I'd just add that we need ways to control volume as well as price. There's a lot of research showing that, in medicine, supply drives demand.

I'll doubly add that volume is significantly more important than price for the reasons you suggest. (Normally, you're the price guy and I'm the volume guy.) In most of the above examples, these are actually good examples of volumes increase. The rules for when cataract surgery is appropriate are pretty clear (and while the envelope can be pushed here, most patients are pretty reluctant to allow eye surgery if they are seeing OK)-- so its actually a case where financial incentives are pushing service efficiencies that allow for greater capacity in the system. The only problem in these situations (laparascopic gall bladder surgery, etc.) is that payments should be decreased to reflect these efficiencies. In short, not all increased volume is a bad thing.

As we say in medicine, good pick up, Ezra. Cost = quantity multiplied by unit cost. Addressing the piecework payment system in medicine is THE key issue in cost control. Pay 'em a good salary, with no incentive for over-treatment. Establish peer monitoring to watch for under-treatment. Good luck with the politics of it all. Next case.

P.S. I am a family doc, but I agree with Wisewon and will defend general surgeons to my dying breath. The one in my town saves my patients' lives on a routine basis. They are most important physicians our society has. No matter how much they're paid, what they do is worth more.

I agree with Wisewon that the volume issue is an important part of price.

In fields like radiology, orthopedics, cardiology, and so on, the great increase in payments to doctors has been more to due to shifts in patterns of care than prices. In fact, Medicare and other third party payers have been pushing back hard on price, dropping fees for CT, MRI, joint replacements, and so on by over a third and often over half. But this price cutting has been accompanied by spectacular increases in volume. Volume of high tech exams and interventions has increased in diagnostic radiology so much that most radiology practices outside the coasts and resort locations are short handed because of being unable to recruit enough doctors -- contributing even more to increases in physician incomes.

This brings us back to the issue of practice standards. If we are going to get a handle on costs for high tech medicine, we need to find a way to first prove what is useful and what isn't, and second to find ways to get providers to cooperate. Education is a start, by publicizing appropriate standards and if possible by including statements of standards on electronic medical record systems so that providers see these standards right in front of them when they summarize a case and get ready to order tests and referrals.

However, experience as a diagnostic radiologist for 30 years leads me to believe that without some form of sanction these steps won't work on their own. Hundreds of times I have told primary care doctors, ER specialists, and some specialists that the high tech studies they are ordering are unlikely to be of any use in the clinical setting they describe, only to have them go ahead and order the studies anyhow. Pressure from patients themselves, fear of making a mistake, preference for using imaging in place of referral, and an irrational belief in the primacy of high tech procedures are all part of the cause.

The real solution is to have a payment system that puts teeth in practice standards that both improve results and save money.

And the only way to get this solution is through use of very powerful payers who are able to withstand the danger that they will become known as the payer who will not let you get an MRI.

And the only good way to give that sort of power to a payer in a democracy is to have the government act as the payer, since the government is subject to the controls of democracy while private payers answer only to stockholders, competition, and the whims of their very highly paid executives.

There are three reasons why we need to adopt a single payer system eventually. First, it will provide care for everyone. Second, it alone has the power to prevent health care from destroying the economy. Third, single payer alone would have the power to solve problems of effectiveness and quality in US health care. Private payer have been trying to fix these problems for over 60 years, and the mess we have now is the result.

We need a new system. The system we need in a single payer system with an accompanying strong agency testing effectiveness of therapy and procedures.

BTW -- Wisewon does not seem to know much about the history of diagnostic radiology. First, diagnostic radiology has been among the highest paid specialties at least since the 70's, second it has been one of the hardest specialties to get a residency in for most of that time. It has been in the same class as orthopedics. And the thing that attracts most radiologists to the field has been a greater interest in problem solving and diagonosis than management, and a desire to be involved in a field that was clearly way out on the cutting edge of the development of medical science.

I agree with everything Patrick wrote. Plus he's radiologist for universal care. Most impressive.

To add to my previous post on the subject, I'd take Patrick's lateral and run with it.

Part of making a system that is more careful with the use of MRIs work is having PCPs who have the skill and credibility to use MRIs (for example) truly as "another tool" and not some kind of magical diagnostic wand.

To do that you need PCPs to have professional skill and standing. This is not to say that PAs/NPs cannot become part of that, but it is to say that you cannot fully industrialise PCPs, you cannot replace them with "any old nurse and a computer based diagnostic aid."

"Any old nurse and a computer based diagnostic aid" might work when MRIs cost about the same as a latte, but I don't think we're there yet.

In the UK, some primary care practices can choose to earn incentives for managing their patients' care to reduce use of specialists and outside services. They get a fund for outside use, based on patient demographics, and if they keep service below that amount they get a percentage of the difference to reinvest in their practice.

One GP group reduced outside use significantly by having a small group of respected GPs review all referrals -- this created pressure to provide high-quality referrals or avoid, in large part just by imposing a sense that somebody's watching.

This only works with a strong PCP group model, but the provision of incentives like this one helps to herd the cats. And the nice thing about these incentives is that their system-focused, not individual -- and I think on the whole more difficult to game than quality indicators, which have been popular in the UK and elsewhere for GP bonusing and wage increases. Those tend to just add more care and to introduce distortions (eg. intense focus on one disease and set of patients).

The figures on usage reductions were impressive - presenter was a Dr Charles Alessi. And its GPs, not the (potentially vulnerable, less-informed) patient, bureaucrats or insurers or "the market" making tbe call on service.

This gatekeeper role, as some other commenters have noted on other posts, is why highly-trained GPs are broadly preferable from a system perspective to those with less training who are more likely to rely on tests and specialists. NPs and PAs etc. have a role but the GP does more than treat colds and push pills -- or should --

BTW -- Wisewon does not seem to know much about the history of diagnostic radiology.

Patrick,

I stand by what I said.

There's a great article a few years back from a little journal called Radiology.

RESULTS: The RA (relative attractiveness) of diagnostic radiology varied greatly during the past 10 years, with a low in 1996 and a return to its high in recent years. There is a relationship between the RA and economic vitality of diagnostic radiology, with the RA lagging behind the HWI and AMA salary data by 2 years.

CONCLUSION: Medical students appear to have an in-depth understanding of the economic forces at play in the health care job market and incorporate this information into their choice of a specialty.

Here's the link to the full article if you'd like a more in-depth understanding about what's happened in your field since you trained 30 years ago.

http://radiology.rsnajnls.org/cgi/content/full/221/1/87

Nick: What you are describing is an HMO. I think it's a good model for efficient care delivery, but I seem to be the only person with that opinion.

As HMOs vary widely (and I live in Canada), I can't say authoritatively "no", but I'll say tentatively "no". The idea is simply to encourage PCPs to fulfill the gatekeeper role as described by Barbara Starfield and others, not to punish patients or providers or limit access where it's needed. This helps to push back against the incentives inherent in volume-based care, or in measures of patient satisfaction that correlate strongly with excess system utilization.

Simply regulating/restricting access to specialty care and diagnostic tools is demeaning to the PCP, not an enhancement of their role!

There's only one solution to this. Pay doctors on a flat salary.

Volume disappears, and people dont get scanned or procedures unless they really NEED them.

Novel idea, I know.

As long as you pay docs based on a per-unit basis, you will have this problem. Flat salary is hte ONLY solution.

There's only one solution to this. Pay doctors on a flat salary.

Nope, that removes only one of many incentives for over ordering and no incentives for over referring. Try again.

Nick: What you have described is exactly what a capitated group of doctors do under an HMO.

Wisewon --

The mid-nineties dip was a well recognized phenomenon in radiology, but was only a short lived exception to steady spectacular growth. In the mid-nineties, the impact of managed care and of the economic downturn of 1987-1993 resulted in a short term decrease in the demand for radiologists. The American Board of Specialties took the opportunity to cut the number of radiology residency positions by eliminating very small programs entirely and by cutting back the number of positions at some residency programs that had increased the overall numbers they were training. This did strengthen the quality of training, but at the expense of the number of new radiologists produced. The American College of Radiology and organizations like the Radiological Society of North America -- the publisher of "Radiology" -- definitely supported this move, for reasons both good and venal.

You need to be very careful about what any specialty society says about itself, since their main goal is to strengthen the specialty financially and otherwise.

The mid-90's dip was a temporary exception to the general rule. By 1997 the demand was increasing rapidly again due to expanded use of CT and MRI in areas they had not been used before. In fact, demand for radiologists and radiology residencies as well as radiology incomes has risen steadily over time since the 1960's. Looking at radiology incomes, if you consider 1975 the baseline, incomes went up about 400% from 1975 to 1993, then fell by about 10% from 1994 to 1996, then increased again by 300% from 1997 to 2007. All due to the wider use of high tech imaging in applications that had previously not existed and to an increasing dependence on imaging for almost all specialties.

Flat salaries.

Interestingly, except for the countries that have true socialized health systems that are completely state owned, almost all other countries use fee for service to pay providers.

The reason is that while fee for service does include an incentive to do unneeded work to boost income, the flat salary and its cousin, the capitated system, includes incentives to do too little work. Even Britain found it needed to include production bonuses as incentive to do the right kind of work.

The best system, in my opinion, is to go straight at the problem by creating practice standards, then paying providers for care that meets those standards but not for care that doesn't.

Not only do you not get paid if you don't work, but you don't get paid if you don't work correctly.

I have been in flat salary systems. The major incentive there is to spend more time on coffee break.

Hmm, the moral of these anecdotes seems to be to never get better at your job, otherwise in the long term your salary will be cut. Or at least hide it when you do.

When a UAW member is able to to do three assemblies in the time he used to do one, no one (who's not a Republican) is saying he shouldn't be paid more for his increased productivity.

Patrick,

Thanks for your response, which pretty much agrees with what I said the first time. You added some color on what happened before the 1990's, which is nice and further adds to the point-- the economics of specialties go up and down over time, and the attractiveness of specialties change as a result.

For radiology, that means that once we allow cross-national teleradiology, which is inevitable, medical students will stop going into a field that has to compete with Indian docs that will do the work for 20-30% of the salary.

Hmm, the moral of these anecdotes seems to be to never get better at your job, otherwise in the long term your salary will be cut. Or at least hide it when you do. When a UAW member is able to to do three assemblies in the time he used to do one, no one (who's not a Republican) is saying he shouldn't be paid more for his increased productivity.

When I was studying a unit on labor and factory issues in college, a factory worker heavily involved in union issues had spoken to us about his experiences, and one of the points he made was that the union specifically focused on recapturing those productivity gains for the workers because they knew that there would be nothing but downward pressure on wages in an incentive/pay per unit system.

The flip side, though, is that it's hard to find doctors who are willing to spend all day, every day specializing in a single procedure and nothing else, so there is an opening in which you can make decent money by being more productive than your peers and profiting from it, since your peers likely don't have the time or the inclination to spend so much time doing the same procedure that they can catch up to your productivity level.

Wisewon:

We do agree that the problem of overpayment to specialists must be addressed.

We also agree that it has to be addressed in two ways.

The first is pushback of premium fees for high tech procedures. CT and MRI fees should be lower. Back surgery and joint replacement should cost less. Fees for laporoscopic surgery should decrease to levels similar to conventional surgery. And so on. All of these fees benefit from being set at relatively high levels when the procedures were new, technically unusual, and more time consuming. Now they are routine, and fees should be adjusted accordingly.

The second is to decrease in the number of procedures themselves. Practice standards need to be set to stop doctors from ordering or performing procedures that are either not needed or actually result in worse care. There is preliminary evidence that the management of back pain, the management of coronary artery disease, the management of high blood pressure, the management of headache, and other problems could be changed in ways that result in better care and the saving of hundreds of billions of dollars.

To do this we need a cop. The best cop would be a national scientific medical standards foundation -- as envisioned by Tom Daschle -- that could study these problems and could issue regulations that would change the way some problems are managed. This needs to be national in scope and needs to be public rather than private in order to achieve uniform results not colored by issues of gain for insurers, providers, or others.

And speaking of being colored by gain, radiologists often call the article you referred to in "Radiology" the "will read mammograms for food" article. It is a classic example of cherry picking statistics to defend a position that is essentially not true. By picking exactly the right time period, RSNA was able to make the argument they wanted, which was that unless radiologists received extremely high income premiums there would be a shortage, and that very high incomes had to continue in order to provide radiologists.

The point about cross national radiology readings will happen about the same time that the US starts allowing Indian surgeons to visit the country during the summer and do surgery much more cheaply than US surgeons. It is not impossible that the US and the various states will relax their standards for medical licensing, but not very likely.

Right now you can read teleradiology only if you are licensed in the state the exam originates in. Radiologists licensed in Ohio cannot read exams from Michigan unless they get a Michigan license.

I will be very surprised if the US starts allowing people from third world countries to practice medicine in the US without going through the appropriate qualification and licensing. Maybe it will, and one way to drive down costs in the US would be to flood the country with foreign doctors who would do general surgery, radiology, orthopedics, neurosurgery, ENT,and other costly procedures for a lot less money.

International teleradiology would be a cause of medicolegal liability problems. If an Indian radiologist misses a diagnosis, who gets sued? Not the person living in India, that's for sure. More likely the hospital that hired the radiology service. It wouldn't take more than one big lawsuit to wipe out any savings the hospital achieved on it's international hire.

If this analysis were at correct, then why do we see equivalent variability of spending within (say) the VA system?

Yes, supply drives spending but you have come to understand this in a kind of cart before the horse manner.

Healthcare spending is fractal (it will ALWAYS be fractal), when will you policy wonks recognize what is quite obvious to those of us are are both clinical physicians AND actually crunch numbers for a living every day.

Red Baron --

I read your comment, and was left with the question of what you are talking about. Obviously you are expressing some ideas not being talked about here.

Please expand a little, for those of us whose only experience with number crunching is managing a practice.

What do you mean by spending being fractal? What are you talking about in the VA in terms of variability?

Teach us.

Massachusetts State Health Plan has National Appeal?

see - the story

My comment

"Kudos to Massachusetts for jumping in first. But we can learn from their mistakes also. And there is a glaring one!

Mass,(especially Boston) being one the hubs of the excesses of a high-tech-high-cost treatment driven "disease care" system does NOT have an economically sustainable "health care" system.

I'm a Doc from Philly which has the exact same problem.

In cities like Boston, Philly, New York, Houston, LA and many others we need to transform medicine. Much of the excess has got to go and move toward primary care, prevention, home care and hospice.

It will be painful but it is an economic imperative. Because, if we don't, the current approach will bankrupt the economies of these cities and states and the nation as a whole

Believe it! "

Dr. Rick Lippin
Southampton,Pa

BTW- How do you like the term "preventionist"?

We talk about desiring health care 'value,' but it seems we haven't really internalized the idea.

"General surgery. Its a pretty tough life-- in terms of lifestyle impact, they deserve the $75-100K more than the PCP. Its the Radiologists and Dermatologists that have PCP hours but are making 300-400K that are the problem."

We shouldn't pay people for their 'hard lifestyle' or say that radiologists shouldn't make more money because of their 'PCP hours.' And we certainly don't need flat salaries. What we do need to do is get better at measuring the benefit of different medical interventions (by that I mean everything from coordinated care to an actual procedure) and align payment to that benefit. That is value. Redirect the market towards something we care about- measureable risk adusted outcomes.

If dermatologists aren't providing benefits commensurate with their cost, then their salaries will go down. But they should go down just because they don't feel enough lifestyle pain.

It all starts with the language, and we need to focus our discussion on how to get the most benefit out of the money we spend. Finance reform is not to exact some sort of ambiguous justice based on who works the most.

In recent times, others have appeared to express concern, and have become aware of the apparent shortage of primary care doctors in particular- both presently and in the future they speculate that the shortage of doctors will continue to exist or progress to even greater shortages of PCPs. Less than 20 percent of medical school graduates go for primary care as a specialty. Typically, the main reason believed and speculated by others for this decline of this unique health care profession specialty that historically has been the apex of our health care system is lack of pay of PCPs, which is the second lowest medical specialty next to pediatrics, it has been reported. Some anticipate a shortage of 60 thousand primary care doctors now and in the future. Most primary care doctors today would not recommend their specialty, or their profession, possibly.
Once viewed as a vocation with great esteem and respect, a desire to be a doctor may not be desired as a career path by many. While this profession requires admirable commitment and dedication, as reflected in their training regimen in the U.S. that consumes about a third of their lifespan, the complications associated with practicing medicine in many situations presently may be why others are not seeking this profession. Such complications may include:
Primary Care Doctors perhaps more than other physician specialties seem to be choosing to practice medicine under the direction of health care systems for financial security, primarily, as the cost involved with running a medical practice is quite expensive. These regional and nationally created healthcare systems are typically composed of numerous hospitals and clinics in a certain geographical area.
The often monopolizing nature of the business models of these health care systems of increasing growth is not necessarily a desired method to practice medicine as a primary care physician in particular. Often, these often large health care systems employ their authoritarian stance by limiting as well as dictating how their health care providers practice medicine. This is further aggravated by possibly unreasonable expectations of their health care system employer- such as mandating that doctors they employ to see as many patients as they can in a full day. There actually have been cases of physicians being fired by a health care system for lack of patient volume that they have in their practice. Conversely, there are instances where health care providers receive financial rewards for seeing more patients a day than what is determined as average visits by the health care organization, it is believed. Such requirements likely and potentially affect the clinical judgment that is determined by physicians employed in this manner, as well as the quality of care the doctors provide their patients. Medicine should not be viewed as a profession of speed and volume.
Another reason may be due to the increasing premiums for their mandatory malpractice insurance, which may make doctors financially unable to work independently due to such factors involved with practicing medicine presently. In regards to malpractice insurance for physicians, many doctors find this type of insurance in need of reform for a variety of reasons. These premiums become more costly for doctors as it relates to their chosen specialty as a health care provider. For example, the malpractice insurance premiums of an OB/GYN doctor are usually higher than one of a specialty viewed less risky for lawsuits, such as Dermatology, perhaps. With malpractice cases that are initiated, those who initiate a lawsuit against a doctor win about 25 percent of the time, with monetary awards averaging nearly a half a million dollars for these who sue doctors and win. Around 95 percent of these cases are settled out of court, it has been reported.
In addition, the issue of medical malpractice is also frequently a catalyst for a doctor to practice what has been called defensive medicine. This basically means that the health care provider is prohibited from relying upon their subjective factors in their assessment of their patients, which in itself raises the question of what the point was of all of their training in the first place. They are compelled to order perhaps unnecessary diagnostic testing to rule out medical conditions or disease states that likely such patients do not have. This practice of defensive medicine may be encouraged by the health care systems that employ such doctors as well. This waste of medical resources is further validated by the legality reflected in the tone of the notes a doctor usually annotates or dictates with their patients after they see them for treatment. So one could argue that over-treatment is as common as under-treatment of patients in today’s health care system.
Such excess and limitations imposed on today’s primary health care provider are usually not fully illustrated during their training for this profession, which is one that has been viewed as one that is quite noble and of great responsibility. This may be why this medical profession may no longer be viewed as distinct from other vocations as it once was, or one that has been desired more than apparently it is now. Some claim that doctors are somewhat understandably more cynical and demoralized than they have been in the past, which may be replacing the pride and responsibility that they historically have had with what they believed were their callings as doctors, as well as the perceptions of patients in the U.S. Health Care System.
Further complicating and vexing to these restrictions is the usual financial state of the individual physician after their training, as many have debt that may exceed over 100 thousand dollars. This is much more debt than what doctors experienced after their training only a few decades ago, it has been said.
Conversely, there are obviously some others who believe that doctors in the U.S. are over-paid and greedy. In spite of how they are judged, physicians are likely not absent of financial concerns as with many other people, yet the situation with doctors may be of more of an issue than many other professions, comparatively speaking, in addition of taking on more responsibility that is of greater importance compared with other vocations, one could argue. Such realistic variables should be factored in when one chooses to judge the profession of a physician. On the other hand, no physician should view their jobs as no different from any other venture capitalist when rationalizing their income and motives related to this exceptional vocation as a doctor, as others are more dependent on their judgment for the restoration of their health.
It has been determined by others, and suggested often and lately, that many of today’s physicians practicing medicine in the United State do not recommend or speak favorably of their professions compared with their typical views of their profession in the not so distant past. While this self-perception physicians may have of a negative nature may be somewhat understandable, it is also unfortunate for the health of the public in the future, and the perception normally associated with the medical profession which could deter ideal medical care for others.
There have been cases where doctors do in fact change careers, and get into vocational fields such as medical communications or corporate medical companies. Also, expert witnessing is another consideration for those who choose to leave their profession. Finally, other choices considered include consulting and research. The training of doctors fortunately leaves them with options not involved directly with the flaws of medical care, but this is bad for us as citizens, overall. The etiology of their departure from their designed profession is largely due to the negative state perceived by themselves as well as others of their profession as medical doctors.
Again, and for perhaps Primary Care Physicians in particular, the medical profession clearly needed by others to some degree appears to be absent as a desired path of today’s careerist. The authentic reasons for what many believe to be a negative perception of possibly the entire health care system may never be known, yet many would agree that most U.S. citizens are understandably concerned with the state of this system of great importance to society. Yet need to be active more in assuring this necessity is more aseptic.
“In nothing do men more nearly approach the Gods then in giving health to men.” --- Cicero
Dan Abshear (ex-military medic and physician assistant for nearly 20 years)
Author’s note: What has been written has been based upon information and belief of a layperson, yet also the assessments of a patient.