In the 10 years through 2017, the salaries of doctors employed at Israeli hospitals jumped 42% after inflation (59% in nominal terms), double the rate for pay raises in the public sector and nearly four times the rate for workers in Israel overall.
That figure, which comes from the Finance Ministry Wages Commissioner Kobi Bar Natan in his latest report on public sector pay, almost certainly understates the jump in physicians’ salaries over the last years.
The 42% refers only to doctors employed at hospitals, but the health maintenance organizations (kupot holim) have been engaged in a wild competition to hire doctors and their pay has been growing even faster. Doctors in private practice have done well, too.
An earlier study by the treasury’s chief economist from 2016 found that doctors’ pay overall in Israel had soared 76% after inflation in 2007-2016. In the public sector (HMOs and government hospitals), the increase reached 84%; in the private sector it was 59%.
In 2016, the average gross monthly salary for a doctor in Israel was 66,000 shekels ($18,560 at current exchange rates) and 47,000 for those in public sector, compared with a monthly average of about 10,000 shekels for all Israelis that year. That makes doctors in the Israeli public sector the highest paid among their colleagues in the Organization for Economic Cooperation and Development (not counting the United States, which has virtually no public sector medicine).
The surge in doctors‘ salaries stems from two wage agreements signed with them in 2007 and 2011 at a cost of tens of billions of shekels, but decision-makers argue that the soaring salaries are due to the fact that inflation hasn’t been as high as was forecasted at the time the agreements were reached.
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That’s an interesting explanation but not an honest one. The real reason was the deliberate and erroneous policy of choking off the supply of new physicians. Over the last two decades the number of medical students in relation to the size of the population has been in free fall.
This is due to the convergence of two interests. The first belongs to the Finance Ministry’s budget division, which takes the view that if there are fewer doctors, there are fewer salaries to be paid. The second is the heads of the physicians unions, the medical schools deans, the hospital directors and department heads, who want the gates to the profession kept closed to improve the bargaining power of those already in it.
This has not only served to inflate doctors’ salaries but has made the standard for being admitted to medical school insanely onerous (a score of at least 735 on the psychometric exam) and resulted a tiny enrollment – just 7,290 students in 2018.
A study by the National Economic Council, chaired by Prof. Avi Simhon, revealed that the number of medical students training in Israel is between half and two third the number in other developed countries on a per capita basis. As it is, Israel already has a low 3.1 doctors per 1,000 population, versus an OECD average of 3.65.
The shortage would be even worse, except that many Israelis are studying at medical schools abroad – and not necessarily the best of them. Thus Israeli patients are increasingly seeing doctors who have not been trained at excellent local schools, but inferior ones in Eastern Europe.
The National Economic Council estimated that 37% of people receiving licenses to practice medicine in Israel in 2016 were trained abroad – 60% of them in Romania, Moldova, Russia, Italy and Ukraine. Their average score on the psychometric exam was just 650.
The pass rate on licensing exams for these students was low. Just 39% of those graduating from Romanian institutions succeeded. Those finishing degrees from Russia had a pass rate of 40%, those from Ukraine and Moldova, 45%, and those from Italy, 51%. In comparison, the pass rate for graduates of local medical schools was 93%; for those with degrees from countries with a higher standard of medical education, like Hungary and Jordan, it was 75%.
No other country besides Israel is training so many of its doctors overseas and at inferior schools. Indeed, there are many countries that try to lure doctors from abroad, but only those trained at top-flight institutions.
Simhon is quite explicit in laying the blame for this absurd situation: the medical school deans who have been slow in using the enlarged budgets they have been given to increase enrollment. He attributes this to administrative lethargy, but an equal portion of the blame has to go to the self-interested policies of the unions.
The universities and the Health Ministry point their fingers at the treasury, which they say refuses to budget enough money for medical residencies and teaching specializations.
Simhon rejects these claims. For one, specialists are trained under much more crowded conditions of up to 10 students per hospital bed elsewhere in the word. For another, Israel does produce enough doctors every year and provides them with residencies – but they get their basic medical training abroad.
“The [healthcare] system needs 1,600 additional doctors a year, and it has no choice but to take 1,600,” says Simhon. “So if there are 800 excellent graduates from Israel, it will take them all, and compromises on the balance – another 800 less good candidates coming from abroad. It’s stupid.”
Simhon also points to the distortions this system creates. The best graduates naturally gravitates to the best hospitals in the center of the country while the rest, who were trained abroad, end up taking jobs in the northern and southern periphery.
Even the politics of the Israeli-Palestinian conflict has played a role. Israel’s medical schools agreed to increase the number of students in exchange for more government aid, but the quid pro quo has been delayed due to a standoff between the state and the Higher Education Council over the opening of a new medical school at Ariel University in the eponymous West Bank settlement.
The National Economic Council recommended that the number of medical students in Israel be increased to between 1,200 and 1,800 by the year 2026, from 800 today. In order to prevent a sudden surge of students seeking hospital residencies, the council suggests that they should also be done at the HMOs, too. It also recommends more budgets for hospitals to take on more residents.
In addition, it suggested measures to discourage Israelis from studying medicine abroad, among them disqualifying with the worst of the schools, publishing figures on pass rates so potential students have a better sense of the risk they undertake, and limiting the number of times a student can retake the licensing exam.
The council is right. The time has come to clear up the distortions of a system that inflates salaries, leaves Israel with less than the best medical care it could have and serves interest groups rather than the public.