This article was written in 2012.
Let’s take a look at physicians. Less than 10% of our healthcare dollars go directly to payments to physicians. However, the total healthcare costs related to their decisions are far greater. A physician order is necessary for nearly all health services, from tests, to consulting other doctors, to hospitalization, and discharge. So they impact nearly all aspects of healthcare spending.
And of course as in virtually all aspects of American healthcare, the profit motive comes into play. In the US, if you’re a physician, people generally assume you’re wealthy. This perception is not unfounded. According to Medscape, the average 2011 physician compensation ranged from $156,000 (pediatrics) to $315,000 (orthopedics). Still, 49% of physicians believe they are underpaid!
Let’s broaden the perspective a bit. A recent McKinsey study showed that general physicians in developed countries earned double the average worker income, and specialists earned 2.7 times as much as the average worker. In the US, primary care doctors earned 5 times as much as the average worker, with specialists earning 10 times as much. This might have something to do with the cost of a doctor visit in different places:
One possible explanation for this disparity is the number of physicians per capita in different countries. The US has about 2.4 physicians per thousand population, a third less than Europe with 3.5 per thousand. It’s not that young Americans don’t want to be doctors. It’s that the admission criteria are narrow, and the acceptance rates are small. Consequently, we are probably not turning out as many physicians as we need.
In 2009, there were 130 US medical schools. Interestingly, there were 166 medical schools in 1909, when the population was less than one third of what it was in 2009. (Citation here.) What happened? The Flexner Report of 1910, commissioned by the AMA, reported that many “substandard” medical schools were producing “substandard” doctors. The AMA saw that the “deficient” schools were shut down. Very few medical schools have been opened since then. This situation can at least partially explain the compensation levels of US physicians. Keep the demand high (growing and aging population) and the supply of physicians low, and prices will increase.
The societal perception or expectation that US doctors are wealthy, and the amount of training and expense borne in medical school, can persuade some physicians that they deserve, or are expected to be wealthy. Why would any of us think differently? Who wouldn’t like to make more money doing what they’re doing? But our for-profit health system encourages the motivation for wealth.
As mentioned above, a physician order is necessary for nearly all important healthcare decisions, and herein lies a temptation. Often, the more things doctors order, the more they might be paid. For example, a CT or MRI scan can be an effective diagnostic tool. If performed, a second physician visit is generated (for discussing results) and the physician might have an actual ownership in the diagnostic clinic performing the scan.
It’s a similar situation with labs, which are routinely performed in many offices, and charged to the insurer/patient, needed or not. (I happened to know of a diagnostic clinic, where nearly 90% of the scans performed showed no injury/pathology. Just checking to be sure, I guess.) Ownership or arrangements with labs generate additional revenue. Drugs that require regular physician monitoring are a great idea for profiting the pharmaceutical company and the doc.
It used to be that your family doctor would visit you when you were in the hospital. No more—it’s a waste of better revenue office time. Over the past decade, the new specialty of “hospitalist” has become common. This doctor only attends hospitalized patients, and since the hospitalists have no office practice, they won’t be stealing hospitalized patients from the family doctor, who’s busy in the office now. The new hospital patient gets an attending hospitalist upon admission to the hospital, who (mostly) attends throughout the stay. The family doctor will be glad to see that patient in the office after discharge, and maybe run some tests.
A disadvantage of the hospitalist arrangement is that different physicians have different perspectives on health care costs and care, particularly when it comes to medications. I have observed family physicians puzzling over the array of meds prescribed to their discharged patients by the hospitalist, which is not exactly the ideal in coordinated care.
Another recent money making innovation has come from the hospitals, as they are now BUYING physician practices.http://online.wsj.com/article/SB10000872396390443713704577601113671007448.html This is, of course, is in the name of “efficiency”, “coordination of care”, and other platitudes of justification.
It works like this: the hospital pays a physician group a bunch of money for their practice. The docs then work for the hospital, which means they can get higher rates of reimbursement for services from insurers, as they are now “hospital-based” physicians. On top of that, any procedures ordered will be performed at the hospital, at… can you guess? A higher insurance reimbursement!
So, a patient or insurer will pay far more for the same service and procedure from the same physician than they did several months before, when the doc wasn’t hospital-based. Everybody wins! Well, except the patient and insurer….
The latest money grab idea is the advent of a new concept in physician owned surgical hospitals. http://www.businessweek.com/articles/2012-07-19/silicon-valleys-surgeons-of-fortune
Although Medicare will no longer (as of 2011) permit physicians to refer to new hospitals in which they’re invested, the new surgery hospitals do not take Medicare patients from their surgeon investors.
They also do not join insurance networks. Instead, they bill insurers for out of network benefits, at a rate of 5 to 25 times the in-network payment. Because of the huge insurance payment, they can afford to forgive the out-of-network penalty to the patient. Little wonder that these hospitals pay their surgeon partners rates of return that can exceed 200 percent per year!
So, it appears that the doctors will seek profit where a profit can be made, just like insurers and other providers,and most of us. That’s why the profit motive is a primary driver in healthcare costs in America, and not so much elsewhere. It’s a capitalist county, but do we believe the preservation of someone’s life and health should be related to the amount of profit they can generate?
As a footnote, I wonder what success the “Jeopardy” champion computer named Watson will have in its recent attempt to become a champion diagnostician.
http://latimesblogs.latimes.com/technology/2011/09/ibm-watson-wellpoint.html
