Primary care doctors, who are already among the lowest-paid physicians, had the steepest decline in their inflation-adjusted earnings — a 10 percent drop — according to the report by the Center for Studying Health System Change, a nonprofit research group in Washington.

The average reported net income for a primary care physician in 2003 was $146,405, according to the study, after expenses like malpractice insurance but before taxes. The highest-paid doctors were surgeons who specialize in areas like orthopedics, who had an average net income of $271,652, nearly double what the primary care doctors said they earned.

Doctors, he said, are reacting to the financial incentives under the current payment system by choosing to specialize and work in fields where they can increase their income by providing more services, like diagnostic tests or procedures ...

The current Medicare payment system, for example, rewards physicians for entering fields like cardiology or gastroenterology in which they can perform a procedure or do a test. Doctors like psychiatrists or primary care physicians, who spend their time evaluating or diagnosing patients, do not have as many of those options for generating additional revenue.