Are New Yorkers Sicker Than Patients in Atlanta–or Are They Just More Likely To Be Diagnosed?

At a dinner party in Manhattan, someone mentions the problems he has been having with his sinuses, and his doctor’s diagnosis. Since everyone at the table is over 40, his comment quickly leads to a lively discussion of back pain, rotator cuffs, high blood pressure, skin cancer, and diverticulitis. It seems that everyone in the room has been diagnosed with something. Finally, someone asks “Are we really that old? Can’t we talk about something else?” Everyone laughs and the conversation turns to politics.

I couldn’t help but recall that evening while reading an article in the May 12 New England Journal of Medicine (NEJM) titled “Regional Variations in Diagnostic Practices” written by a team of investigators at Dartmouth.

Earlier work done by researchers at Dartmouth has shown that patients in some regions receive moretreatment than others. This newest study, written by Yunje Song, senior author Elliott Fisher, and colleagues, goes further, to suggest that patients in places such as Miami, New York or McAllen, Texas are more likely to be diagnosed in the first place. “Their doctors order more tests and refer more patients to sub-specialists than doctors in Atlanta, Phoenix or Jackson, Mississippi,” explains Jonathan Skinner, one of the co-authors, “and so they discover more disease.”

At first glance, this might suggest that physicians in Atlanta should devote more time to testing, so that their patients can enjoy the benefits of early detection. But when the Dartmouth team looked at survival rates, they found that in regions where there is more testing and more diagnosis, patients fare no better. This suggests that our enthusiasm for diagnostic imaging has led to “early detection” of what some doctors call “pseudo disease” –small breast lesions that will disappear, without every leading to breast cancer, or lower back pain that, with time, will vanish on its own, without any need for surgery.

As Dartmouth’s Dr. Gilbert Welch points out, the explosion of medical testing has created an “epidemic of diagnosis:” “Exactly what are we doing to our children,” he asks, “when 40 percent of summer campers are on one or more chronic prescription medications?”

Given Regional Variation in Diagnosis, How Can Reformers Adjust For Risk?

Nevertheless, once the diagnosis is recorded in a patient’s medical record, it becomes a fact. The New Yorker who has been diagnosed with early stage prostate cancer now appears sicker than his cousin in Atlanta, who has never had a PSA test. The New Yorker may never experience symptoms, but he is now listed as a cancer patient.

This poses an enormous problem for health care reformers who hope to adjust for risk when deciding how much to pay hospitals and doctors. Under the new legislation, Medicare plans to begin rewarding providers for the quality of the care they offer—paying more for better outcomes. But Medicare recognizes that some providers care for sicker patients, and in those cases, outcomes won’t be as good. Obviously, hospitals shouldn’t be penalized because they treat more vulnerable population. They, too, should be eligible for bonuses.

Reformers who plan to compare the effectiveness of various products and services, also need to adjust for risk. If a patient suffers from two or three diseases, this could explain why he is not responding to a new cancer drug.

Clearly, regional variations in diagnoses could wreak havoc with risk-adjustment. As the authors of the study note: “Risk adjustment is only as good as the information on which it is based. Current risk-adjustment methods depend on the diagnoses that are recorded by physicians in medical record. . . or are coded by medical-records personnel and billing staff in hospital discharge abstracts and physician claims…” “If physicians have substantial and systematic differences in their diagnostic practices that are unrelated to the underlying health of their patients but are related to institutional or regional practice patterns, biases in risk adjustment will result.”

Testing the Hypothesis

To test their theory, investigators began by comparing trends in laboratory testing, imaging and diagnosis in different “hospital referral regions” (HRRs) across the nation. They grouped these regions into five quintiles based on the intensity of hospital and physician services in the HRRs, ranging from the 1st quintile (least aggressive) to the 5th (most aggressive).

They then identified 5,589,741 Medicare beneficiaries who received Medicare from 2001 to 2003, zeroing in on the 255,264 individuals in that group who moved sometime during those three years. Some migrated to a city in the 5th quintile where physicians do more tests; others moved to a place where diagnostic imaging is not as popular. The researchers asked two questions: Would seniors be diagnosed with more diseases simply because their address had changed? What would happen to those who didn’t move? (Researchers excluded beneficiaries who died during those three years because, wherever they moved, as their health deteriorated, they would have been likely to see more doctors and undergo more testing.)

The Results of the Study

As the table below reveals, a change of place made all of the difference.


Jamachart518 Percent Increase in the Number of Major Diagnoses, Diagnostic Tests, and Imaging Services among Medicare Beneficiaries, According to the Intensity of Practice in the Hospital Referral Region (HRR) in Which They Lived.

The investigators had expected that, as Medicare patients aged, they would be diagnosed with more major diseases. And indeed, they were. The top line of the table shows that those who lived in a town like Phoenix (in the 1st quintile) and stayed put, nevertheless watched their diagnosis rate rise by 65 percent over the course of three years.

But what is striking is what happened to those who moved from a 1st quintile region to a 5th quintile city such as Miami. Over the same span, their diagnosis rate jumped by more than 100%. (See the third line of the table). Suddenly they appeared much sicker than friends who stayed at home–at least according to their medical records. As the third and fourth columns show, their doctors ordered many more tests. Seek and ye shall find.

“It’s not hard to understand how this happens,” says Skinner. “As Jack Wennberg [the father of the Dartmouth research] has said: ‘Older people are vast reservoirs of disease.’ It’s relatively easy to diagnose any Medicare patient if you look hard enough.”

What about patients who moved to an area where care is more conservative? The bottom two lines on the table show that those who moved from a 5th quintile town such McAllen, Texas to a town more like Atlanta or Jacksonville, Mississippi (both in the 1st quintile) appear healthier (at least on paper), after making the move. If they had stayed in a 5th quintile region, their diagnosis rate would have risen by 55% over three years; those who moved to a place where doctors are less assiduous saw diagnosis rise by only about 43%.

Still, many Americans would find it hard to believe that Atlanta physicians aren’t short-changing their patients. Hundreds of millions of dollars are spent every year on hospital ads indoctrinating us to believe that more lab tests and earlier diagnosis will lengthen our lives.

And, in fact, sometimes this is true. But when Dartmouth’s researchers compared 1-year and 3-year rates of death after Medicare patients moved– adjusting for differences in age, sex, and race– they found no evidence of a survival benefit among those who moved to a region where doctors find more disease.

The only difference is that when the discussion turns to health problems at a dinner party, New Yorkers have more to brag about— the number of doctors they see, the number of diseases diagnosed, the number of treatments, the cost of all of the above….

More work needs to be done examining when and where more diagnostic imaging and lab tests will actually save lives. As the Dartmouth team acknowledges: “Although our study did not show a significantly higher rate of survival among beneficiaries who moved to regions with higher-intensity practices, this result should not be interpreted as implying that greater diagnostic intensity offers no benefits. Rather, it underscores the need for research to determine the specific clinical settings in which greater diagnostic intensity does — or does not — confer a benefit.”

Implications for Reform

If, under reform, we try to pay for quality, and “payments to health care providers are based on risk-adjusted costs and risk-adjusted outcomes, those who diagnose more will have a double advantage,” Skinner observes. “Every time a hospital enters new diagnoses for its patients, reimbursements will go up because” Medicare will assume that it is more expensive for a hospital to care for patients suffering from more diseases. Meanwhile, in places such as Miami, doctors’ risk-adjusted outcomes will look better; even if their outcomes are only average, because it will appear that they are doing better than other doctors while treating much more vulnerable patients. “The temptation to diagnose more and more disease will be irresistible,” Skinner concludes.

The Dartmouth team estimates that variations in diagnoses could mean that “reimbursement rates would be as much as 19% higher in the high-intensity regions solely because of bias related to diagnostic practice. Alternatively,” in regions where doctors are not so quick to order a Cat-scan, “risk-adjustment models could fail to account for the difficulty of caring for truly high-risk patients or those whose care is made more difficult owing to challenges such as language barriers, poor health literacy, or lack of social support, encouraging some providers to avoid or stop providing care for such patients.”

“Risk-adjustment is going to be more difficult than we thought,” Skinner admits. “The challenges are going to be to measure risk in more objective ways by focusing on more detailed measures.”

The Dartmouth investigators end their study by focusing on the problems that geographic variations in diagnoses pose for reformers trying to measure quality, and they offer some solutions. “These challenges could become more manageable as comprehensive electronic health records are implemented,” they write. They go on to suggests that when these electronic records are used to identify sicker patients, they should include not just clinical diagnoses, but “nonclinical factors that may predict a patient’s lack of adherence to clinical advice (e.g., homelessness or poverty).”

This makes sense. When allocating bonuses, Medicare should recognize that low-income patients are harder to treat, not only because they suffer from more chronic diseases, but because a lack of education combined with a high-stress life makes it less likely that they will comply with their doctors’ recommendations. That said, providers who care for poorer patients should receive extra compensation only if treatment leads to some improvement in heath and survival rates, not simply because the physician correctly diagnoses more diseases.

Too often, a Medicaid patient’s health problems are recognized, but he or she still doesn’t receive recommended care. For example, the California Breast Cancer Research Program has found that while poorer women are more likely to be diagnosed with breast cancer, they are less likely to receive standard treatment. This is why, as I noted in a recent post, poor women are about twice as likely to die of breast cancer as wealthier women. They receive less medical care, and less sophisticated care, explains Otis Brawley, MD, associate director of the Winship Cancer Institute at Emory University. The same pattern holds true for other diseases. In general, even when they are on Medicaid, poorer patients face more hurdles in getting access to the right care at the right time.

The Dartmouth team also recommends that when adjusting for risk, reformers should focus on “clinical data that are less subject to bias that is due to differences in diagnostic practices.” Rather than simply assuming that all patients diagnosed with cancer are “at risk,” they should use “data that includes stage and grade of the cancer.” For example, the vast majority of men who are told that they have early-stage prostate cancer will never experience symptoms.They are far healthier than patients diagnosed with a more aggressive cancer. Similarly, the researchers suggest, that “in the case of those with congestive heart failure, researchers should pay attention to ejection fraction” (the percentage of blood pumped out of the heart with each beat) which is an important measure of how serious the problem is.

Finally, they note, it’s always worth listening to the patient: “measures of health risks reported by patients (e.g., smoking and exercise patterns) and functional status (physical, social, and role function) could be incorporated in risk-adjustment models.”

I am glad that researchers at Dartmouth are taking a hard and honest look at the challenges that we will face now, more than three years before full-scale reform becomes a reality. As I have said in the past, mending our broken health care system will require constant “re-visioning,” as we learn more about how to assure that we are getting value for our health care dollars. My guess is that it will take a decade to restructure the system, changing how we pay for care, what we pay for, and how care is delivered.

But I also believe that we can “break the curve” of health care inflation in the next three or four years by beginning to squeeze the hazardous waste out of the system. As I have suggested in the past, much of that waste is easy to spot. Some of it takes the form of over-testing which then leads to an “epidemic of diagnosis.” But we cannot simply assume that all providers in a region where care tends to be more aggressive are diagnosing “pseudo-disease.” The Dartmouth team cautions that in order to assess benefit to the patient, Medicare will have to hone in on individual hospitals and doctor/hospital networks where patients seem to be undergoing an unusually high number of tests and procedures. Only then can Medicare begin to use financial carrots and sticks, on a hospital-by-hospital basis to encourage higher quality, less costly care. Take a look at the proposals for pilot projects in the reform legislation, and you will discover that this is precisely what Medicare plans to do.

Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.

48 replies »

  1. I am talking about Paul Levy and Dr Wachter’s post of a couple of days ago bringing attention at this site about questionable behaviors and Dr Wachter’s defense of them. Not the kind of press you want when you are running a blog trying to educate and enlighten about health care concerns and hopeful improvements.

  2. ExhaustedMD, I have no idea what you are talking about.
    Nate, it’s too early to say (or at least for me to say) how different it is going to be this time. I am certain that there is a lot more understanding of the complexity of assessing risk. 15 years ago, those who are now in their 50s and 60s running organizations were mostly in their 40s, slogging in the trenches as the Sh-t hit the fan.
    The only thing that gives me any cause for concern as far as providers taking too much risk or pricing it badly is the herd mentality. If becoming an ACO becomes the “it” thing and the high-prestige systems get on board, the me-too’s will want to do it post-haste. If there is a big rush, there could be big problems. Not unlike what happened in the real estate market with sub-prime borrowing. Some people just shouldn’t be buying homes, and some health systems just shouldn’t be trying to take on risk until they’re good and ready.
    So, I don’t know which mechanisms ACOs will turn to for better risk management, but they have a more sophisticated starting point and better analytical tools than 15 years ago. At least for now I think people’s eyes are open. They may not stay open.

  3. Man, who are these people who just promote this attitude that doctors are overpaid scum who need to be put in their place like a misbehaving child? People who have an agenda to see this legislation come to fruition. And I’ll keep saying this until everyone puts in their honest and documentable disclaimer that they are not tainted by this legislative insult: there is a buck to be made or fatal optimism will play out as labeled!
    Now you read how another commenter has “issues” with the way he handles his job. Not the kind of press you want if running a reliable site trying to promote better health care plans, eh?
    You are judged by the company you keep. I pay attention to this adage, at least!

  4. “Bottom line: in many situations,care would be better if docs were on salary.”
    Like at the VA?

  5. Margailt keep talking like that your going to get disinvited from the wine tastings.
    I think this is where the politics really screw up the whole process. Politicians are trying to score points with “solutions”. There are no perfect solutions or sure fire answers as history has proven. We need to accept that imperfection will still exist and figure out how much of it we can live with.
    I agree that FFS needs to stay but capitation also needs a place. Its to bad our supposed free market healthcare system is so not free that we can’t try some of these things without an act of congress. I would love to captitate PCPs and see if we can’t improve cost and care from the bottom up.
    I would like to look at Prescription capitation for low to moderate income individuals. Pharam would assume the liability of someone needing a high cost drug in exchange for guarantee revenue for R&D.
    I would like to try capitating a local health system and let them assume the risk for hospital care. As a segment that has high fixed cost capitation and predicatable income should be appealing to them. They should also be able to manage the annual increase if they know their funding is stable.
    To bad we’ll never get to try any of these.

  6. “In fact, while Texas has had tort reform, it is one of the high intensity areas.”
    Texas, like the U.S., has wide regional variations. Look at the Central Region for an island of very efficient health care (Waco and Temple). Their costs are about half that of their counterparts in McAllen and Harlingen.
    The touted benefits of tort reform were an increase in the supply of certain medical specialties, particularly in regions of the state where litigation was more prevelant (the Lower Rio Grande Valley being one). There were also major reductions on the costs of liability insurance and an increase in the number of firms offering it.

  7. Here’s another blasphemy Nate. I’m not entirely certain that the FFS system is so inadequate that it needs to completely go away. Maybe it’s not so much about how we pay, as it is about how much we pay, and maybe some tweaks here and there can make FFS viable, because I can’t really see a clear alternative either.

  8. Why don’t you compare apples to apples, Dr jd! Doctors don’t spend the time, money, and energy into 12 years plus of training after finishing high school to have the whole profession redesignated one as salaried when the training gives one the opportunity to go solo; yes you have to answer to your boards of specialty and the state boards of ethics and accountability, but what is this argument that pilots, cops, and teachers are synonomous with our field? And by the way, don’t some of them go out on their own and earn a private income if someone is willing to pay more for their experience and expertise? Sounds like an argument not fully viewed from all perspectives.
    Let’s face it, all readers, there is just a persistent few who are just trying to spread the lies heard enough become truth and are annoyed some of us, like me, call them on it and they have to work harder. And, if salaried, I guess they resent the extra labor.
    Gee, now you know how I feel!

  9. “Time is almost irrelevant in most circumstances.”
    Except in the numerous codes that specifically outline a time componet. Not all codes are time based, your not going to pay extra if a doctor spends 6 minutes drawing blood instead of 5. At least I hope that isn’t your plan. There are few, in the total count of all CPTs, codes that have significant time differential. Their are already codes for email, and phone calls. The question is how you measure and verify them. I’m not going to take a doctors word it took 12 minutes to write an email. Your not proposing anything new you just want to call it by a different name and pretend you addressed the problem. I still have never seen a detailed explanation of how any other payment method to replace FFS would actually work. Lots of fancy names and buzz words but never any meaningful details.
    jd do you see the new ACOs doing anything different then what the PHOs, IPAs, and other providers did in CA 15-20 years ago when HMOs were all the rage and providers thought they could manage risk? Just about all of them lost their shirts at it. Is it being done right this time or did they just forget the errors of the past? I haven’t heard any new ideas that allow me to believe they have any better grasp on it this time. Which is unfortunante as I think prvoiders taking risk is a great idea and would put more of the liability for health where it belongs, on the people actually delivering health.

  10. Barry and bev, first let me say what probably goes without saying: I am prognosticating, and of course do not have infallible insights into the future.
    Second, unfortunately I cannot be all that much more specific about what is happening between payers and health systems right now. This is partly because the conversations are exploratory and not yet public, so I can’t responsibly spill the beans on any details. My direct experience of new activity pertains to the New York market only, though it stands to reason that similar conversations would be happening nationwide. Here is what I can say without breaking any confidences:
    ACOs are emerging as a significant part of the new legislation. Lots of provider organizations are looking to become ACOs, or at least exploring the possibility. It’s a lot easier to become an ACO when your payments are aligned, not just from the Feds but from private payers. Also, it’s easier to be an ACO when you are coordinating on care management (especially post-discharge and for the chronically ill) with an organization that already has an interest in reducing wasteful care, and has a great deal of data and resources that could be put to better use through better cooperation.
    Even short of being an ACO, more than ever payments are being tied to quality outcomes (hospitals will be denied payment for re-admissions; payers have large bonuses/penalties tied to quality measures for Medicare and in some states Medicaid). The traditional FFS-based health system and its private practice feeders just isn’t built to do coordination of care and value-based care very well. Health plans are a natural partner. Of course, for many docs and patients who’ve bought the myths about health plans, this amounts to playing with the devil.
    As for the 5 years and 15 years, they are fairly arbitrary numbers, but here is what they were based on: already the state legislature in MA is trying to curb the market power of Partners and a few other institutions. The political and policy elite in MA know that the state is being bled by the power players, and that this threatens the success of their health reform law. Paul Levy wrote recently about this. His complaint is that this first effort came up short. I expect that there will be a fair amount of learning and re-thinking about how to do this, and given my sense of the speed of government and health care reform, I figure it will take up to 5 years for them to figure out something that is workable and reasonably successful. I don’t know if they will go something like the Maryland route that Maggie has written about before. But they will do something, and so will the nation as a whole but at a slower pace. I expect modest reforms at the federal level, with some states going beyond what the Feds do to curb this kind of naked rate-setting power.

  11. No, Nate, that’s not how it works now. You have to document 6 of these and half a dozen of the other and pile up as many ICD9 as you can think of in order to get a certain CPT. Time is almost irrelevant in most circumstances. If you spent half an hour with a patient, and another 15 minutes making phone calls or sending email on their behalf, you should get paid for a base of 45 minutes, plus a little more based on the complexity of the procedure and the level of mastery required to perform whatever you performed. This will reduce the need to rush patients through and it will also reduce disparities in pay across specialties. IMHO.

  12. “if you just pay docs for time spent with, and for, patients, instead of CPTs, with proper adjustments for mastery and complexity,”
    Isn’t this exactly what CPTs do? Measure and differentiate time and complexity?
    What if we call this new system CPT10 or what ever they are calling the new expanded codes. Will that work?
    “For-profit insurers moved in– and drove non-profits out of business as for-profits that had made $$$ in other areas of insurance (Aetna, etc.) used their deep pockets to fund price wars, etc.”
    And things werw going SOOOOO well there for a day. Actually it was nothing like this, what happened was non-profits converted to for profit. Very Very Very few non-profits were driven out of business, far from it, actually most of your old for profits were driven out of business. Transamerica, Provident, Nationwide, etc etc etc. Besides United and Aetna and CIGNA most of your major carriers are either still non profit or were non profit then de-mutualized switched status. All three of the big for profits are national, they don’t dominate a single market I am aware of except United in NV.
    “Bottom line: in many situations,care would be better if docs were on salary.”
    If quality of care was the only issue we wouldn’t be discussing healthcare today. Cost is the crisis in the US and every other industrialized country and we have plenty of examples of what happens when you pay a doctor a salary with no productivity requirements. A radiologist spending 8 hours reading 1 image will be sure he isn’t missing anything but we can’t afford that. Compensation addresses productivity, malpratice lawsuit addresses quality. We must trust the radiologist to be smart enough to balance the two. If they can’t do that I’m not sure I want them reading my test in the first place.

  13. I, too, would like to hear jd expand upon his comment about Partners. Certainly we need ways to combat this pernicious method of keeping costs high.
    Barry, as for bad doctors, please see the post (and especially comments) called “Badness in Baltimore” by Robert Wachter, on both his own blog (wachter’s world) and here on May 14. Also check out the link in his post tied to the word “traditonal”, which refers to an earlier post of his called “Is Peer Review a sham?”
    As I mentioned in my own comments there, it is clear that the peer review system needs strengthening by an order of magnitude, and thoughtful physicians are concerned – but fear of the National Practitioners’ Data Bank, greedy hospital administrators, and concern over who “peers” are, seem to be significant obstacles. I hate to say it (hope Nate isn’t reading!) but the feds may have to force this issue to make it work…..

  14. Maggie – I’m not talking about or advocating executive physicals. In our company with tens of thousands of employees worldwide, there probably aren’t more than two or three dozen executives who get executive physicals at company expense. Insurance generally doesn’t cover those but large self-funded employers often choose to cover them for their own reasons which may not include medical cost-effectiveness.
    One of the frustrating aspects of health and healthcare is that, for many conditions, when symptoms finally manifest, it can be too late or, at least, treatment will be more complex and expensive than it would have been if the problem were caught earlier. Lots of people with hypertension, high cholesterol and diabetes don’t have any symptoms. Simple blood tests can identify the latter two while even a tech or the patient himself or herself can measure blood pressure. When I go for my own physical, I only get the blood and urine chemistry plus a chest x-ray (every other year) and an EKG. The whole process including the paper work and the consult afterward takes about an hour or a bit more. It doesn’t cost that much, at least at the contract rates, and I would cheerfully pay for it myself if I had to.
    Regarding doctors on salary, I agree that it’s a preferred compensation system to fee for service but it doesn’t necessarily save money. The key is how the doctor is evaluated and rewarded by his organization. If the organization is rewarding quality as defined as outcomes related to costs, that’s one thing. If it’s rewarding productivity defined as revenue generation, it’s a different story. I suspect that most doctors who work for hospitals or hospital owned clinics have their revenue generation tracked carefully and hear about it in no uncertain terms if they are lagging behind their peers.
    Another frustrating part of the healthcare system, I think, is the inadequate disciplining of incompetent or unscrupulous doctors. Whether it’s performing heart surgery on healthy patients to maximize revenue and profit or abusing alcohol and drugs or just plain incompetence, we need to weed this relatively small number of doctors out of the system. Instead, they have the equivalent of what in police departments is called “the blue wall of silence” to protect their own. So, even though most doctors do a fine job most of the time, this fraternal inclination to protect their own reduces the trust that most of us would otherwise have in the system. I don’t fully trust police officers for the same reason and that’s based on personal experience.
    jd – Could you provide some more detail on why you think there won’t be any more “Partners” in 15 years and why even Partners will no longer be Partners in five years? I hope you’re right but I would like to learn more, especially about cooperation between payers and providers that wasn’t present previously.

  15. Many of these physician comments expressing hostility or skepticism about a salary-plus model take a naive view of what it is to work at a salaried job.
    ExhaustedMD’s comment that it is “slavery” is really remarkable. It shows a lot about his psyche, and probably reflects that of many other physicians. Pilots are slaves. Cops are slaves. Teachers are slaves. VPs and CEOs of essentially every corporation are slaves. Only doctors and others paid by the task without being employees are free. Apparently, I am also a slave and, motivated by the principle that misery loves company, I want physicians to be slaves like me. Or is it that I am part of some Obama cabal with some inscrutable motivation to knock physicians down a notch, rather than a motivation to improve the quality of care, reduce wasted care and stop having the least wealthy pay more of their paychecks every year to those in the top 10% (usually top 5%) in income? reductio ad absurdum.
    As for Margalit’s question, “Do we elect to trust the doctor’s employer to have the patient’s best interest at heart more than we trust the doctors?” this is a false choice. You can have my best interest at heart and still do a bad job of meeting it. It is at least possible that the well-meaning individual doc practicing atomistically does a worse job than the well-meaning doc working as part of a team for a corporation, even a for-profit. In part it will depend on how the company is paid (do outcomes quality factor into payment?).
    Margalit brings up wanting Geisinger but getting Partners. I agree that is exactly the battle will have to be fought. But it is being fought, and it will be won. I say that because it has to be won, not because I have any great faith in the courage of our political and health care leadership. 5 years from now, Partners won’t be Partners anymore, by which I mean it won’t be able to use its market power to keep squeezing payers and taking business from other providers that actually give better value (quality per unit of cost). 15 years from now, there will be no more “Partners” nationwide.
    Promising things are happening right now that I have not seen written about. Large and small health systems are more interested in cooperating with payers than they have been in over a decade in order to meet Federal quality guidelines and payments. Things are moving quickly, at least by health care standards.
    As for MDasHell’s comment that “It must be nice having defined what must be completed. In my world the work never stops.” Who said my work stops? When I said I work late to get the job done, that meant a particular deliverable (rider submission, website enhancement, member communication, program implementation, strategy document, etc.) When I finish one task, there are always many others ongoing that move one notch higher on my priority list. This is commonplace among management employees.

  16. Maggie —
    If this is really true:
    > the average middle class family (Median income
    > roughly $50,000 to $58,000) can not afford to pay
    > [for perfectly expectable stuff]
    then what they need is an adequate income, not medical insurance. If it is expected, it is not insurance.
    And what this implies is that “median income” is not the same as “middle class”. There’s a story idea…

  17. Shereef, Margalit, Barry,
    Shereef: You write: “It seems that when conceiving of pay-for-performance reimbursement schemes, we are faced with a tension between two components of quality: adherence to quality measures in management vs. health outcomes. If we emphasize the former, we get more patients diagnosed and treated with higher resultant costs (that may be unjustified). If we emphasize the latter, nobody wants to care for sick patients. The imprecision of risk adjustment requires that we establish a happy medium between these two incentives.”
    A very interesting point–and, I think, true.
    Thank you for giving us something more to think about.
    You write: “I understand that Kaiser and Geisinger are voluntarily accountable, but this model cannot be generalized to the entire country. Well, maybe it can, but it won’t, just like the ‘non-profit’ insurance model didn’t last very long.”
    Actually the non-profit health insurance industry lasted from 1945 to the late 80s.
    Before 1980, there were only a tiny number of for-profit insurers. Then, President Reagan changed the law, and eliminated govt’ support for non-profit insurance.
    For-profit insurers moved in– and drove non-profits out of business as for-profits that had made $$$ in other areas of insurance (Aetna, etc.) used their deep pockets to fund price wars, etc.
    By the early 1990s, most HMOs were for-profit. In other words, this is a relatively new (and not very successful) business model.
    We have much research showing that non-profits were better for patients.
    (You can Google this.)
    But I entirely agree, Obama and whether one is a Democrat has nothing to do with health reform.
    Medical research shows that the annual physical–and particularly the very expensive “executive physical” is a waste of money.
    If a patient has clear symptoms, a physical exam can be very useful; the doctor will use those syptoms to try to nail down what is wrong while doing a physical.But if a patient is experiencing clear symptoms, he shouldn’t wait for his annual physical to see a doctor.
    When an a-symptomatic patient goes in for a physical, he doctor is on a fishing expedition with no clue as to what he is looking for. All of the tests done in an exec physical are expensive and largely wasted.
    I’m sure you’ve heard all of the bad jokes about the patient going in for a physical, getting a clean bill of health, leaving the doctor’s office, and falling dead on the sidewalk outside. Unfortunately, those jokes are based on the truth. (Many honest docs will confirm this.)
    A low-cost annual physical (few tests, etc.) can serve a very important purpose becuase it gives a doc a chance to touch base with a patient. As Dr. Rick Lippin has suggested, there are two impt. questions he should ask: “HOw are things at work? How are things at home”
    This opens the door for cognitive medicine– listening to and talking to the patient. This is where the doc will find out that the patient is stressed at work, that he is getting divorced, that he has begun drinking more than he should, that he has gone back to smoking . . . . In other words, that he is truly at risk. This is the info that a good PCP needs to counsel the patient, and really help him.
    I agree on excess testing. But we have no evidence that malpractice reform (including the very intelligent tort reform that you are talking about) reduces excess testing. See the state of Washington.
    I still think we should work on experimenting with addressing the malpractice problem in various ways. These cases cost too much and cause too much for doctors, patients and relatives. The reform legislation would fund pilots so that we can begin to figure out which of the solutions you suggest might work best.
    At the same time, we need to continue bringing malpractice cases in criminal courts where docs are clearly profiteering. Here, I’m thinking of the Tenet hosptial in Redding, Cal. or the recent case in Baltimore where docs were performing completely unnecessary bypasses and angioplasties on basically healthy patients. Some died. Some were crippled. For these docs, there should be jail time. This is manslaughter.
    Docs who are impaired (drug use, alcoholism or age and ) also should face prosecution–and lose their licenses, permanently. They need–and should get–medical care. But even then, I would be very, very wary of reinstating their medical licenses–not because I want to punish them, but because docs have so much power over life and death, and their peers are not very good at monitoring them.
    Finally, you write: “As a general rule, capitation makes more sense for primary care than for specialty care. Bundled payments will probably work best for surgical procedures like CABG, hip and knee replacement, etc. Like Nate suggests, radiologists should probably get paid per test that they read but they should not be involved in ordering the test in the first place.”
    I agree that capaitation (paying docs a lump sum per year to keep a patient well) works best for primary care and bundled payments (paying all the hosptial and all docs involved in the procedure a lump sum, that they divvy up, with a bonus if the outcome is very good) makes sense.
    And, yes, I wouldn’t’ pay radiologists per test that they read if they are ordering the tests. But I wouldn’t pay them per test even if they are not ordering the rests.
    Research shows that if paid per tests radiologists read tests too quickly– more false positives,and worse, more deadly false negatives.
    Bottom line: in many situations,care would be better if docs were on salary. Paying them “piece-work” is not a good idea. They’re not factory workers. And patients are not automobiles.

  18. Maggie,
    This boils down to the same question I asked jd. Do we elect to trust the doctor’s employer to have the patient’s best interest at heart more than we trust the doctors?
    I understand that Kaiser and Geisinger are voluntarily accountable, but this model cannot be generalized to the entire country. Well, maybe it can, but it won’t, just like the “non-profit” insurance model didn’t last very long. The more likely employers will be Partners and Mega Hospitals types. I am not at all inclined to trust them more than a primary care doc in private practice. Not at all.
    I know there is a backlash against profiteering physicians right now, but those doctors are the exception, not the rule. I think we need a bit of caution here before we through out the baby with the bathwater.
    As to working hours and vacation times, Americans in general work longer hours than Europeans and take much less vacation. I guess it’s the American way and docs are not different. BTW, not all physicians who work 60 hours weeks are out to fleece the public. There is (or was) certain pride associated with a doctor’s hard work. I don’t want to get rid of that either.
    Dr. E., being a democrat has nothing to do with this discussion and certainly President Obama has absolutely nothing to do with it. Not every disagreement is along party lines.

  19. Umm, why don’t all of you advocates for doctors to be working under slave labor, well, just piss off, like your supreme advocate, Mr Obama, who invites the President of Mexico to tell Americans what is right for this country that El Presidente himself does not practice. If you support amnesty for illegal immigration like this piss of bull feces health care bill legisflatulation, then I hope the realities of this type of advocacy takes you all where you belong.
    The longer this type of alleged leadership, and that word should be ended with a “t” and not a “p”, continues to be validated by clueless and demented supporters, this country is spinning counterclockwise down the only path it can lead. And you Democrap losers can have the mislead and misguided new graduates of health care-less thinkers who cluelessly accepted the MD after their names thinking that political leadership defines their direction in care choices. And moreso, patients who cling desparately to this pathetic and harmful advocacy can then try to plead and cry for mercy WHEN democrap direction only leads you to cliffs and septic arenas.
    Salaries. Another demeaning and destructive ploy to diminish the role of responsible and caring health care representation. Well, all you losers who claim to be health care advocates can choke on what your representation claims to provide and support you with.
    Again, no one responsibly challenges what I provide in links and foundation criticisms of the driving forces to health care changes. Ignore me, that is easy for people who don’t really care in the end. And as I have asked before, I just hope unbiased and objective readers see through the filth being propagated here, especially by this one author of posts.
    The alleged President of the United States is failing as the leader of this country. It is nothing less than shameful, and perhaps treasonous, what he is doing of late. And he is the driving force behind health care reform, so I have the right to drag his name and title into this morass! Good luck people, you stay silent, your eventual screams of discontent and pain will be equally unheard!

  20. Rbar & Margalit–
    First, Margalit, on productivity: when doctors work on salary at a place like Kaiser, Geisinger or any of the accountable care organizations of the future, productivity is not measured by how many patients they see per hour. These organizations hire and retain docs who get better outcomes–not docs who work faster. They really are patient-centered– the patient comes first.
    Secondly, rbar & Margalit– On Docs being compensated for working more hours:
    First, we don’t want docs working longer hours in hospitals & clinics– this leads to more medical errors, and more over-treatment.
    You might ask: But don’t we need to ask them to work longer to take care of all the patients? No. Many of those patients shouldn’t be at the hospital. They come to the ER with a problem that is not an emergency, and should be re-directed to a community clinic or PCP the next day. (An ER is required to assess every patient who comes in; it is not required to treat them if they are not an emergency. (The law defines this as able to walk out the door.)
    The only way patients will learn not to go to the ER for a head-ache or an ear-ache or a sore throat a bruise that is not a broken bone is if they are re-directed. Treating simple problems that can wait (and often will resolve themselves on their own) in an ER is a very, very expensive way of practicing medicine. We can’t afford it.
    Many patients who are inpatients or out-patients in the hospital also don’t need to be there. They are undergoing unnecessary tests or they were admitted to the hospital as inpatients because they have good insurance and the hospital is urging the ER docs to admit as many people as possible to build revenues. (I recently talked to a PCP working at a hospital that wanted him to admit a patient with bleeding hemerhoids . The doc had stopped the bleeding. The patient had recently had a colonoscopy. There was no reason to suspect a problem. The doc refused to admit him, instead, he just scheduled the patient to come back the next day for an office visit to make sure everything was okay.
    As we cut back on unnecessary treatments, hospitals shouldn’t have to ask docs to work overtime. You might ask: How do we know that many of these tests and treatments are unnecessary? As the number of surgeries, tests and procedures has surged over the past 10 years, neither the health of the population nor outcomes have improved.
    And as community clinics, double in number and as we make increasing use of nurse practitioners, docs in clnics also shouldn’t have to work overtime (under normal circustances.)Paying them for telemedicine and e-mailing patients also means that they will be able to
    provide good care to more patients in fewer hours.
    Most importantly, the majority of doctors in the U.S. are not working for a hospital or clinic– they work for themselves or are part of a rpivate partnership.
    They are, as rbar puts it “self-determined”–they choose to work long hours.
    In the U.S. male physicians now work 53 hours. Female docs in the U.S. work 47 hours. Docs in Europe typically work less than 40 hours. (And they take longer vacations.)
    Docs here work such long hours in large part because they are working fee for service and are trying to keep income up. By doing more and working harder, most specialists have kept their incomes rising over the past 10 years.
    But they, their families, and their patients would be better off if if they worked fewer hours and did less.
    They would make less, but would still make more than 95% of all Americans. And they might not be so unhappy.
    Rbar’s right–we will need to adjust fees so that surgery is significantly less lucrative. Or, we may cap the number of surgeries that docs are allowed to do per week or per year (this is what they do in some countries including Canada.) We’re already planning to penalize docs who do more tests. As the penalties become stiffer, the incentive to try to make up the losses on volume fade .

  21. jd, that boss who MD as HELL will be working for, is he more worthy of your trust then the doctor?
    The boss will be presumably running a business and as such will want to maximize profits and therefore will be demanding productivity from his MD employees, just like the McDonald’s boss does, and productivity will be measured in bottom lines. So how is this new arrangement more conducive to lean medicine?
    On the other hand, if you just pay docs for time spent with, and for, patients, instead of CPTs, with proper adjustments for mastery and complexity, I think you may be able to reduce over-treating to acceptable levels. There are only 24 hours in a day.

  22. I agree with almost all of what jd wrote, althought I believe that there should be some form of overtime compensation. Managers usually are selfdetermined when they work overtime, or are spefically motivated by deadlines, high activity etc.
    It works different in clinics/hospitals: 1st, most physicians already have a lot of unpaid overtime built in – being on call. 2nd, it is hard to add on a semiurgent patient Friday afternoon, or fix a broken hip on Saturday when it could wait until Monday morning. The work of physicians is done in units of care, and an extra unit should be compensated. However, you should put in a ceiling, that docs don’t do 5 highly compensated back surgeries a day – the temptation to do unnecessary surgery is too high that way. Much better would be a fee adjustment – surgery is about as well compensated as seeing outpatients, or only slightly better (adjusted for risk and expertise). Currently, many surgeries are paid triple to quintuple as well as cognitive medicine – no wonder that we have way too much of the former.
    You could do whatever you want with working conditions for physicians if you have just enough qualified physicians competing for every job (not the case in the US currently) … but only short term. I have seen that happening in my home country where there was an oversupply of residents and young doctors, and those were abused. A few years later, a lot of those changed fields or raised a family, with a breadwinner partner.

  23. I also am glad I am not your doctor. But if you are ever in my ED you will receive excellant board certified care that will both please and impress you.

  24. Thanks for biting on the sexist bate I left for you, Maggie. Nothing simple minded about it. It is human nature. Same is true for the men who are nurses and the docs, which is why we inserted a productivity factor.
    As for paying him less, we kept him in the group by covering his nights shifts, so he could remain a partner. He can have them back whenever he can do it. Then the pay is a wash.
    Everyone gets the same hourly base plus a night differential (less opportunity to be productive at night due to fewer PA hours overnight, fewer patients, plus the requisite turn-around time to get back to a day schedule) plus productivity.
    Nate must have missed something to generate his less than usually capable comment. These kool-aid junkies are the pushers. They are being highly destructive.
    JD works over to get the work done. It must be nice having defined what must be completed. In my world the work never stops.
    In fact medicine is boring. It is the people that are interesting. It is the dinosaurs keeping the system working. Pushing the EHR to get out of the way is hard work. You have to want to take care of the people to ramrod today’s hospital systems; they are totally paralyzed by technology.
    The federal model of productivity is what will result from “deform”. That should scare even Maggie.

  25. jd & MDasHell (Everyone, I will come back to respond to other comments.)
    You wrote– “Huh.. . unexpected pairings: Margalit and MDasHell on the one side and Maggie and Nate on the other”
    LOL. Brilliant. I knew there was something screwy going on when I read this thread, but hadn’t figured out what it was until I read oyur comment.
    Responding to your points and MDasHell’s:
    On freelance journalists:
    The vast majority of freelance writers are actually paid considerably less than those who work for someone on salary. There’s more accountabliity if you’re on salary. If you make mistakes, you will be fired. Freelances are usually younger, less experienced writers. No disprespect to freelances–I spent many years as a free-lancer, and wrote some very good stories during that time. But it is interesting that, within journalism, salary is assumed to mean higher quality and more responsibility, while some physicians view being on “salary” as a step down.
    And jd, I agree, if some doctors want to work piecemeal, that’s fine. Doctors under forty as well as women doctors are already migrating in large numbers to jobs where they work on salary. The dinosaurs can remain working fee-for-service.
    MDasHell’s “energizer bunny” exmaple about young nurses is, indeed, simple-minded–not to mention sexist–for the reasons you outline.
    –And, yes, it isn’t that hard to factor night work into salary.
    MDasHell– When one of your partners became sick, you began paying him less because he could no longer work nights? Nice.
    jd & MDasHell– Yes, among professionals and managers, working over-time without extra pay is normal because people want to do a good job, and advance in their careers. As j.d. points out, “this system has worked well for most of the best companies in America and across the world.”
    Normally, workers are paid extra for working overtime when they are working in very boring, not= very-fulfilling jobs where they cannot expect to advance. (Assembly line jobs, ec.)
    Is this how MDasHell views medicine–clock in, clock out?” Glad he is not my doc.

  26. There are several institutions that do well with docs under salary. As I said, there should be an adjustment for work irregularities – i.e. those extra hours/extra workins should bring some extra compensation.
    There is no easy answer to the reimbursment problem, but re the innovation argument, here are some observations:
    -I have seen my share of high producers. These are usually docs who operate to often, with sketchy indications (I am talking about hysterectomies, back surgeries). These folks are usually not people bringing innovation, because that requires risk and extra (initially unpaid) time. Often, they are early adaptors (esp. for things that help the bottomline).
    -I have personally met some (and read about) innovators. These are usually people driven by detailed interest in the matter itself, motivation to help people afflicted by a certain condition/problem, career/vanity, but money is probably least important, as long as a safe, convenient lifestyle is provided.

  27. Hunh, unexpected pairings: Margalit and MDasHell are on one side and Maggie and Nate on another.
    Count me on the side of extensive payment reform: capitation plus quality, or salary plus quality.
    To deal with MDasHell’s rhetoricals:
    Let’s salary free lance writers.
    If your life depended on writers coordinating with each other and having a system to minimize mistakes, while freelancers were typically less able to do this, then freelance writers wouldn’t seem so innocuous or harmless. That said, I don’t think we need to mandate salaries. If a small rump group wants piecemeal payment from atomistic providers while the vast majority of us have a choice of integrated care delivery without perverse incentives, I’d be happy.
    Nurses are paid by the hour. They are paid without productivity factors. The energizer bunny nurse rapidly learns to slow down, since she does more work than the slug, who gets the same pay.
    This is simple-minded. A nurse who loses motivation in her job, usually for reasons that have nothing to do with pay (like a bad work environment), will slow down. Management has expectations for productivity, and if you aren’t meeting them you get a talking to, corrective action, and possibly firing. Are you saying that hourly pay is a mistake? Is that why McDonald’s and assembly lines are such inefficient operations? Another motivation to maintain high productivity is the possibility of higher hourly pay. Not every nurse gets paid the same rate. In any case, I have not seen a proposal to pay doctors on an hourly rate. Neither salary nor capitation are the same thing as an hourly rate.
    My ED group has a huge night differential in our hourly rate. Why work nights otherwise? This became necessary when a member could no longer work nights due to a medical condition.
    What possible relevance does this have? It isn’t that hard to account for night work in a salary-based system. You could have a dedicated night crew where night work is in the job description and thus higher pay, or you could write occasional night work into the job description and make that an expectation for the salary. Many salaried jobs have a travel expectation built in, which isn’t that different.
    If I am to be salaried, with whom do I negotiate? To whom do I answer? As an ED doc I work shifts, but I am usually overtime by 1-2 hours. Want to bet that doesn’t happen if I am not working for myself?
    The short answer: your boss. At an ED, your boss would be whoever heads the ED. If you head the ED, your boss would be whoever is next in the heirarchy. The organization you work for would have to negotiate with the payers and otherwise concern itself with revenues to be able to afford to pay you. That’s how most of American employment works. Are you unAmerican now, on top of picking on the disabled, MDasHell?
    As for not working overtime, well, millions of salaried Americans work in management and don’t get paid overtime but STILL WORK OVERTIME! Pardon the shouting. I am one of those Americans, working overtime more days than not. Why? Well, I want to get all my work done on time and do it well enough to make a good impression and be deemed worthy of (a) not being fired if times get tough, (b) a raise if times are good and (c) a promotion if I do well enough several years in a row. This is not rocket science. It’s remarkable that you would be so skeptical about a payment system that works for most of the best companies in America and across the world.

  28. “The kool-aid junkies”
    That would mean they have an addiction. If they have an addiction that means they are disabeled. That means MD as HELL is picking on disabeled people wanting them to pay more. That is so not cool!

  29. Let’s salary free lance writers.
    Nurses are paid by the hour. They are paid without productivity factors. The energizer bunny nurse rapidly learns to slow down, since she does more work than the slug, who gets the same pay.
    My ED group has a huge night differential in our hourly rate. Why work nights otherwise? This became necessary when a member could no longer work nights due to a medical condition.
    If I am to be salaried, with whom do I negotiate? To whom do I answer? As an ED doc I work shifts, but I am usually overtime by 1-2 hours. Want to bet that doesn’t happen if I am not working for myself?
    The kool-aid junkies always have an easy answer.

  30. “Under this approach, all insurance would be subsidized the same way, regardless of where it is purchased. All taxpayers would be subsidized the same way, regardless of how they obtain their insurance. Unlike the president’s scheme, it makes sense both in terms of equity and economics.”
    What a silly idea treating all people equal, I’m pretty sure that is unconstitutional

  31. This is a very good and interesting article. Like so much of healthcare, the issues are complex and multi-factorial.
    The state of the art around risk definition and quantification still has a long way to go. For a given individual, I think it would be helpful to complete a comprehensive health risk assessment questionnaire. The prescription drug history, if any, would also be useful. I agree that it would also be appropriate to look at relevant measurable metrics like the ejection fraction for CHF patients. Risk scores will also need to be adjusted each year as the patient’s medical history evolves.
    There needs to be some consensus definition as to what a routine physical consists of depending on age and sex and how often the patient should have a physical depending on age. At my employer, it consists of a battery of blood tests, urine chemistry, a chest x-ray, maybe every other year, an EKG, a hearing and vision test, a lung function test and the fecal slides. A stress test is offered if appropriate. The doctor also does his own exam. Some people, including myself, decline some of these because we deal with them elsewhere or in another way (like a colonoscopy at appropriate intervals).
    The routine exam by the physician will find hypertension. The blood tests will determine if glucose and cholesterol levels suggest diabetes and/or heart disease risk. The EKG might identify heart related issues but probably not. The chest x-ray will find lung related problems. The eye exam can assess glaucoma risk.
    Excess utilization can often result from too much use of diagnostic imaging. There needs to be adverse financial consequences for doctors whose practice patterns are excessive in this area. In exchange for subjecting them to such consequences, however, we need to provide them with real tort reform which means not damage caps but specialized health courts, neutral experts to sort through conflicting scientific claims, no juries and robust safe harbor protection for doctors who follow evidence based guidelines where they exist.
    Regarding payment models, the Massachusetts AG found that capitation did not necessarily save money compared to fee for service when care was provided by the large hospital plus clinic groups with significant market power enabling to extract very high reimbursement rates from insurers. As a general rule, capitation makes more sense for primary care than for specialty care. Bundled payments will probably work best for surgical procedures like CABG, hip and knee replacement, etc. Like Nate suggests, radiologists should probably get paid per test that they read but they should not be involved in ordering the test in the first place. Long term care needs to be more tightly supervised by primary care doctors but they need to be paid adequately to do so including payment for their time to travel to and from the nursing home from their offices.

  32. The idea of paying directly for non-catastrophic care makes sense (at least for the population who can afford it).
    However, this won’t work unless you can somehow guarantee that the patient will save money by paying directly and not filing a claim. Today, this is rarely the case since the price discount that insurance companies negotiate far exceeds any potential 20% overhead savings. Price transparency and limits on price differentials (between insured and non-insured patients) would be needed to attract patients to this form of payment.

  33. In our block of business where groups buy a $5000 deductible then self fund back down to a lower deductible only 5-15% of individuals ever hit the $5000 and less then 5% are recurring year after year.
    The average cost of healthcare is only $3600 or so per person. A large chunck of that goes to the 20% of people who incur 80% of the bills. If you remove that high cost 20% your average cost per person is $1000 a year, well within the affordability range of your average family.
    Rule of thumb once every 5 years you will have a bad year, law of averages catches you and breaks your arm. If you save the 20% over head from small claims and the wasted premium it is more then enough to pay your cost when you have a bad year.
    I have 20+ years of claims data to back this up.
    The only flaw in the system is people taking a vacation with their money or buying a new car instead of saving it.

  34. “What do you believe is a reasonable base salary for doctors in the program you envision?”
    $1 less then what I make that year!
    PCPs should be employed by individuals on a capitated basis.
    Radiologist and those reading test results etc should be paid per test or scan but not be the ones ordering them or affiliated with those ordering them
    Hospitals should employ their own staff and pay their salaries
    Specialists should be in small competitive groups.

  35. Maggy and commenters,
    What do you believe is a reasonable base salary for doctors in the program you envision?

  36. I have a question regarding the seemingly broad agreement on the benefits of having physicians be salaried workers.
    Who will be their employer?
    The Government, ala NHS? Private corporations, like Partners? Kaiser type organizations who still need to prove that they can be truly cost effective? Hospitals?
    Are we jumping out of the frying pan and into the fire?

  37. A really excellent summary of the problems with risk-adjustment as a tool for reimbursement. It seems that when conceiving of pay-for-performance reimbursement schemes, we are faced with a tension between two components of quality: adherence to quality measures in management vs. health outcomes. If we emphasize the former, we get more patients diagnosed and treated with higher resultant costs (that may be unjustified). If we emphasize the latter, nobody wants to care for sick patients. The imprecision of risk adjustment requires that we establish a happy medium between these two incentives.
    Please visit my blog on the business of health care in America:

  38. Stephen Motew,Nate & rbar,
    Stephen– Thanks for the kind words about the article and review, as well as the comment that patients tell you they were just fine–until you discovered their aneurysm with a CT scan . . .
    But I wouldn’t worry that “risk-adjusted quality payments” are being “pushed through by legislation.”
    The legislation doesn’t try to spell out how to adjust for risk. And this NEJM article by the Dartmouth investigators makes it clear that they are very alert to how difficult it will be to adjust for risk. The folks at Darmouth are the people that the White House
    (both the president and White House budget director Peter Orszag and Don Berwick, soon to become head of Medicare & Medicaid), listen to.
    The legislation only calls for Medicare pilot programs that will experiment with trying to figure out how to pay for quality. The people I named above are all very sophisticated, they know just how complicated this is.
    Nate: First, thank you for two exceptionally civilized comments. I mean that sincerely.
    And I agree that rbar’s suggestion–that physicians should be paid on salary, with some adjustment for productivity —is a clean, efficient idea. (Though I would add that “productivity” should be defined as better outcomes at a lower price–Not seeing more patients per hour.)
    I understand that many people fear that docs won’t work as hard on salary–but see the post by Kaiser’s innovation specialist on this blog. She makes a strong argument that when it comes to motivating health care professionals to work harder, money is not the answer.
    Finally, I afriad I have to disagree with your first comment. Given the cost of medical care today, the average middle class family (Median income roughly $50,000 to $58,000) can not afford to pay the cost of physicals, ear-aches, strep throat, allergy exams, Ob/Gyn exams, dentistry (under reform, eye and dental for kids are covered); the occasional fall and broken arm, an accident at school in gym class where there is some concern that your child suffered a concussion, presciption medications for high blood presure, high cholesterol, birth control, anxiety etc. etc. etc. When my kids were growing up, those are the types of expenses I faced on a routine basis. And I’m not quick to rush off to a doctor when someone in the family bruises a knee or has the flu.
    Today, ordinary, non-catastrophic expenses for a family of 4 can easily add up to $7,000 to $10,000–or more — a year. That’s 14% to 20% of a middle-class family’s income: Not affordable.
    Years ago, when my family’s doctor in upstate N.Y. charged us $5 for a home visit and prescriptions were far, far less expensive (and we took many fewer pills), a middle-class family could cover those non-catastrophic expenses. (My family’s doctor charged wealthy families signifcantly more; for decades, physicians ran their own progressive health care system, charging more affluent patients to cover the cost of caring for poorer patients. See Paul Starr’s book, The Social Transformation of American Medicine. But that’s no longer the case.)
    Rbar– You are entirely right. If there was good evidence that “higher intensity care” correlated with
    a more litigious enviroment, we would have heard about it. And we haven’t.
    In fact, while Texas has had tort reform, it is one of the high intensity areas.
    We do need to address fear of malpractice suits, but as you say, caps on rewards are not the answer.
    Finally, I agree that the largest and simplest solution is to move away from fee-for-service. And that is exactly what the reform legislation suggests.

  39. part of me likes the efficency and simplicity of rbar’s suggestion I just worry about productivity, salaried employees often lack motivation to produce more then required or innovate.
    Either would be better then any of the new ideas being tossed about

  40. Oh Maggy,
    This not any big deal. EMRs and HIT will solve all of this in a meaningfully useful way. Menus and order sets will enable chimpanzees to be doctors.

  41. Stephen, hellMD,
    I believe that defensive medicine is very important, but does the NEJM article really compare regions based on the medicolegal environment? And I am not aware that in the Wenberg atlas, high care intensity, for instance, has been correlated with the medicolegal climate in each hospital referral region. If there was a good correlation, we would have seen it discussed extensively (I personally believe that the usual “tort reform” – caps – doesn’t do much at all; as long as a physicians feel threatened by the threat of unfair litigation, they will practice defensively, whether the damages are capped or not – see http://www.aan.com/elibrary/neurologytoday/?event=home.showArticle&id=ovid.com:/bib/ovftdb/00132985-201002180-00012
    for some interesting anecdotal evidence).
    But back to the main point: what would one conclude from the NEJM article? I am pretty sure that the higher intensity does not result in better outcomes (but of course let’s wait for the evidence). It results in “pseudobetter” outcomes: a very mild or pseudoillness is easy to treat, and with good outcomes.
    One possible fix (better, I believe, than Nate’s suggestion, which is not unreasonable), is: physicians need to be salaried, with slight adjustments for high productivity (I am a physician myself and certainly would not want to work extra hours for free, at least not as a rule).

  42. I think the article, an excellent one by the way, is a great argument to stop believing we can regulate and overcome human nature by comming up with more and more perverse reimbursement schemes.
    Know what works really well and always has, people paying for their own medical care with reimbursement for the very large claims. 45 years of “fixing” has done nothing but make it worse.
    acknowledge the razor!

  43. Fascinating article and nice review, but not the least surprising. Tie reimbursement to more sickness, and you can bet it will be sought-out. I agree with MD as HELL, good argument for tort reform, but now a whole new reason to order more tests. They key is to make it more advantageous financially to avoid unnecessary testing.
    In addition, maybe my patients are correct when they tell me that they were just fine until I went and found their aneurysm with a CT scan.
    More concerning is the serious lack of foresight with which concepts such as risk-adjusted quality payments may be pushed through via legislation.

  44. I have a partner who moved here from a state with a hostile liability clamate. He test more than the rest of us. It is the way he was conditioned. This article is a great argument for tort reform.

  45. What is the truth? There is an inverse correlation between how much doctors are paid plus the quasi controls of “managed care” and the number of scans, test, and operations performed, tinctured with a professional version of “monkey see, monkey do”. The charades of care enabled by the flawed CMS payment policies of the past 3 decades are coming home to roost.