Physicians

What if Physicians Worked for Free?

Today I am going to write about how the US could save up to 10% on its healthcare bill.

The US spends more on health care than any other nation, $8,500 per person per year. Multiply that by 300 million people and try to grasp the vast sum of $2,5 trillion.

A lot of changes are taking place with the intent to save healthcare dollars. So far, many of those changes have involved creating new layers of middlemen, whose paychecks will come out of the same healthcare budget as MRI’s, prescription medicines and physician salaries.

Every so often physician salaries come into focus as a place where money might be saved. Some people even picture physician pay as a major driver of healthcare costs.

Now, I am just a country doctor, and I don’t have an MBA or any financial background. But I used to be pretty good at math, and I’d like to think I still am.

If the 2.5 trillion dollars this country spends on healthcare is paid to or prescribed by our 850,000 physicians, then each doctor controls 3 million dollars from our nation’s healthcare budget.

Of course, physicians aren’t the only providers or prescribers. I don’t have a figure for how much money is controlled by our 100,000 Nurse Practitioners and 70, 000 Physician Assistants. I also don’t know what portion of our 50,000 chiropractors’ work falls inside the traditional healthcare budget, but let me assume each physician on average controls only 2-2.5 million dollars worth of products or services…

Then, if every physician took a $200,000 pay cut, we could reduce our healthcare spending by up to 10%!

This would be a 50% pay cut for many surgeons, and would actually make the average primary care doctor have to pay Uncle Sam for the privilege of working. I suspect most wouldn’t.

Is 10% too much to pay the providers of the intellectual and procedural services that are still necessary for $3,000 MRIs and $200/month prescriptions to be used for the right reasons and produce the right outcomes for patients?

Would a symphony fire the conductor to save less than 10%? And would we still want to hear the music if they did?

Sources:

http://www.cdc.gov/nchs/fastats/hexpense.htm

http://www.ahrq.gov/research/findings/factsheets/primary/pcwork2/index.html

http://www.bls.gov/ooh/healthcare/chiropractors.htm

Country Doctor is a Swedish-born family physician in a small town in rural Maine. This post originally appeared on Country Doctor’s blog, A Country Doctor Writes.

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legacyflyerplaton20MatthewFiona LaneSusan Recent comment authors
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legacyflyer
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legacyflyer

Platon 20 has it right.

And what happens as reimbursement per procedure is driven down (which has been happening for many years) doctors strive to do more procedures (and new procedures) to maintain their incomes.

As the old joke goes: “We lose money on every car we sell, but we make it up in volume”

platon20
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platon20

Good article. About every 6 months or so, a liberal healthcare policy wonk who has no healthcare experience (i.e. Peter Forbes, Ezra Klein, Sarah Kliff, Matthew Yglesias, etc) writes an article complaining that: 1. Doctors are paid too much 2. Doctors incomes are the reason why healthcare costs are so high 3. Doctors’ supply is artificially limited and increasing the numbers of doctors or “providers” will lower healthcare costs. Argument #1 is solely a matter of personal opinion with no real argument to back it up. Similar to saying that “fried green tomatoes are good.” I dont like fried green… Read more »

Peter1
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Peter1

“Arguments #2 and #3 on the other hand, are blatantly false ”

Actually it’s all the prices that contribute to high U.S. medical costs – including docs. Wouldn’t the market forces guys say more supply would increase competition?

http://content.healthaffairs.org/content/22/3/89.full.pdf

platon20
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platon20

“Actually it’s all the prices that contribute to high U.S. medical costs – including docs.” High costs relative to what? Europe? Lets take a look — US healthcare costs are roughly 100% higher than Europe. That article you posted shows that doctors incomes account for 10% of total US healthcare spending. That means that you are still 90% more expensive than Europe even if you pay US doctors zero dollars. Hardly any kind of significant savings. On a more realistic scenario where you give doctors a 50% paycut, there is only 5% savings. Again, hardly worth the effort. You are… Read more »

Peter1
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Peter1

I said ALL the prices, docs compensation are part of the prices.

I asked the question about competition from more docs, I did not say I believed it. If fact more docs create more medical care not lower prices.

The “consumer driven health care” group are talking nonsense, as I have always posted on this blog.

Matthew
Guest

You didn’t quite make the point I thought you were trying to make. From a macro perspective, there’s really no inefficiency from the fact that we pay physicians a lot. That is, there is only a pareto-type welfare loss if you are going to argue that there are too many or too few doctors, but if the number of doctors is correct, then how much we pay them is simply a matter of redistribution and not efficiency. More generally, I cringe whenever someone talks about healthcare “costs” as if every dollar we spend on medical care disappears from the economy.… Read more »

MD as HELL
Guest
MD as HELL

Here we go again… The driver of healthcare expenditures in the USA is the patient. The patient has too much free money and free time to spend on his healthcare, so he does. The patient has a shark in the water with him, so the doc gives the patient everything he wants so the shark will not try to bite the doc. MRI’s cost thousands because the insurance company will pay it. The patient would never have one if he had to pay for it. Too much money sloshing around tempts everyone. You cannot change outcomes when the care was… Read more »

Dr. Rick Lippin
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Dr. Rick Lippin

right on Peter1

Peter1
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Peter1

“Until we stop lying to ourselves and others we will continue to struggle with excessive costs”

Wholeheartedly agree, but being honest and taking action would reduce the income of those “arms merchants” who support both sides – the cause and the treatment.

Dr. Rick Lippin
Guest
Dr. Rick Lippin

We continue to fail to recognize one the root causes of excessive health care costs – We have foisted “the big lie” onto the American consuming population about the effecacy and safety of many (most?) medical interventions by organized bio-medicine. We have also medicalized America’s social problems.

see http://www.unnaturalcauses.org

Until we stop lying to ourselves and others we will continue to struggle with excessive costs

We need megadoses of humility and honesty

Dr. Rick Lippin
Southampton, Pa

Peter1
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Peter1

“Today I am going to write about how the US could save up to 10% on its healthcare bill.” Boy is this self serving. If insurance companies didn’t make a profit we’d only save 5%, if hospitals didn’t make a profit we’d only save 10%, if executives took a pay cut we’d only save 2%, if we eliminated malpractice we’d only save 5%. As noted there is no one cause, however docs are in control of 100% of potential costs. If docs would lobby for reducing costs (and passing that along) rather than feathering their own beds we’d do much… Read more »

Patrick Mac
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Patrick Mac

Other countries also limit health care providers exposure to medical malpractice litigation and this limits the cost of defensive medicine. For example, in England if a patient sues for medical negligence, the National Health Service gets sued, not the health care provider. New Zealand, Sweden and several other countries have no-fault medical malpractice systems. Trial lawyers in the US continue to be effective in lobbying against meaningful tort reform, and medical care in the US remains more expensive because of it. This is just one of the many reasons why medical care is more expensive in the US than in… Read more »

Peter1
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Peter1

” For example, in England if a patient sues for medical negligence, the National Health Service gets sued, not the health care provider.”

They’re employees on salary. Do the same in the U.S. and I’d agree to that system as well. Of course as employees they’d be subject to professional oversight and discipline by the employer.

Fiona Lane
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Fiona Lane

if there was an “applause” button to it, i would have pressed it. well said peter1!

OLDRN
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OLDRN

Agree Tim. After 30 yrs in the hospital, I’ve learned a thing or two, more than most people off the street. I still have to rely on my physician’s expert advice just as I rely on my trusted mechanic. I know how an internal combustion engine works but I don’t know how to fix it. Expecting lay people and elderly to come in the door with some knowledge base is the exception rather than the rule. The expert physician will always be necessary to inform and provide options. Having an educated and informed patient class is another problem altogether.

David Clymer
Guest

You are defining health care as what happens in a hospital not what happens the other 99% of the time that lead up to it. I am 46 years old and have spent less than 5 days in a hospital my whole life. Why would I define how I manage my health by 5 days out of the nearly 17,000 days I have been alive. Even then, I am not willing to let my outcomes or the outcomes of my family be completely dependent on the quality of the provider you assign to me. The idea of “buyer beware” has… Read more »

Spring Texan
Guest
Spring Texan

Right, Mr. Clymer, I am 62 and I too have spent less than 5 days in a hospital my whole life. Ya know why? Cuz we are both not in the age group that spends a lot of time in hospitals normally, although I’m a lot closer than you to the age I might use more. And yes you’d define how you manage your health by that time because it tends to be the most intensive use and a great fraction of health care spending, although you are right there are other costs also. And yes, I too am an… Read more »

Timmy Thompson, RN
Guest
Timmy Thompson, RN

Most patients have no idea what is needed for their care when sick, so to say they should have more skin in the game is folly. Perhaps, 10% of the people/potential patients have the time or interest or intelligence to have menaingfully significant “skin” in the game. They rely on professionals.

David Clymer
Guest

The idea that the patient is too stupid to participate in their care is an antiquated rationale that is not only self-serving but simply not true. Leaving all their care decisions up to the professional and hoping everything works out is not only insults the patient, but potentially threatens their life. They do complicated things all day long in how they spend the rest of their paycheck, why should their routine health be any different. No one is calling for a patient to make surgical decisions on their own or direct their care in a hospital bed but those cases… Read more »

Susan
Guest
Susan

Bravo!

Legacy Flyer
Guest
Legacy Flyer

Rob, You need to take it one step further. There is no ONE cause for excessive healthcare spending and David Clymer is right, if patients had “more skin the game” there would be fewer useless tests/procedures. And there are tests/procedures done that are a “deep wallet biopsy”. But one of the huge drivers of unnecessary testing is malpractice. A doc can be right in NOT ordering a test 99 times out of 100 – and in doing so can save a huge amount of money. But the one time he doesn’t order the test and he is wrong – KaChing… Read more »

Rob
Guest

It’s obvious that the waste in health care is not in the realm of physician salary, except where that’s tied to unnecessary procedure (like coronary stenting padding salaries of cardiologists). Just like the solution to obesity is less food intake, the solution to overspending is to spend less. The insurance companies, led by Medicare, are unwilling to say “no” to unnecessary ER visits, admissions, MRI scans, etc. and so choose instead of accepting the blame the deserve, to use reimbursement to try to control physician behavior or to shame those who “do bad.” It’s like parents who keep a pantry… Read more »

David Clymer
Guest

After reading these comments I am reminded why nothing ever changes in health care. For the last 40 years everyone involved in patient care has taken the stance that by finding someone more inefficient or greedy than you, they are the problem and you’re not. The truth is that everyone is at fault by running their piece of the machine (at least from the financial side) in THEIR own self interest. I am not one to argue that this is not human nature, but just like Margaret Thatcher’s famous quote about socialism, eventually it fails because it runs out of… Read more »

William Minkowitz
Guest
William Minkowitz

David this is so true. I find it so amusing when otherwise smart people have such a narrow vision. Yes, hospitals would be lost without physicians. Good luck to any physics the tries to practice medicine without the availability of a: hospital, medical staff, pharmacy or pharmaceutical company. If you meet a physician like that run.

I also object when individuals use carefully culled facts to make their argument but then use “common knowledge” when pointing the finger at others.

Peter1
Guest
Peter1

“Solutions that are expensive and/or provide little real benefit to your overall health (90 year old knee replacement or 10 prescription meds) will be used less and less.”

David, WHO will decide the “real” benefit”?

pharmacist
Guest

These are all high roller career (an on demand) but what are the income threshold and how would you control it along with the accountability of rising inflation?

life uninterrupted
Guest

Yes, it is very necessary for take control on the cost of medical subscription for providing all required facilities to all patients