Is “Socializing” Doctor Pay Sustainable?

Med-school grads make less than business-school grads

And take on far more risk. Is this model sustainable?

John Schnapp, retired partner in management consultant firm Oliver Wyman, “Doctor Pay and Social Priorities, “ Wall Street Journal,  July 20, 201

July 20, 2012 - In government circles, re-engineering doctor pay is much in vogue these days.  Schemes for changing doctors pay include:  “bundled payments,”“capitation,” and “accountable care.” 

The idea behind these approaches to put doctors on tight budgets,  to place them at financial risk should they exceed these budgets,  to “cap” the amount of money they receive, and most importantly,  to do away from that dreadful thing known as “fee-for-service” medicine, the standard form of payment  for most professionals in a capitalistic society. 

In minds of critics in government,  “fee-for-service” promotes overtreatment, excessive visits,  self-referral to doctor-owned centers performing high-tech procedures such as MRIs,  and unnecessary ordering to protect themselves against malpractice suits.  Doctors, in short, cannot be trusted to do the right thing for patients, but are in practice to pad their pocketbooks.

In theory, says the author of a WSJ piece out today, critics maintain that  doing away with FFS and adopting alternative approaches,  “physicians would see their incomes enhanced by promoting the health of patients. The healthier the patients, the more money left for the doctor.”

The Op-Ed writer  maintains  if these anti-FFS schemes were to succeed,  trial lawyers would have a field day assailing doctors for withholding treatment from  patients in the name of cost-effectiveness and self-interest.

In reality,  doctors know much anti-FFS theory is bunk.  People go to  doctors not to stay well but  because they are sick,  and patients, are not likely to abandon junk-food,  exercise more, smoke or drink less just because of the way doctors are paid.   Besides patients  tend to trust doctors more than govenrment bureaucrats and experts,  and, for the most part,  they do not begrude doctor fees.

Doctors are paid and trained  to treat sick people, not to promote health .  And doctors  need the money to pay for what it costs to be a doctor.  It isn’t easy and it’s expensive to  become  a doctor.  Harvard Medical School admitted just  165 out of 5,031 applicants last year.  That's a 3/3% acceptance rate.

Medical school lasts 4 years and costs $200,000.  Medical school graduates carried an average debt of $158,000 in 2011.  Young doctors  then go into residences lasting 4 years or more at salaries of $50,000 to $60,000 per year. Meanwhile interests on their medical school debt continues compounding, sometimes exceeding $100,000.

The United States is unique iamong Western nations n launching its medical graduates into practices with sizable debts.  Meanwhile champions of the Affordable Care Act  continually snipe at doctors, accusing them of  padding their incomes to meet expenses and pay back debts.  

Is it any wonder that doctor survey after doctor survey indicate massive demoralization among doctors with  50% to 70% saying they would not recommend a career in medicine, would not enter the profession if they had it to do over again,  and advising their children not to become doctors.

The WSJ piece concludes:  “If we are moving inevitably towards more and more ‘socializing' of how doctors are compensated for their usual exemplary professional labors, the question arises: Should we ‘socialize’ the costs of creating the skills they bring to those labors?”

Tweet:  The U.S. is unique among Western nations in requiring its medical school graduates to enter practice with average debts exceeding $150,000.