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Tag: physician pay

What Is the Cause of Excess Costs in US Health Care? Take Two


We’ve discussed it before. Why are costs so much higher in US healthcare compared to other countries? The Washington Post has a pointless article which seems to answer with the tautology costs are high because healthcare in America costs more. How much more? Well, we spend nearly twice as much per capita as the next nearest country while failing to provide universal coverage.

In the WaPo article they make a big deal of the costs of individual procedures like MRI being over a thousand in the US compared to $280 in France, but this is a simplistic analysis, and I think it misses the point as most authors do when discussing this issue. The reason things costs more is because in order to subsidize the hidden costs of medical care, providers charge more for imaging and procedures. For instance, Atul Gawande, in his New Yorker piece “The Cost Conundrum” wonders why it is that costs are higher to treat the same conditions in rural areas and in a major academic centers like UCLA than at a highly specialized private hospitals like the Mayo Clinic? I think the reason is it’s not nearly as expensive to administer and provide care for a select group of insured midwesterners at the Mayo than it is to provide care to the underserved in the poor areas of inner-cities and in poor rural locations.

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The British Primary Care System and Its Lessons for America

I’ve heard a lot of shocking things since arriving in England five months ago on my sabbatical. But nothing has had me more gobsmacked than when, earlier this month, I was chatting with James Morrow, a Cambridge-area general practitioner. We were talking about physicians’ salaries in the UK and he casually mentioned that he was the primary breadwinner in his family.

His wife, you see, is a surgeon.

This more than any other factoid captures the Alice in Wonderland world of GPs here in England. Yes—and it’s a good thing you’re sitting down—the average GP makes about 20% more than the average subspecialist (though the specialists sometimes earn more through private practice—more on this in a later blog). This is important in and of itself, but the pay is also a metaphor for a well-considered decision by the National Health Service (NHS) nearly a decade ago to nurture a contented, surprisingly independent primary care workforce with strong incentives to improve quality.

Appreciating the enormity of this decision and its relevance to the US healthcare system requires a little historical perspective.

As I mentioned in a previous blog, the British system cleaves the world of primary care and everything else much more starkly than we do in the States. All the specialists (the “ologists,” as they like to call them) are based in hospitals, where they have their outpatient practices, perform their procedures, and staff their specialty wards. Primary care in the community is delivered by GPs, who resemble our family practitioners in training and disposition, but also differ from them in many ways.

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The Doc Fix

Holiday cheer and bipartisan bonhomie are still possible on Capitol Hill.

For evidence, one need only look at the so-called “doc fix,” where Congress every year overrides a previous effort at health care cost control to ensure physicians get paid at least as much as they did the year before.  Expect another present to arrive at physicians’ offices sometime between Thanksgiving and Christmas, now that the Super Committee has failed to permanently resolve the issue as part of Medicare’s contribution to long-term deficit control.

The heretical thought that the salaries of physicians who treat Medicare patients could be held in check dates from the mid-1990s. The optimistically entitled 1997 Balanced Budget Act created a “sustainable growth rate” (SGR) for physician reimbursement that said any increase in total pay for physicians could not exceed the growth rate of the rest of the economy.

That was wishful thinking, as it turned out. Health care costs and physician pay far exceeded economic growth, largely because of Medicare’s fee-for-service system. While the Center for Medicare and Medicaid Services could fix the reimbursement rate for the 7,000 price-controlled services offered by physicians, it could not put a brake on the quantity that physicians ordered.

“This system, which ties annual updates to cumulative expenditures, has failed to restrain volume growth and, in fact, may have exacerbated it,” the Medicare Payment Advisory Commission (MedPAC) noted in its non-binding recommendations to Congress in mid-October.

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