It’ll take more than Shannon Brownlee’s bloviations to make this doctor’s head explode

Mike the Mad Biologist posts a link to and excerpt from an article that he seems to think will make “M.D.’s heads explode.”

It didn’t. At least, not in the case of this M.D.

Basically, it’s about physician reimbursement, a topic guaranteed provoke controversy, divided between those who think doctors are already overpaid (most non-physicians) and those who do not (most doctors). The article is by Shannon Brownlee and makes a proposal that is breathtakingly naive and poorly thought out:

…we don’t end up saving any money by tightening reimbursements. But we do end up pissing off doctors, who don’t really want to have to run around doing more procedures and seeing more patients just to maintain the same income. It also means we patients can expect to be given a lot more unnecessary procedures, because when doctors do more, they don’t necessarily do more of what we really need. In the 1990s, managed care trimmed physician reimbursements and an avalanche of unnecessary procedures and blood tests and CT scans was the result.

All of which is just one more reason why fee-for-service has got to go. It’s a broken payment system, and it simply encourages bad quality care. Doctors need to be put on salaries.

Alan Sager, at Boston University, suggests that we take the portion of our national health care bill that already goes toward physician reimbursement — about $500 billion — and say to doctors, in effect, you can keep the money, but you have to take it in the form of a salary. Surgeons would no longer be paid separately for each surgery, and primary care physicians would no longer get a separate fee for each office visit.

We might want to redistribute the money a bit, so primary care doctors make a little more and the super-specialists make a little less. The main idea here is to recognize the fact that we can’t save money by squeezing doctors, and what we ought to be doing is removing the financial incentives for giving patients care they don’t need.

Actually, being an academic surgeon, I already work for a straight salary. I could make more in private practice, but the differential has been decreasing, thanks to my salary gradually increasing and the take home pay of private physicians remaining stagnant.

As for this “solution,” it neglects a number of things, not the least of which are for-profit health insurance companies. I’m also very skeptical of the claim that there was an “an avalanche of unnecessary procedures and blood tests and CT scans” due to reimbursement cutbacks in the 1990s. For one thing, ordering blood tests and CT scans do not add to a physician’s income. Even if I were in private practice, ordering such tests would not make me a red cent, although it would make money for the lab and for the radiologists who do the tests. Given that there are laws preventing physicians from owning testing companies to which they refer patients, this is not really an incentive. True, a small proportion of such tests might uncover abnormalities that need treatment, but that’s a really long run for a short slide, given the low yield. I’d have to look at lots and lots of tests to find one patient who needs a procedure.

In other words, although the idea of salaried physicians has some merit, this Brownlee article is full of dubious assumptions on a number of levels.

As for the concept of a salaried physician, which, being one myself, I don’t have an intrinsic dislike of the concept. It works just fine for me at the moment. However, Brownlee’s solution leaves out the fact that a significant fraction of reimbursement does not come from Medicare and Medicaid, but from private insurers. The government could try to become the employer of all physicians by paying physicians on salary, but that leaves out a huge area of reimbursement. And if this proposal involves taking that private insurance and including it in the pot that provides physician salaries, then that is a de facto nationalization of the physician work force. If that’s what Brownlee believes to be the solution to the problem, fine, but she should come right out and say it, then defend the proposition for what it really is.

Here’s the real problem though. Brownlee’s concept of making all physicians take a straight salary, presumably dictated by the government would also be a bureaucratic nightmare to an extent that would not necessarily any better than the present system and might very well be as bad or worse than our current hodge-podge system of piecemeal reimbursement. As a commenter named jon said:

Doctors presently get money from government healthcare, corporate healthcare, and private payers (and combinations of all three.) How would they merge?

Would a doctor that sees 90% private persons paying cash and 10% Medicare/Medicaid get 10% of the government maximum salary? What about a guy who sees 10% private, 30% private/corporate, 30% government healthcare and 30% government/private patients but only fully treats the private patrons? I see the doctors not having to let any of their office staff go. Right now, handling the billing is more than a full-time job or two for most doctors’ offices. How this can be fixed will have to be part of the solution rather than an addition to the problem if this proposal is to have any chance of flying.

Shannon’s response to this comment was not particularly enlightening. In fact, it was in essence a non-answer:

Richard Riley gets the prize for coming to precisely the next question — who pays, and who does the physician work for?

First, let’s remember that there are lots of doctors on salary — at places like the Mayo Clinic, and Kaiser Permanente, and Group Health Cooperative of Puget Sound, the Veterans Health Administration, and Intermountain Healthcare, some of the best organized medical practices around. The key word here is organized, but I’ll leave that part for another post.

These systems are either prepaid, integrated Health Maintenance Organizations (to be distinguished from the managed care we all learned to hate in the ’90s). Or, in the case of Intermountain Healthcare, an integrated hospital system that hires its physicians. Or a government-run system with a budget, a la the VA.

They are also demonstrably better at delivering high quality care than the rest of the fee for service world.

So who would salaried doctors work for? Either an HMO, as is the case in Group Health and Kaiser; the government, as in the case of the VHA; or a hospital system, as in Intermountain Healthcare.

Yeah, yeah, yeah, I know, everybody is blowing a gasket right now, saying I’m crazy if I think Americans are going to go for either a government-based system like the VA, or an HMO. All I can say is, look at the data. These systems all do a better job of delivering care that people need, not giving them stuff they don’t need, and doing it all for less money.

Oh, and the doctors who work in them are generally more satisfied with their jobs.

Who would pay? Well, employers and individuals pay HMOs directly. All of us who pay taxes help support the VA system. I don’t know how Intermountain gets paid.

None of this addresses the main problem: How would each physician’s pay be determined, particularly the proportion that would come from each source? Who would “organize” the distribution of payments? Which HMOs would physicians work for? How would they be forced to work for such HMOs? (And, make no mistake about it, this would require a carrot and a huge stick to accomplish.) What evidence does she have that her system would be any less complex than the present system or that it would prevent more procedures? Clearly, Brownlee hasn’t thought this through very well, if this post is any indication.

In fact, her second post on the topic is also full of assumptions that are not necessarily related to reality. For example:

One poster stated: “You can’t just say that you’re going to cut out the 5% of procedures that are harmful.” OK, but instead of focusing on harmful care, let’s look at unnecessary care (which, it turns out, is also harmful). The amount of unnecessary care delivered in this country isn’t 5 percent. It isn’t even 10 percent. It’s closer to 20-30 percent. That means we’re wasting between $400 billion and $700 billion on care that isn’t doing us any good.

How do we know this? The best work has come out of research at Dartmouth that has uncovered wide variations in how much care patients receive in different parts of the country. The Dartmouth researchers have found a two-fold difference in per capita spending on Medicare recipients in different regions.

That difference can’t be explained by variations in the price of medical services. Of course prices differ in Biloxi and Boston, but not enough to account for the two-fold variation in spending. It also can’t be explained by differences in the prevalence of illness in different parts of the country. (Yes, people are generally sicker in Biloxi than in Seattle, but that can’t account for the difference in spending either.)

The only explanation for it is that doctors and hospitals in different regions are giving Medicare patients a lot more — and a lot more intensive — care.

No, that’s not the only explanation. To say so is, quite frankly, dumb. It may be part of the explanation, but regional variations in care patterns and usage represent a highly complex topic for which a number of explanations have been proposed. She utterly neglects referral patterns, malpractice concerns leading to “defensive medicine” and more testing and referrals to specialists, and even differences in training at different residency training programs that produce the physicians who live in the area. I am not by any means trying to claim that overtreatment is not a problem, and, indeed, the only point that Brownlee gets mostly right is that more specialists do tend to lead to more referrals and higher costs. However, it should be noted that these specialists tend to congregate in urban areas considered desirable, such as New York, Boston, Chicago, etc. Putting physicians on salary would not fix this aspect of the problem; specialists would still tend to congregate in such areas. To use Brownlee’s example, there would still be more specialists in Boston than in Biloxi. Because doctors, tending to have a a generous income by and large also tend to like the culture, lifestyle, and amenities that large urban areas provide, likely the only way to truly overcome this problem would be to dictate the geographic distribution of physicians, as, for instance, Canada does.

In other words, command and control.

All in all, although converting physician reimbursement to a salary system is not intrinsically a bad idea, Brownlee oversells its potential benefits and seems not to be aware that it would not necessarily be any better or any less complex than the system it replaces. It also does nothing to explain exactly for whom all these new salaried doctors would be working or how the various funding streams that reimburse physicians for their work would be integrated into a salary system. She seems to assume that it would not be that big a deal to do.