist on a spectrum. Within this range, one must account for both inter-specialty and intra-specialty variability. Simply put, a physician specializing in a related field will earn more.
Interestingly, Canadian Physician Salary vs US comparisons show that family doctors in Canada often earn similarly or even slightly more than their U.S. counterparts. This helps explain why nearly half of Canadian doctors are family physicians. In contrast, about 70% of U.S. doctors pursue additional specialization for higher earnings.
Due to the government-funded medical system, Canadian doctors act as gatekeepers to specialists and hospitals. They also serve as a filter for the government to help ease the burden on these establishments. In the US, since patients privately fund healthcare, they can choose where they are treated and who treats them.
This also incentivizes US doctors to specialize in additional fields, which will benefit them from referring the patient to someone else. This leads doctors to administer additional treatment and issue a separate bill to the health insurance company.
Differing Legal Expenses
Two major legal expenses differ between the two countries, each playing a key role in the total earning potential of doctors. These are:
Tax considerations: Tax in Canada, especially for higher earners such as doctors, is significantly higher than in most parts of the US. Tax in Canada is deductible at 33% for individuals that earn more than $221,000 of taxable income. This is fairly significant, especially when compared to some parts of the states, such as Florida, that do not charge state-level tax.
Malpractice insurance: In Canada, medical insurance is publicly funded. While covering everyone, Canada still spends far less on health care than the United States. Doctors in Canada pay a specific fee based on the type of service they offer and their location. This, in turn, provides them with legal representation in medical malpractice cases by the Canadian Medical Protective Association. The Canadian government actively discourages malpractice claims through its universal treatment approach and caps the amount of damages.
In contrast, the onus lies on doctors in the US to take on all the risk and responsibility of seeking their own insurance coverage for malpractice. In addition, doctors in the US may also face malpractice charges by patients and medical insurance companies. The greater the level of coverage, the more it will cost. Therefore, doctors in the US usually face high insurance bills to ensure they are sufficiently covered.
Additional Expenses
Doctors in the US face significantly higher insurance expenses and are more likely to spend more on costs to operate their practice, including:
- Administration (including billing, collections, etc.)
- Employee costs (including salary, benefits, etc.)
- Additional insurance (building, contents, etc.)
- Rental or mortgage
- Cost of equipment (due to higher import costs)
In the US, doctors spend considerable time on administrative tasks like billing, handling insurance, and managing accounts. This makes it impossible for a doctor with a decent customer base to maintain a grip on their own and will often require assistance with each task.
The Canadian Physician Salary vs US differs not only in earnings but also in administrative simplicity. Canada’s single-payer model allows doctors to bill the local government monthly, reducing the burden of invoicing and follow-ups that US doctors face. This structured system makes it easier for Canadian physicians to track their income and spot discrepancies using software, unlike the more complex billing process in the US.
A final point of interest worth mentioning that may be especially helpful if you’re still a medical student is that the cost of medical school in Canada is subsidized by provincial governments and varies depending on whether a student is a Canadian citizen, permanent resident, or foreign student, as well as the actual school they decide to attend. Over time, student debt can become a major cost difference, as it often lingers for many years after completing one’s schooling career.
Conclusion
Canadian doctors receive notably less compared to US doctors. However, this observation invites us to ask, what do Canadians “get” in exchange for paying their physicians less than their American counterparts? The simple answer is standardization.
Insurance companies create red tape for US doctors, requiring constant attention to technicalities and legal claims. Therefore, despite the obvious upside of a potentially higher income, one must also consider the cost of that extra income during the decision-making process.
When choosing between working as a physician in Canada vs the US, the factors discussed, including the Canadian Physician Salary vs US, will play a significant role in your decision. Understanding the differences in compensation, healthcare systems, and lifestyle will help you make the best choice for both your career and your patients.