The Doctor Shortage - Is Health Care Too Important to be Left to Doctors?

This isn’t an idle question. Sit back a moment and think about it. Many hospital CEOs, insurers, Congressmen, think tank leaders , Medicare bureaucrats, media pundits, employers, journalists, managers, and single-payer advocates think they can run the system better than doctors.

The question reminds one of Clemenceau’s famous statement, “War is too important to be left to generals.” I, for one, don't equate foreign wars with health care. Nevertheless, the reasoning goes like this. The issues of ware and disease are too big for generals or doctors to grasp or control. Health care may be even more important. It takes 16% of the GNP versus 3.5% for the military, and the casualties, estimated by the Institute of Medicine, are 100,000 unnecessary annual deaths in hospitals, exceeding by far Iraq’s combat deaths, approaching 4,000 over a five year period.

Let me state upfront I don’t agree with the analogy of generals, doctors, and war. My sympathies are with the doctors. Doctors may be fighting a war against disease, but federal rules and regulations unnecessarily and often unfairly hamstring them.

Physicians rarely set their own fees – or are seldom free to do whatever they might want to do for patients. Medicare sets physician payment rates for a wide range of services. Private insurance companies set their rates based on what Medicare pays. The money doctors receive often has little relation to costs of doing business.

I became acutely aware of this today. I was speaking to a family physician who is leaving town because his three person practice is collapsing economically. He said, “ I get $12 from Medicare for seeing a patient postoperatively in my office. The surgeon got $3000 for doing the operation. Medicare fees simply have no relationship with my costs of doing business. Primary care is on the verge of collapsing, but no one seems to care. You simply can’t practice independently anymore. You have to be salaried by a hospital.” Something has to be done, he said, to level the economic playing fields between hospitals, specialists, and the primary care doctors in the trenches.

Hospitals consume nearly half to the $2 trillion spend on health care in the U.S., But they too are bound by Medicare rules and regulations, which account for roughly ½ of their revenues. Hospitals and systems have sought for years to find ways to unite doctors and hospitals. These ways include: physician employment, joint ventures, gain sharing projects, centers of excellence, and integration into clinic model. Once again, federal rules make many of these ventures hard to carry out. In all of these efforts, hospitals – because of their superior resources, organization structures, access to capital, and sheer critical mass – have economic advantages over physicians.

In addition, third parties dictate what doctors can and can’t do for patients by declining to pay for services doctors think their patients might need. To complicate matters, the Medicare regulatory code for doctors is 130,000 pages long (compared to 11,000 pages for the federal tax code). Doctors must document everything they do or risk civil or criminal penalties for fraud.

According to Merritt, Hawkins, & Associates Guide to Physician Recruiting (Practice Support Resources, Inc),

"This is not the environment most of us work in. There is no ”third party” barrier between the lawyer, the accountant, the computer programmers, the plumber, the mechanic and his or her clients. They all set a fee, perform a service, and are paid directly by the person for whom they did the work. Imagine a plumber who fixes a pipe for a fee set by the government – a fee that does not meet the cost of his tools. The plumber then submits a bill - not to his client, but to an agency or insurance company. The agency then declines to pay the bill n the grounds that they do not cover that particular service under those particular circumstances. It would be no surprise if, under these conditions, plumbers became a generally cranky group – especially if they had to complete 11 to 15 years of post-college training to become plumbers.”

It should also come as no surprise that,

•The morale of the medical profession is at an all-time low.

•The U.S. faces a 50,000 shortfall of physicians by 2010 and 200,000 by 2020.

•Medical students are no longer entering primary care specialties – which Medicare pays at a rate of $90 an hour (actually $40 an hour after overhead is paid) – and going into specialties which pay as much as $600 an hour. Medical students are no fools, and word quickly gets around.

•Doctors, beset by declining federal reimbursements, rising practice costs, and worries over malpractice, are increasingly seeking employment, and in the process, forsaking autonomy and independence.

Why this state of affairs? It boils down to a matter of mindset. If you think of disease and death as inevitable and of patients as vulnerable, ill-informed, and potential victims of doctors, you have to protect them. If, on the other hand, you regard patients and doctors, as intelligent consumers of care and providers of integrity, who give that care, you may believe they are perfectly capable of fending for themselves.

If you regard health care as a “inalienable right,” then naturally government has to make the rules, set the fees, decline the payments, make everything transparent, provide the oversight, and supply the advice on how to make the system rationale.

The advice goes like this.

•Overhaul the payment system by eliminating fee-for-service. Fee-for-service, you see, gives doctors incentives to do more services. To use the words of critics, it creates a “fee-for service treadmill that runs faster and faster in pursuit of billable services.” Never mind that the rest of the economy runs on a fee-for-service basis, buyers tend to trust those who set the fees, and the market in general does a good job of weeding out and regulating miscreants.

•Organize doctors into bigger groups so they can have a managerial infrastructure that places them on salaries, gives them no incentives to do more, compels them to follow protocols, and otherwise integrates, rationalizes, and coordinates their professional activities. Never mind that this talk have been around for at least 50 years, that only about 10% of doctors practice in groups of 50 or more, that 75% still practice in groups of 5 or less, and that most doctors still think of themselves as automomous professionals, not unlike university professors, who deem themselves capable of making their own judgments.

•Create a homogenous national system that eliminates regional variations, charges uniform fees, pays only for evidence-based care, follows rigid protocols, documents performance of all doctors, and rewards those with the best outcomes. Never mind that Wennberg and his associates at Dartmouth have been decrying the sins of regional variation for 33 years with visible effect, that monolithic top-down regulation to achieve uniformity rarely works, that federal bureaucracies are easily manipulated to favor those doing the manipulating, that patient expectations and demands vary profoundly from one region of the country to the other, and that pay-for-performance and outcomes has so far produced a very mixed picture.

What is the solution? No one can say for sure. Right now an ideological battle is being waged between government and marketplace advocates. Government advocates say only government can achieve universal, evenhanded, and equitable care. Marketplace advocates say a free-market is much more efficient and innovative at distributing resources.

In the end, political and managerial compromises are likely, and public-private partnerships, i.e. “deals,” will result. As always, there will be “top-down” versus “bottom-up” considerations. It’s my belief that consumers and doctors, acting together, and with help from the business community with their management platforms and retailing strategies, are better equipped to achieve what patients and doctors want – efficiency, choice, convenience, value, access to technology without rationing, and freedom from bureaucratic rules and regulations