Sunday, July 29, 2007

Paying doctors: Room for huge cuts

The New York Times points out that physician reimbursement is one of the reasons that Amerian healthcare is more costly than european (or Canadian, Israeli, etc) health care.

I think they're mostly correct, though the discussion is necessarily simplified. They so point out that the discrepancy is far larger for specialists than primary care, but I think that when one adjusts for differing social costs and workload that primary care physicians in Europe and the US are similarly compensated. The gulf is entirely in the specialties, and particularly the procedural subspecialties (gastroenterology, radiology, etc.). The vastly greater compensation for specialty care in the US has shifted the physician workforce to being largely specialty based, amplifying the total cost to American healthcare. Of course lawyers in the US are probably paid several times as much as European lawyers, but that doesn't change the conclusion.

There's no way to figure out what one should pay physicians because there's no true market in healthcare; the best guide we have is people who pay cash and they tend to be atypically impoverished. It's likely, however, that one could slash US orthopedic reimbursement by 30-40% [1] and still get excellent orthopedic care once the dust settled (though the dust would take years to settle).

There's one point in the article where things went quite wrong however (emphases mine)...
...Dr. Goldman of RAND said that doctors are misleading themselves if they think the current system serves patients’ needs.

For example, if a diabetic patient visits a doctor, he said, “the doctor is paid to check his feet, they’re paid to check his eyes; they’re not paid to make sure he goes out and exercises and really, that may be the most important thing.”

“The whole health-care system is set up to pay for services that are rendered,” he said, “when the patient, and society, is interested in health.”...
I assume Dr. Goldman is not terminally naive, so he must be dissembling. I'm sure his job requires some creative dishonesty, but I wish he wouldn't. There's no real evidence that Americans, or anyone really, is happy shifting healthcare resources from treatment to prevention. Humans simply are not that rational. It's not even close. If Americans were spending their own dime, meaning we had a true healthcare market, I bet we'd spend even less on preventive care than we spend now.

Other than Dr. Goldman's misdirection I agree with the thrust of the article. We could slash healthcare administrative overhead by 70% chop 30% or more off drug costs, and cut procedural/subspecialty reimbursement by 30-40% [1] and still end up with better quality healthcare, by any measure, than we have now. We'd also, with no increase in primary care compensation, end up with a better supply of primary care physicians. The subspecialty offices, however, would have thinner carpets and rattier furniture.

[1] I originally wrote 70%, but that was the result of too quick math. The contrary argument is that, barring continued importation of non-citizen physicians, the US healthcare system is competing for talent with the corporate sector. If US corporate compensation is much higher than European compensation, then that might necessitate higher proceduralist compensation. I don't think that's true however.

No comments: