Thoughts from a physician reader

I’ve been reading your stuff for awhile, and enjoying your thoughts even when I disagree with them (e.g., DTC advertising). The pay for performance issue is one more piece of evidence that physician care is being subjected to economic analysis.

Start with the study that reported that over a quarter of the ‘extra’ cost of American health care is because U.S. physicians are paid more than in other countries. Why? Oops, no good data. Take data available and throw it against wall. Things that stick include U.S. has higher infant mortality, lower life expectancy, etc. Ignore complexity of issues and conclude that U.S. patients don’t really do better than ‘average.’ ‘Logical’ conclusion–U.S. physicians are overpaid!

Centralized control solution–nationalize and/or price control. (Aside #1: Any doctor who wants the Feds to control drug prices needs to realize that both physicians and pharma ‘supply’ health care– controlling drug prices is one very small step from controlling physician prices.) Point to VA as national health care solution. (Aside #2: Having been out of clinical care for 10 years I can’t comment on the current VA, but in the early 90′s it wasn’t bad. Not great, but the quality of care distribution, i.e., span from best to worst, definitely overlapped the average private hospital. What I don’t understand about the doctors who want to nationalize health care is why they want to be a bureaucrat? Everybody in the VA is either fighting the bureaucracy, part of the bureaucracy, or hiding from the bureaucracy.) Oops, VA now getting stretched, Canada, Britain not looking like stellar examples…

MBAs to the rescue! Let’s measure performance and pay for same! Everyone likes this idea…doctors say “I’m giving good care, this won’t hurt me…”

Well, in my opinion, physicians had better wake up. Personally, I support the idea of paying for performance, but it is going to cause a lot more disruption than most physicians believe.

First of all, the assumption is that pay-for-performance will create winners and losers in relatively equal numbers, and physicians who are above average will win. But this is dependent on the average pay staying the same. Is it coincidence that the projected Medicare cuts are about the same as the amount U.S. physicians are ‘overpaid’? And if the average pay goes down 26% you won’t see winners, just losers and a select few that just hold on to their earnings by their fingernails.

Second, physicians overestimate how good they are. A professor of mine said that 1/4 of the patients get better even if you do nothing, 1/4 get worse no matter what you do, and 1/4 stay pretty much the same, leaving only 1/4 where the physician really can make a difference. I think he overestimated our power; in my estimation we really only impact 5-10% positively (although the potential for harm is limitless). So if one doctor has 26% of his/her patients go bad (the apocryphal 25% + 1%) and another has 27% go bad, the second doc is twice as bad as the first! Not only that, the first one has a 10% ‘error’ rate. I think physicians are going to be shocked at how much they are going to have to change their practice.

Third, what happens with the government is the primary purchaser? Consolidation. National pay for performance standards will quickly lead to bigger physician groups (it is already hitting health insurance). Most new physicians are already becoming employees; now they will become employees of really big companies. Small specialty groups will survive, especially those who work hard to stay out of the Federally covered areas, but I am afraid the small independent primary care group will disappear. The ‘fixed’ costs of meeting bureaucratic rules will overwhelm small groups, who can’t amortize those costs across hundreds of docs.

Final point, doctors need to fight like hell to keep the option of specialty hospitals alive. Although a lot can be done in the outpatient setting, most docs need the ability to provide inpatient care for some of their patients. And if the only option is the local general hospital, they will either be shut out or be forced to join a large group. How many independent anesthesiologists, radiologists, ER specialists, etc. are there? Only if a small group of docs is able to control its own inpatient facility will they be able to control their practice.

This email makes many interesting points. I will respond to a few.

1. Drug pricing – I agree that we should avoid price controls. However, for both pharmacy and physician fees I would like to see a true free market. Patients generally have no concept of costs, because insurance covers those costs. The market place could influence drug costs if patients made decisions partly on the basis of costs.

2. The VA – working in the VA, we do a very nice job caring for patients. We do better for inpatients than for outpatients. Finding enough physicians to handle the demand remains a problem. Expeditious scheduling of many tests remains a problem. Nonetheless, VA care has improved dramatically in the past 30 years. The VA often provides better care. I clearly has the best information system.

3. Pay for performance is much more complex than a sound bite phrase. The writer points out one of the problems with the math. The problem really depends on how we value and define performance. We can look at common problems and value quality indicators (measuring HbgA1C, giving a beta blocker post MI, referring type II diabetics for eye exams, etc.). However, good medical care involves much more than simple quality indicators. For example, we could look at back pain and value appropriate use of imaging studies. Or can we?

4. I am not sure about the specialty hospital point. It seemed like a non sequitur, but I included it to be complete. I have viewed specialty hospitals as skimming the cream from the system. I might be wrong, and invite our reader to comment on my error here.