Health care costs – the big problems


Category : Medical Rants

Physicians often wonder in what reality we have the current health care cost problem.  Contrast physician payments with the pharmaceutical industry.

As an internist with over 35 years experience, my payment schedule is exactly the same as a newly minted internist.  Can anyone think of another profession that does not get some credit for experience and reputation?

Can anyone imagine a payment system that encourages you to spend less time with your patient, because you payment for a 15 minute visit is likely the same as a 20 minute visit?  Can you consider the implications of a system that encourages volume rather than an appropriate consideration of what the patient needs?  Too often physicians do not take the time to really connect with their patients (at least that is what many patients tell me), and these behaviors are driven by the payment system (and the administrators who are running the practice).  Physicians get RVU reports.  If you do not know what RVU means – I can only say that it is a ridiculous metric.

Contrast this with the pharmaceutical industry.  The latest example of their lack of regulation is the Epi-Pen pricing abomination.  Read this article, but take some anti-nausea medication first – Painted as EpiPen Villain, Mylan’s Chief Says She’s No Such Thing  Her defense – she is running a business.

Too many drugs have ridiculous price increases, while physicians generally stay flat or have less than cost of living increases.  We cannot increase our charges, because CMS and insurance companies tell us what they will pay us for some incomprehensible code.  So we spend time learning how to code to maximize our income; we use EMRs that meat coding requirements, but produce incomprehensible notes.

We try to do the best for our patients, but then the unregulated components of health care hamper our efforts.  Check out the prices of colchicine (generic for years, but no longer), inhalers, or the hepatitis C anti-virals.

Too many physicians suffer burnout and frustration with regulations that make their days frustrating.  And then this drug company chief increases the price of 2 EpiPens to $600 from $100.  What crazy world are we living in?


Comments (5)

Dr C,

You identify problems correctly, then attribute the wrong causes for such problems and insinuate that the ideas that got us to this points will somehow solve those problems. Why are we in this bind? Because we agreed to commoditize our services via CPT codes that “organized” medicine (AMA, ACP, etc.) continue to support. We (illogically) accepted the bureaucratic/administrative notion that FFS is the culprit and somehow 3rd parties could create a more “value-based” system of paying for our services. Then we acquired to PPACA and finally MACRA, while refusing to call out the real causes – random price-fixing for our services by 3rd parties, not rejecting use of CPT codes, lining up for EHR MU payments, abandoning our relationships with patients, and refusing to discuss economics of medical care with our patients/communities. Mylan is playing the game as well as it can – a game set up by our own govt that makes it easier for established pharma, insurers, hospitals, etc to stamp their authority without worry of competition, while new comers have a steep hill to climb.

Let’s demand a true free market in healthcare rather than more regulation.

The reasons why medications can be ridiculously expensive, and why sole manufacturers and oligopolies can charge ridiculously high prices for goods that in a functional marketplace should be available at a much lower price, are certainly worth discussing. But an “abomination” that results from protectionism and marketplace distortions is not a model to emulate.

If we focus only on the anti-competitive aspects of healthcare, in a truly free market the price for medical care would be lower — but we also wouldn’t have licensing and credentialing standards that narrow the pool of practitioners, and would see a huge increase in quackery by unlicensed “medical practitioners”. If that’s not the “true free market” that one desires, then the argument is not actually for a truly free market — it’s for a different level of regulation.

As it stands, U.S. doctors are among the highest paid in the world, and it’s difficult to conceive of a functional market for medical care that would result in significantly higher overall compensation. While the model of compensating doctors based upon volume of care, rather than quality, is deeply flawed, were we to fashion a superior alternative the net effect would almost certainly be for counterbalancing raises and decreases in compensation. We would have to consider how lower compensation for inexperienced doctors would affect both medical school enrollment and the ability of newer doctors to service their (in most cases) substantial debt.

Functional alternative compensation models within the United States include the salaried model that works well for two of the nation’s finest healthcare providers, the Mayo Clinic and the Cleveland Clinic. Under a salaried system it should be much easier to take skill and experience into consideration when setting pay, but I see little sign of doctors around the nation clamoring form integrated systems with salaried practitioners, or to convince other medical centers to switch to a salaried model. Is there such a movement?

Doctors can choose a specialty that is largely not covered by insurance and compete for clients in the marketplace, or they can attempt to build an entirely private pay practice and leave it to their patients to try to recoup money from their insurance companies. While a few years ago there was a great deal of talk about concierge medicine and private pay, that talk seems to have petered out. There is no question but that some doctors who offer specialized services, largely not covered by insurance, have built exceptionally lucrative practices — consider, for example, some of the prominent names in cosmetic surgery.

The high price of EpiPen is not due to lack of regulation. It is due to lack of competition that shields Mylan from pressure to reduce the price of epinephrine injections. This is mostly from FDA regulations that have prevented entry of other competitors into the market.

@Ernesto, it would be easy enough for a competitor to create a generic alternative if it could also reproduce the delivery mechanism. The issue is that competitors attempting to produce a generic alternative have been using proprietary delivery mechanisms, and have yet to be able to create a delivery mechanism that is sufficiently reliable. The untold part of the story would appear to be that Mylan’s delivery mechanism remains under patent.

Your post reminds me of when Suboxone became generic and, all of a sudden, Reckitt Benckiser became concerned that the tablet form of the medication was inherently unsafe, and that tablets should be eliminated in favor of its new, proprietary sublingual film. Had the FDA accepted that position, Reckitt Benckiser would have become an effective monopoly while its generic competitors scrambled to come up with an acceptable alternative delivery mechanism (or gave up).

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