Physician Specialization in the United States

One of the most important questions medical students wrestle with is a deceptively simple one: What kind of physician do I want to be?

A small minority arrive at medical school already convinced of their future specialty, often influenced by personal or family experience. Most, however, discover their preferences over time—through mentors, role models, and clinical experiences during their third and fourth years. Students may initially choose specialties based on perceived community needs or broader social goals, only to reconsider under the subtle (and sometimes not‑so‑subtle) pressure of teachers and peers.

Some specialties attract students because of their intensity and excitement (for example, emergency medicine). Others promise a more predictable lifestyle or lower stress (such as dermatology or hospital medicine). Still others are chosen for financial reward (notably surgical subspecialties) or for the prestige that accompanies them.

For readers familiar with the Harry Potter series, the process is not unlike being placed by the Sorting Hat.

From Generalists to Specialists: A Brief History

Before World War II, American medicine was dominated by general practitioners. In 1940, more than three‑quarters of physicians were generalists who had completed four years of university education followed by a one‑year hospital internship. Surgery had already emerged as a recognized specialty in the late nineteenth century, but specialization was otherwise limited.

Formal residency training—additional education after internship—began in the 1920s. By the 1930s, thirteen specialties had been officially recognized, along with specialty boards to certify physicians. These included internal medicine, pediatrics, obstetrics and gynecology, surgery, radiology, and eight others.

World War II profoundly reshaped the U.S. healthcare system. The rapid expansion of hospitals and clinics to care for returning veterans created an urgent demand for physicians with specialized expertise. The military rewarded specialists with higher rank, further reinforcing the value of specialization.

As a result, the number of residency positions grew dramatically—from about 5,000 in 1940 to roughly 25,000 by 1955. Internal medicine physicians, once the backbone of primary care, increasingly pursued subspecialty training in cardiology and more than twenty other emerging fields.

This shift toward specialization has continued ever since, shaping today’s physician workforce and contributing to a persistent shortage of primary care physicians—a topic I will address in more detail in a future post.

Why Specialty Care Costs More

Care delivered by specialists is typically far more resource‑intensive than primary care.

Surgical specialists now perform increasingly sophisticated procedures, often supported by advanced technologies such as robotic assistance. Medical specialists frequently prescribe treatments that are both new and extraordinarily expensive, including biologic agents and other targeted therapies.

Part of this cost difference reflects the context in which specialists practice and are trained. Emergency medicine physicians, for example, work in environments where a substantial share of patients present with potentially life‑threatening conditions such as trauma or heart attacks. Their training emphasizes rapidly ruling out dangerous diagnoses and stabilizing patients. Once life‑threatening conditions are excluded, patients are often discharged and advised to follow up with their primary care physician to pursue a diagnosis and receive further care.

Medical subspecialists, by contrast, typically see patients who have already been screened by a primary care provider. Their task is to identify uncommon diseases or complex syndromes. The familiar medical maxim— “When you hear hoofbeats, think horses, not zebras”—is effectively reversed. Specialists are trained to look for the zebras.

How Payment Systems Reward Specialization

A major turning point in the reimbursement of specialty care came in 1992 with the introduction of the Resource‑Based Relative Value Scale (RBRVS). This Medicare payment reform replaced “usual and customary” physician fees with a standardized system based on three components:

1. Physician work

2. Practice expenses

3. Medical liability costs

Because specialists dominated the committees responsible for determining relative values, the system evolved to favor procedures over cognitive medical management. As a result, physicians who perform procedures—such as cardiologists and surgical subspecialists—are paid substantially more than those who primarily manage chronic conditions.

This creates a powerful financial incentive to perform more procedures, further driving up healthcare costs.

The Double Cost of Specialization

The dominance of specialty care in the United States delivers a double hit to healthcare spending.

1. Specialty Salaries

Physician specialists in the U.S. earn far more than their counterparts in Europe—often double or more. Average specialist salaries in the U.S. exceed $350,000, compared with roughly $160,000 in countries like Germany. U.S. specialists argue that these earnings reflect longer training and higher malpractice costs that they feel should be “repaid” over the course of a career.

2. The Cost of Specialty Care

The U.S. also has a much higher percentage of specialists and who frequently utilize expensive technologies such as MRIs. A 2021 NIH study* found that the United States is the most expensive country for treating patients with complex illnesses, despite having shorter hospital stays than peer nations such as France and Germany.

Across eleven countries studied, annual spending for patients with complex conditions often exceeded $30,000 in the U.S., compared with about $11,000 in England. While differences in how specialists practice contribute significantly to this gap, higher costs for hospitalization and medical technology—driven in large part by profit—also play a major role.

Do We Get Better Outcomes?

Paying more for healthcare might be acceptable if outcomes were better than those in Europe. As we have seen in looking at peer nations, they are not.

Reference:
* Figueroa et al., International comparison of health spending and utilization among people with complex multimorbidity, Health Services Research, December 2021.