Thursday, October 22, 2009

Why "average salary" is frequently misleading in medicine

When you hear the phrase "average salary," do you think of mean, median, or mode?

Let's suppose that the average salary for a primary care physician is $150,000 (I'm just making up numbers here). Now, is that because the majority of people fall between $140,000 to $160,000 (a very narrow range)? Or, is it because the range of pay is from $90,000 all the way up to $210,000 (a very wide range)?

I know many primary care physicians who are making around $90,000 (academic medicine or salaried) each year, and others who are making well over $200,000 (they do a ton of procedures and see a very high volume of patients). So, although the average salary of $150,000 may provide one perspective, we know that salary ranges are very wide in the field of medicine. Is this also true in the non-clinical world?

The short answer is "yes."

The phrase "average salary" tells you nothing about the range of salaries. Hence, it's a very misleading term unless you know the range of salaries. When you're thinking about a career transition and you're researching salary ranges, avoid the question of "average salary." Instead, explore the potential range of salaries and then you'll have a realistic idea for compensation. When you have some outliers, the average can become very unreliable (unless you're not using mean as your average). For instance, some physicians end up becoming CEOs of hospitals and major corporations. Some CEOs may have a base salary of $300,000 per year, while others make several million dollars annually. Now how do you calculate an "average" in this type of situation? It's hard for me to imagine making several million dollars each year.

Speaking of salary, I find it refreshing that physicians on Sermo are willing to disclose their salary (since it's anonymous) and that's where you can get a more accurate representation of salary ranges and distribution trends.

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