Monday, June 16, 2008

The Doctor's Dilemma: The Parable of the Plumber

Occasionally I come across a passage in a book or article that is notable and quotable and captures the essence of one of American doctors’ many dilemmas. This passage is from Merritt, Hawkins & Associates Guide to Physician Recruiting (April, 2007). This recruiting firm is currently conducting a survey of all of America’s 270,000 primary care physicians for The Physicians Foundation for Health System Excellence.

Physicians are different from other professions by virtue of the ground rules of contemporary medicine. The ground rules are largely determined by the way in which medical services are paid for in the United States today. Medicare sets physician payment rates for a wide range of services categorized as Diagnostic Related Groups (DRGS). An orthopedic surgeon might be reimbursed $500 by Medicare for setting a simple bone fracture. Private insurance companies often set their reimbursement rates based on what Medicare pays.

The point is that physicians rarely set their own fees. Their fees are dictated to them by Medicare, Medicaid, HMOs, PPOs, and other third parties. The money reimbursed to them for services may have little or no relation to their cost of doing businesses. What can be more aggravating is that sometimes third parties also dictate what physicians can or can’t do for their patients, by declining to pay for services physicians may believe their patients need.

This is not the environment most of us work in. There is no “third party” barrier between the lawyer, the accountant, the computer programmer, the plumber, the mechanic and his or her coolants. 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 or company then declines to pay the bill on the grounds that they do not cover this particular service under those particular circumstances.

It would be no surprise, 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.


Farby100 said...

After a plumber finishes the job, the customer has to pay for the bill with cold hard cash - nobody else foots the bill. The physician's patient usually never has to even look at the bill, and even if s/he does, doesn't care because "somebody else" (insurance company) is paying for it, right? (We all know that is not true, but at the moment of the transaction, it sure seems like it). If a patient had to pay for that $2000 MRI right out of the pocketbook or wallet, like a plumber's bill or a car repair bill, then we might not see so many of those scans, labs, test, procedures, and hospitalizations. And maybe the price on the bill would be more realistic than the inflated "list price" that most physicians charge.

DoctorDan said...

First of all, you'd be in much better shape paying $2000 for a non-invasive test than the traditional alternative which involves not knowing what is wrong. This leads to leaving important problems alone which can be expensive or deadly later on (e.g. cancer). The flip side is that you end up getting a $5000 surgery you didn't need to begin with. Also, very few MRI's cost $2000 these days - Farby100 clearly is misinformed about this. Those that do approach the $1000-$2000 tend to be for very serious life threatening conditions like strokes, tumors, etc. But the one thing Farby100 does have right is that more consumer choice (via consumers actually paying personally) in healthcare would likely lead to more efficient care. At the very least people would probably be more engaged in and value their health if they viewed it more as a service/privilege and less as an entitlement. Lastly, part of the reason the prices for such scans may seem inflated is that medicare and insurance companies often agree to pay only $0.60 on the dollar and the physician's practice or hospital is left holding the bill for the rest. "Real world" analogies of the type that farby100 is trying to apply can be very deceptive when one is misinformed. said...

Thanks so much for this post, pretty helpful data.

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