Why America's best-paid physicians are in South Dakota

America's top-earning physicians practice in some unexpected pockets of the country. 

The Washington Post analyzed more than 10 million tax records from the Internal Revenue Service to find the average annual income in 2017 for physicians in the prime earning years of age 40 to 55. 

Rural regions rule in the ranking. South Dakota, North Dakota, Alaska, Wyoming and Nebraska are the top five states for physician pay, an outcome that Post staff writer Andrew Van Dam described as "confounding the intuition hammered into our souls by more than a decade of covering economics." 

The newspaper's "department of data" interviewed economists who pointed to competition and Medicare's geographic practice cost indices as the driving factors of the geographic pay-gap anomaly. 

CMS takes Bureau of Labor Statistics measurements of how much other local professionals earn and compares them with the national average for those professions, divides the difference by four and sets the physician-compensation component of the reimbursement formula at that number. CMS also abides by a "work GPCI floor," which raises the work GPCI value to the national average for any locality lower than it. 

If the government's adjustments were more closely tied to local prices or median incomes, then geographic differences in physician incomes would look more like those of lawyers, the highest earners of which practice in high-cost, high-income areas such as New York and Washington, D.C.

Below are the top 10 states for physicians' average annual income in 2017 for professionals ages 40 to 55, according to the Post's analysis.

  1. South Dakota — $524,000
  2. North Dakota — $468,300
  3. Alaska — $466,800
  4. Wyoming — $464,300
  5. Nebraska — $459,800
  6. New Jersey — $458,100
  7. Connecticut — $453,900
  8. Indiana — $448,500
  9. New York — $447,200
  10. Texas — $446,500

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