Doctors on the dole.
June 29th, 2008When was the last time you worried that your doctor doesn’t make enough money?
If you haven’t worried about this recently, maybe you should. I’m thinking about this today because of an article in The New York Times about cardiologists owning and operating 64-slice CT scanners. The gist of the article is that doctors are doing too many tests on these machines in order to make the payments on them. (Full disclosure: To the best of my knowledge no cardiologists in our area own these scanners; several LHN hospitals do.)
The article, by Alex Berenson and Reed Abelson, appears generally to be balanced and accurate, though the writers either found or created some goofy cardiologists to quote. One claims that he gave a free CT angiogram to a referring physician, a clear violation of Federal law if the report is accurate. Another is quoted as follows: “It’s incumbent on the community to dispense with the need for evidence-based medicine”. Gosh, most of the docs I know are going in the other direction. Evidence is, uh, usually a good thing.
The authors conclude that unnecessary scans are being done by doctors in order to turn a profit on their machines. They do quote a Georgetown University Economist, Jean M. Mitchell, who correctly observes that “this is not greed. This is normal economic behavior.” Why is it “normal” and “economic”?
The answer lies in circumstances that are not widely understood. Over the past two decades physician reimbursement has basically remained the same while inflation has more than doubled the cost of overhead (rent, staff, insurance, etc.), and of living, for U. S. physicians. That’s right, doctors have taken more than a 50 percent pay cut, as Medicare and insurance companies have held physician fees constant – or reduced them – while the consumer price index doubled!
Doctors are pieceworkers; they are paid by fee schedules tied to each service they perform. Physicians can compensate to some extent for stagnant or falling fee schedules by increasing the number of office visits or procedures they do, but this is clearly constrained by the number of hours in the day. And productivity increases are further limited by the rising documentation (paperwork and computerwork) requirements placed on our doctors.
Having tried cranking up their hours in an attempt to maintain their incomes and lifestyles, physicians are increasingly giving up and cutting back. Many are taking early retirement. Young doctors fresh out of training are choosing shorter hours and predictable lifestyles. And, unfortunately, they seem to be choosing cities other than Fort Wayne.
In years past, doctors came to our region to join a strong medical community but also because they could work hard and make above-average compensation. We are currently having more trouble attracting new doctors to northeast Indiana than at any time in my memory. With the compensation differential fading away, young doctors are selecting places with oceans, ski slopes, or balmier temperatures. We have growing shortages in several specialties, which we only grow worse as the national doctor shortage worsens.
Back to the Times article, it illustrates that doctors have sought to maintain their incomes by capturing a portion of the “technical” component of the healthcare revenue stream. That component, which historically went to hospitals, covers the facilities and equipment involved in procedures and tests, while the “professional” component is traditional physician fees. Venture capitalists and equipment manufacturers have exploited the falling professional fees by urging physicians to invest in CT scanners and the like in order diversify their revenue sources. Critics say this leads to the kind of overutilization alleged in the Times piece.
Physician attempts to capture technical revenue streams through imaging and surgery centers are under attack and are unlikely to succeed in the long run. Just this year, Medicare cut reimbursement for surgery and imaging centers, most of which are owned by physicians. Further efforts by the government and insurers to disincentivize “physician self-referral” are inevitable. There are stormclouds on the horizon for the CT-scanning doctors profiled in today’s article.
In the United States, we are punishing our physicians. The combination of declining reimbursement, deteriorating quality of life, and perverse incentives will ultimately take its toll. The crazy system of physician reimbursement is the biggest driver of the “healthcare crisis” in America, yet politicians rarely talk about it. Our doctors are behaving exactly as can be expected, responding appropriately to the incentives and disincentives offered to them by the government and the insurers.
What to do? The first step in health reform should be a bottom-up redesign of physician reimbursement to align doctor incentives with the health of the nation. An argument could be made that we should compensate doctors well for what they are trained to do and remove incentives for them to branch out into unfamiliar territory. And, if doctors are going to need to “participate in the technical revenue stream”, there are more sustainable models than “one-off” centers with narrow ranges of service that are susceptible to allegations of overutilization and cherry-picking.
The Lutheran Health Network is a - follow me, here - “network” of hospitals and other health providers in northeastern Indiana. It is called the Lutheran Health Network (LHN) because the first hospital in it was Lutheran Hospital (LHI). Others who joined later include St. Joseph Hospital, Kosciusko Community Hospital, Wells Community Hospital and Caylor-Nickel Medical Center (now merged as Bluffton Regional Medical Center), Dupont Hospital, Dukes Memorial Hospital in Peru, etc. The Boards of Trustees of these facilities wanted to be part of the Network but keep their own local names and identities, so they did. We try to tie them all together in the public mind with a cute little butterfly logo (depicted nearby) that is supposed also to remind you of the “H” sign for hospitals. 