May 05, 2008
Doc Pay: Salaries v. Fee-for-Service
Health care reform entails more than health insurance reform, although you wouldn't know it by listening to the candidates of both political parties. Achieving affordable universal coverage will depend on holding down the relentless rise in health care costs, and that will depend on changing the way health care is delivered. Reform must include changing the way physicians are reimbursed.
The current system relies on fee-for-service medicine, which encourages doctors and hospitals to do more services to increase revenue. And its primary beneficiaries are high-paid specialists, who rely on the 21st century equivalent of the time-and-motion studies used by factory engineers in the early 20th century to create compensation schemes for skilled workers.
Under such schemes, the amount of time needed to perform each task in a complicated project (like a tool-and-die maker cutting a new mold for a machine tool) is multiplied by a rating of the skill needed to perform each task. That's then multiplied by the pay scale to come up with the relative value of each worker's time. So in the steel foundry where I worked in the late 1960s, the tool-and-die makers earned 50 percent more than the molders, and twice as much as the laborers.
Medicine uses the same system to determine physician compensation. An American Medical Association committee dominated by high-paid specialists determines the "relative value" of the skills needed to perform, say, eye surgery compared to analyzing a rare eye disease that might be easily treatable with a drug, or shouldn't be treated at all.
The result is wide variability in physician income, and a huge incentive for doctors to enter specialties that not only get high rates for each procedure but can game the system by doing far more procedures than the original time-and-motion studies suggested they could. Sometimes that is a result of improved technology. More often, it is simply the result of ramming more patients through the procedure mill. Today's Wall Street Journal had an enlightening chart showing the resulting disparities in physician income:
Alas, the story offered an inadequate analysis of what needs to be done. Instead of discussing the relative value system and giving voice to critics who suggest scrapping it entirely, the story talked about a looming shortage in sub-specialties that are paid like general practitioners (non-surgical eye specialists in the story). The implication was that insurers need to raise these sub-specialties' relative pay to attract young doctors to the field.
Arnold Relman, the former editor of the New England Journal of Medicine, in his new book "A Second Opinion" offered a different approach. Yes, different physicians have different skill sets and some take longer training than others. That should be recognized in pay scales.
But, he suggests, the more important reform is that physicians be organized into group practices that encompassed all the necessary specialties. And they should be paid not by the number of patients they see or can run through their individual offices, but by skill, experience and their relative importance to improving patients' overall health.
This would give a huge boost to general practitioners and docs who coordinate care. And it would eliminate the perverse incentive that encourages specialists like radiologists and invasive cardiologists to overprescribe many diagnostic tests and surgical interventions.
Posted by gooznews at May 5, 2008 07:38 AMGooznews - flip that tabels. By you're logic an unmotivated GP that refers everything out and confines his/her practice to yearly exams and blood pressure checks should be paid more than the eye surgeon that organized his day so efficiently that someone who's loosing their vision to cataracts can get in within a week? I agree there are problems with fee-for-service but I don't agree that a "wothiness" scale is the solution.
I would suggest that groups of doctors get paid to manage patients in their entirity (so the practice gets paid) and the salary is divided based on days/hours worked. When the team pulls together to manage patients more efficiently they all benefit. If a group feels a particular specialty requires a greater percent (eg higher risk or harder work) then they can negotiate it. This approach still has it's drawbacks but I think it's better than what you're suggesting.
www.waittimes.blogspot.com
Ian,
I think we're in agreement. Read the last two paragraphs of my piece. Docs, I argue, should be organized in group practices, which should be reimbursed as a group for making people well. This would give a huge boost for doctors who coordinate care and remove perverse incentives for specialists to overuse pricey procedures.
It never ceases to amaze me how intelligent people can be so oblivious to the role of a radiologist in health care delivery. Do you honestly think radiologists "prescribe" anything? With the small exception of recommendations for follow-up or additional imaging, some of which is blatantly ignored by referring physicians (see my latest post), the escalating salaries of radiologists is a direct result of the "perverse" ordering patterns of specialists and primary care physicians alike. Overutilization (partially driven by defensive medicine as Kevin, M.D. likes to argue) is driving the rising costs of health care with radiology being the fastest growing component. The real culprit in this twisted and broken system are referring clinicians who have no financial DISINCENTIVE for over-ordering diagnostic tests and procedures. Until referring clinicians can safely practice medicine by relying on their own clinical judgement rather than deferring to subspecialists like radiologists for fear of the dreaded lawsuit, radiology practices will continue to grow and radiologists will continue to prosper.
Furthermore, to address your proposed compensation scheme, the measures you propose are naive and impractical, yet not surprising coming from someone outside the medical profession. How is skill measured? By patient satisfaction? Mortality rates? We in the medical community know how fraught with bias this approach can be. And importance? How is this determined? Medicine is an interplay of countless disciplines, each with a uniquely vital role. Obviously, there are no easy solutions.
Posted by: Stark Raving Med at May 6, 2008 10:48 PMDear Stark,
Good point on the referrals and defensive medicine. But the radiologists benefit nonetheless. On the skill question and relative salaries among medical specialties, the AMA has a committee dominated by specialists that currently sets those values. I don't know what the most objective method of setting those rates should be, and it certainly isn't easy. But surely that conflicted group isn't the answer.
Dear Stark Raving Med,
Defensive medicine is only one of the reasons imaging services are the fastest growing sector of the health care industry. They also make up a good part of "ancillary services," which are physicians' answer to falling reimbursements. Physician payments to radiologists have gone up, but payments to NON radiologists for imaging services have gone up faster -- the non-radiologists who invest in an MRI machine, or who own a share in a radiology practice. Add to that CMS's decision to pay for PET scanning for possible Alzheimer's and the sheer number of imaging devices/machines that proliferated when managed care began to die at the end of the 1990s, and you have a perfect storm of over-utilization. Oh, and of course patients demand images when they are unnecessary/inappropriate, in part because the media has told the public how great the new machines are, and becuase hospitals advertise the wonders of their new gizmos.
That suggests that malpractice reform alone won't solve the problem.
Posted by: Shannon Brownlee at May 10, 2008 06:59 AMGooz:
Wouldn't it be nice if someone would report the real figures concerning physician and other health industry providers' incomes?
The amount they earn via "physician billing/charges" is just one category.
How about the ownership and investment in ancillary services such as MRI/CTI/diagnostics, surgery centers, physical therapy and large medical practices?
How about the medical director contracts? That includes the legitimate contracts and the long- term epidemic of "kick-back contracts for referral".
What about the pay-offs from pharmaceutical companies and knee/hip implant device companies?
How about payment for participation in questionable Pharma research studies?
And, what about the incestuous, ever growing self-referral business? (As we know the Stark laws are an absolute joke.)
...ken
Posted by: Ken Schields at May 10, 2008 07:32 AMGooz,
sensible as usual--to a point group practices could solve cost pressures, but then again, so would simply making big cuts in physician payments. both transmute wishes into horses so beggars can ride. why would high paid specialists join group practices that would lower their incomes. sorta like us well-paid liberals voluntarily cutting out incomes to ease income distribution problems in American society.
I suppose the spam for Viagra online will be removed...but before you do that, consider the possibility it may actually be a pertinent comment on how the present fee-for-service through insurance companies is, well, "servicing" the public.
Is it a cry for girding our loins to do the same in return?...could it be a suggestion for release of anxiety?...is it there because the poster wants to help prevent prostate cancer?
I suppose we'll never know the true purpose...
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