Economics

How Should Doctors Get Paid? Hourly Wage, Piecework or Quality?

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A long time ago, when I worked in Sweden’s Socialized health care system, there were no incentives to see more patients.

In the hospital and in the outpatient offices there were scheduled coffee breaks at 10 and at 3 o’clock, lunch was an hour, and everyone left on the dot at five. On-call work was reimbursed as time off. Any extra income would have been taxed at the prevailing marginal income tax rate of somewhere around 80%.

There was, in my view, a culture of giving less than you were able to, a lack of urgency, and a patient-unfriendly set of barriers. One example: most clinics took phone calls only for an hour or two in the morning.

After that, there was no patient access; no additions were made to providers’ schedules, even if some patients didn’t keep their appointments, not that there was a way to call and make a same-day cancellation.

As my father always said: “There must be a reward for working”.

But, high productivity can sometimes mean churning out patient visits without accomplishing much, or it can mean providing unnecessary care just to increase revenue. For example, some of my patients who spend winters in warmer climates come back with tall tales of excessive testing while away.

A recent Wall Street Journal article offers an interactive display of doctors who collect the highest Medicare payments. The difference between providers in the same specialties across the country makes interesting reading. It is hard to imagine that many individual doctors are billing Medicare more than $10,000,000 per year.

So it might make sense to insure against paying for excessive care by also demanding a certain level of quality.

But defining quality is fraught with scientific and ethical problems, since quality targets really aren’t, or shouldn’t be, the same for all of our patients.

The scientific community, for example, knows that elderly diabetics with “ideal” blood sugars are more likely to suffer harm or die than those with sugars that are a little higher. Even though the American Diabetes Association has embraced higher blood sugar targets for older diabetics, many healthcare organizations’ quality assurance programs treat all diabetics the same and penalize doctors who individualize treatment goals in accordance with the scientific evidence or common sense.

In almost every area of medicine there are individual nuances that must be considered if we are to best serve each of our patients. It is ironic and very sad that, right now, those who pay us are looking for simple (or simplistic), universally applicable quality targets just as the explosion in our understanding of genetics is promising to usher in the era of “personalized medicine”.

Up until now, the gold standard of scientific research has been to prove which standardized interventions work best for large groups of patients, even if there are subgroups that aren’t helped at all by them.

Who should define the “quality” measures of our work?

The central question for how doctors might be paid for quality in the future hinges on the priorities of whoever holds the purse strings. Insurance companies, if we overlook profit motives that also exist, prioritize population management. They pay for what works for most people, knowing full well that some patients will not get the best care for their individual situations, for example when certain medications are not covered.

Politicians also favor the population view of health care.

If patients pay us directly, they expect us to deliver the care that works for them. If the Government or an insurance company pays us, they expect us to deliver care that meets their standards, because they don’t trust the patients – their constituents and customers – to know what is best for them.

And their focus is to have us do what helps most of our patients, even if some are not helped and some, or many, aren’t happy with what they are getting.

With all the political talk about “Patient Centeredness” during the current health care reform, may I suggest that patients need to be given more choice about how their health care dollars are spent. With limited choice and no responsibility, patients tend to feel entitled and deprived at the same time.

This creates a toxic environment for delivering health care. I have never met a patient who felt in partnership with his or her insurance company – ever.

And I don’t expect to.

In order to maintain what partnership is left today between doctors and patients, we need a cost-quality paradigm that is shared by patients and providers. We also need to foster and maintain a sense of stewardship that is elusive if all that is at stake is someone else’s money.

I think there are ways to achieve this.

Hans Duvefelt, MD is a Swedish-born family physician in a small town in rural Maine. He blogs regularly at A Country Doctor Writes where this piece originally appeared.

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Paul SlobodianHans Duvefelt, MDMichael MillensonbirdNate Wright Recent comment authors
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Michael Millenson
Guest

Dr. Slobodian, perhaps you never heard of “usual, customary and reasonable,” which allowed doctors (as a group) to raise their fees to Medicare (as a group) without any controls whatsoever for a number of decades? You are, of course, making a version of the argument against health insurance — ANY health insurance — that some physicians made for years. “Third-party payment” interferes with the doctor-patient relationship (at least the financial one). And it does. Except that given the cost of medical care, if the patient paid you completely out of his own pocket, giving you that economic freedom that lawyers… Read more »

allan
Guest
allan

Perhaps we need to have an awareness that doctors did originally set their fees, but that did not necessarily mean Medicare used those fees in updating the fee schedules though the smaller subspecialties might have had more influence. Additionally Medicare had some rules that made physicians *increase* their charges even though those increases had no immediate impact on the fee they were paid. If a physician’s charges were below Medicare rates or below an increase in rates then Medicare would not increase payments to them for a year or a year and a half after the physician so called charges… Read more »

Paul Slobodian
Guest

Michael, I don’t believe my preference for more freedom for doctors to set prices and for patients to choose to pay more (or shop for a lower price) is the equivalent of giving up on health insurance. I think the way it would work is that the insurance contract commits the insurer to pay a set amount (akin to usual and customary) per procedure….and the patient pays more if his doc charges more….and the patient gets to keep the difference if he finds a lower cost provider: this is similar to how high deductible plans linked to health savings accounts… Read more »

Paul Slobodian
Guest

1. Twenty years ago I was sitting in a health insurer board meeting when it dawned on me that physicians are the only professional group that cannot set its own fees or rates. Lawyers, architects, engineers all set an hourly rate and/or bid on jobs…..ending up with negotiated recompense from their client. I believe this came about as Medicare evolved with a set fee per procedure…..and then the insurers (in my case we had 65% market share) simply told hospitals and doctor groups we’d pay medicare plus a set percent…..and no provider could afford to reject the deal as we… Read more »

Perry
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Perry

It’s very frustrating, how we get paid vs getting paid period. Since I am in Occupational Medicine, we are paid through MCOs for the Worker’s Compensation cases we see. About 6 weeks ago, I saw an injured worker as a referral from the ER. He had multiple injuries including a mild concussion, cervical strain, nasal fracture, facial laceration and significant ecchymosis and swelling around the eyes. I talked to he and his wife, did a thorough exam, especially neuro, reviewed his scans, Xrays and ER reports, set up an ENT consult, and discussed his work status with his employer. The… Read more »

Michael Millenson
Guest

True, tort reform must accompany evidence-based medicine. A legitimate worry.

Hans Duvefelt, MD
Guest
Hans Duvefelt, MD

Tort reform must accompany the future of health care in this country. Period.

Michael Millenson
Guest

Oh, those good old days before the evil insurance companies stopped us from doing what was best for our patients. (And pay no attention to the telephone-book thick number of studies on profit-driven overuse, or the refusal to use any decision tools because it was an insult to professional autonomy, or the lack of evidence-based practice). I don’t doubt Dr. Duvefelt’s sincerity, any more than I doubt the sincerity of physicians who believe Obamacare is socialism and communism or the sincerity of physicians who believe this nation’s failure to adopt a single-payer system is immoral and indefensible. Alas, every system… Read more »

Perry
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Perry

If a patient is paying directly, physicians have will have little incentive to bow to conflicts of interest, as opposed to third parties paying. I think that is what Dr. Duvefelt is getting at. Obamacare simply continues the process by engaging insurance companies, and now ACOs to continue putting layers between physicians and patients. How much different is a conflict that causes overcare vs undercare? I’m sure many would disagree here, but I would argue any attempt at using evidence-based medicine should be accompanied by Tort reform to protect the physician. There continue to be serious debates on the need… Read more »

Hans Duvefelt, MD
Guest
Hans Duvefelt, MD

Profit is a motive for most “players” in the healthcare game. No argument there. But there are more and more “players”, who want some of that profit. I think the insurance companies, pharmacy benefit managers and the like are not the best and most credible arbiters of quality. Our professional societies may be a better guardian of such things.

allan
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allan

One of the problems about evidence based medicine is the definition and understanding of what evidence based means. If Dr. D treats patient A with a drug that has been tested for a disease and found to be useful, is that evidence based? One might immediately say yes, but what if that patient was of a different age than the group studied? What if that patient is on a whole bunch of other medications? What if the patient has multiple diseases? The problem faced by physicians is not the average patient with the average disease that needs one medication. The… Read more »

Nate Wright
Guest

Fundamentally, so much of patient care revolves around patients actually taking the doctor’s advice, sticking to their prescription schedule, avoiding activities / foods / environments that aggravate their condition, etc… that quality measures would have to be single-dimensional. It may be crude, but looking at how people measure quality between auto mechanics would reveal some great indicators for doctors. For example, many people will consider a mechanic excellent if they take the time to explain the ‘treatment’ their car will be receiving (show them the busted part, the new part, let them get in the pit to see the problem… Read more »

allan
Guest
allan

“who spend winters in warmer climates Yes, it is sadly true, but on the other side of the coin the same complaint exists when the patient returns south. What do all these anecdotes prove? There are doctors up north and down south that might not be doing the best job possible. A partial solution is for the patient to take charge, ask questions and demand answers. How can one accomplish that goal when much of this type of treatment is *prepaid* by someone else? Those in charge need to consider how many people will go to a restaurant they have… Read more »

Hans Duvefelt, MD
Guest
Hans Duvefelt, MD

I absolutely agree. In my third installment, I will make the same point: it is human nature to be a little less conscious about spending “other people’s money” and we need an insurance system where people feel the money is THEIRS.

Doc Epador
Guest

The only positive thing I can say about the current changes in the healthcare system is that through higher deductibles patients are gaining control and insight into the costs of care they encounter. Too many are choosing to avoid care and spending anything instead of seeking care but negotiating directly just how and what they want things done. Sadly costs remain extremely and artificially inflated, and government insurance reimbursement practices inhibit realistic charges and billing that reflect patients’ ability to pay. So the folks that Medicare and Medicaid are supposed to help are suffering because of those systems, not inspire… Read more »

Joel Hassman, MD
Guest
Joel Hassman, MD

What is the price of quality of life? When the businessmen come up with the equation defining “quality of life”that maximizes profit margins and makes sure it can be quantified for Wall Street stock advisers, then I guess all of us doctors can then apply it at the front desk of our offices, right? Or, better yet, maybe the real question is what is the price of shame and humility? Oh yeah, those terms aren’t applicable in the business arena, true?! Maybe finally the best question is, what will it cost to end a physician’s strike to finally make this… Read more »

Perry
Guest
Perry

“If patients pay us directly, they expect us to deliver the care that works for them. If the Government or an insurance company pays us, they expect us to deliver care that meets their standards, because they don’t trust the patients – their constituents and customers – to know what is best for them. ”

And therein lies the rub.

bird
Guest
bird

Agree…the words patient mangement are never uttered in my hospital employeed practiced, only the term population mangement. we use patient centered, patient satisifaction but never patient manangement.