Polish hospitals bid for doctors or how the system boosts pay rates

This article is a part of Poland Unpacked. Weekly intelligence for decision-makers

Hospitals owned by different local governments compete for the same specialists, while doctors increasingly work as self-employed contractors. The result is rising rates, ever weaker cost control, and a mechanism that has, for years, entrenched the effects of staffing shortages.

Public opinion has for some time been preoccupied with scandals in the healthcare system, alongside reports of very high doctors’ earnings, often exceeding PLN 1 million annually (approx. EUR 232,600). We do not know the current distribution of physicians’ incomes, as the administration has chosen not to publish estimated data covering total remuneration from salaried employment, service contracts, and business-to-business arrangements (self-employment). According to data from the Social Insurance Institution (ZUS), doctors were the highest-earning professional group in the first half of 2025. However, this applies only to standard employment contracts.

A more comprehensive attempt was made by the Polish Economic Institute (PIE) in 2021, based on 2019 data drawn from tax records. The median income of doctors holding a license to practice medicine stood at PLN 16,882 (approx. EUR 3,926). Using the median reduces the impact of extreme values. Meanwhile, 25 percent of physicians reported incomes above PLN 26,661 (approx. EUR 6,200). A drawback of this study – at least in my view – was its reliance solely on gross income figures. For non-agricultural business activity, net income (taking costs into account) would have been more appropriate. Moreover, the data included all income derived from medical practice (both public and private funding sources), but also any income unrelated to healthcare. Still, it is better than nothing – and it is regrettable that no updated editions of the study have been published since.

Doctors in numbers

The chart below shows the number of professionals in medical occupations from the end of World War II to 2015. After a period of rapid growth under the communist-era People’s Republic of Poland (PRL – until 1989), a striking stagnation followed after 1990. Between the beginning of the transition and 2015, the number of doctors increased by only around 10 percent, while the number of nurses and dentists actually declined.

In 2019, the methodology for counting people working in these professions was changed. As a result, later data are, according to Statistics Poland (GUS), not comparable with earlier figures. Nevertheless, these datasets are still used today for international comparisons. In 2019, Poland had 3.3 doctors per 1,000 inhabitants. Today, the figure stands at 3.9 (latest data for 2023), indicating an improvement. This is broadly in line with the OECD average. This is all the more notable given that some countries report registered rather than actively practicing physicians, which inflates their statistics.

Of course, the total number of doctors is an aggregate figure and therefore does not capture shortages within specific specialties.

A weak monopsony in Poland

From an economic perspective, the public healthcare system should resemble a monopsonistic labor market – that is, a market with a single employer. In such a system, due to strong bargaining power, wages can even fall below their market value. In practice, however, this is not the case in Poland, as numerous examples show.

The reason is competition between facilities managed by different owners (counties, cities, regional authorities, and others). Hospitals independently negotiate rates with doctors, who often operate as self-employed businesses and provide services to multiple entities. As a result, hospitals frequently compete for the same specialists, pushing remuneration higher. Moreover, from a hospital manager’s perspective, there is information asymmetry regarding a specialist’s potential earnings. In addition, reimbursement and valuation systems often make it profitable to hire a specialist for a given procedure even at exorbitantly high rates.

…and stronger in other countries

How do other countries deal with this issue? It is important to stress that this is not a binary situation, but rather a spectrum reflecting how much monopsonistic power the state is able to exercise. If Poland sits at one end of that spectrum, the United Kingdom is at the other. The National Health Service (NHS) is the dominant employer, salaries are set centrally, and wage competition between hospitals is limited.

The same applies in Denmark, Norway, and Sweden, where pay is negotiated collectively rather than at the level of individual institutions. In Spain, a regional wage grid is in place. In countries that aim to keep physicians’ pay under control, doctors are primarily salaried employees rather than self-employed contractors. This limits their ability to negotiate individual rates freely. Equally important is strong ownership coordination, which reduces competition between hospitals for medical staff.

Another instrument is ensuring an adequate supply of doctors. As noted above, between 1990 and 2015, supply barely increased. The situation has recently improved thanks to higher admission quotas for medical studies, as well as Poland’s declining population. Models suggest that within the next 5–10 years, the country may even face a surplus of doctors. However, the system has already been shaped under earlier conditions of scarcity. Hospital directors filled gaps in healthcare provision by allowing doctors to work on contracts or across multiple institutions. This path dependence must now be broken – but doing so requires significant political courage and structural reform.

Tax preferences

It is also worth noting that doctors in Poland working under contracts may benefit from a preferential tax regime. This applies in particular to lump-sum taxation on recorded revenues (PIT-28). Until the end of 2020, this option was not financially attractive. The rate for so-called liberal professions (a broader category than physicians alone) stood at 20 percent of revenue, whereas taxpayers could opt for a 19 percent flat tax (PIT-36L) on income – that is, after deducting costs. As a result, only a few hundred people used this option each year, and it remains a mystery, at least to me, why they chose this form.

In 2021, several changes were introduced. First, the lump-sum rate for doctors was reduced to 17 percent. This could already, depending on the level of costs, have encouraged some to switch to this form of taxation. At the same time, doctors working under contracts in clinics and hospitals were granted access to the tax card regime. Previously, this had been available only to those running their own private practices. Under the tax card, a fixed monthly amount applied – simplified here as PLN 1,824 (approx. EUR 423) – regardless of revenue or income. For earnings of around PLN 300,000 (approx. EUR 69,700), this implied a low effective tax rate of about 7 percent.

Exploding use of lump-sum taxation

In 2022, this option was effectively closed as part of the Polish Deal (Polski Ład) tax reform. At the same time, the lump-sum tax rate for doctors was reduced to 14 percent. This form of taxation is more favorable than other types of non-agricultural business activity taxation (the progressive tax scale or the flat tax) in terms of social health insurance contribution rules.

As a result, between 2021 and 2024, the number of taxpayers using the lump-sum regime at the rate applicable to physicians (a bracket that also includes other professions) increased from 5,000 to 100,000 – twentyfold. In 2022 alone, according to Ministry of Finance data, 46,500 individuals switched from the flat tax regime to the 14 percent lump-sum rate, with an average income of PLN 287,000 (approx. EUR 66,700).

The lump-sum tax offers a lower effective burden on both income tax and health contributions at higher income levels. An additional advantage from the doctors’ perspective is that this form of taxation is not subject to the solidarity levy. Moreover, when combining salaried employment with business activity, these income streams are not aggregated in tax returns. This is clearly advantageous for physicians. As a result, this group pays relatively low taxes and social contributions given their income levels.

During the first decades of Poland’s post-communist transition, the number of doctors barely increased. Against a backdrop of rising demand, this strengthened physicians’ bargaining position. Although the number of doctors is now growing—and may even exceed demand within a few years—the system still operates according to rules shaped in an era of scarcity.
In Poland, the public healthcare system does not function as a classic monopsony in which a single large employer can set employment conditions. Fragmented ownership of hospitals, competition between facilities, and the widespread use of contract-based employment mean that hospitals compete for the same specialists, pushing up pay rates. Countries such as the United Kingdom and the Nordic states make greater use of the public payer’s bargaining power: salaried employment dominates, wages are set centrally or through collective bargaining, and competition between hospitals is more limited.
The lump-sum tax can result in lower effective burdens for individuals with high revenues due to its relatively low rate, while health insurance contributions are also more favorable under this regime. In addition, income from business activity is not always consolidated with other income sources in the same way as under standard taxation.