Public Opinion And Payment For Medical Care

Just as in the previous post Megan McArdle is generally right but makes an error, the same can be said about this post from Ezra Klein on health care. Ezra looked at a Kaiser/NPR poll on health care and does make some good points, such as questioning why people have such little interest in  “in implementing the findings that emerge from cost effectiveness studies.” In this case it is more common for physicians than for the general public to be encouraged by cost effectiveness studies as we realize how much is done without good evidence. We want the data to make the best choices for our patients.

While Ezra reads a lot about health care and is very knowledgeable about the subject, such reading is often not a sufficient substitute for actual experience. This leads to his puzzlement over one issue:

doctorpay

Ezra writes in response to this question:

Honestly, I’m surprised patients even have an opinion on that. And it might be a very weak opinion. But for now, the public prefers that doctors get paid for each thing they do than on a salary basis. They prefer, in other words, that doctors have an incentive to do more rather than do less.

Here the majority of Americans are smarter than Ezra. Many have experienced the horrors of the HMO era in which doctors were actually paid based upon how little care they provided. Many also see the difference between the more old fashioned model of doctors in private practice as opposed to the increasing number of doctors who are employees paid a salary. They have seen the difference between a doctor who is motivated to work long hours to care for their patients and salaried doctors who check out at 5:00.

Imagine the negative incentives for being paid a yearly amount regardless of what is done. I’m often at the office past 8 p.m.  to see people who call with problems late in the day. If paid a fixed salary most doctors would tell them to take an aspirin and call (or preferably don’t call) back next month. I’ll often wind up  spending a  half hour to an hour with a patient who is having serious problems. If paid a salary doctors are encouraged to see the highest number of patients possible in as short a time as possible. The medical offices run by the local hospital (which has bought up most of the doctors in town) has nurses with stop watches monitoring office calls and knocking on the door to end the visit if it lasts over fifteen minutes!

Sure, when paid fee for service for taking care of patients this could lead to incentives to do too much to make more money. This is reduced by both utilization controls and by the fact that there is so much more to do than we have time for. Of course, as in the previous post, I’m writing from the perspective of primary care. There is undoubtedly far more waste in some of the high-priced procedures as opposed to primary care offices, but this is also the situation which most people are probably considering when responding to poll questions such as this.

Be Sociable, Share!

3 Comments

  1. 1
    Eclectic Radical says:

    I have to agree pretty strongly with Ron here. I think that the interest of the patient (regardless of the cost to the system) is served by the doctor being paid based on his billable hours with patients. This is how doctors used to work (assuming they were not a town doctor who worked for room and board and maintenance), even doctors in hospitals, for most of American history.

    Compare the way doctors are paid, now, to the way lawyers are paid. Even when on yearly salary, lawyers are paid on a scale based on their billable hours. The amount of work they do is fundamental to whether their pay is increased or decreased. Failure to generate billable hours can even lead to first or second year associate’s termination. I am not saying this is necessarily the system that should be used exactly, but it is important to consider: lawyers are compensated based on how many clients they service, doctors are paid in a manner that incentivizes worshiping the clock.

    I think reform in this area is a necessary component of any health care reform. Thank you, Ron. 🙂

  2. 2
    Ron Chusid says:

    Doctors are actually paid in a wide variety of ways, with only some paid based upon worshiping the clock.

    The poll above basically divides it into fee for service versus capitation. Capitation is when a fixed amount is paid to care for a patient, regardless of how much a patient sees a patient. This led to one of the problems of HMO’s as doctors became motivated to avoid seeing patients.

    It gets more muddled when we consider doctors who are employees as opposed to working on their own. Some physician employees are essentially paid fee for service  as their pay is directly proportional to how much they bill and bring in for the practice.

    Others are paid more on salary. Some liberal bloggers seem to like this, thinking it removes motivation to do too much. If paid purely on salary, it also removes much of the motivation to look beyond the clock.

    Salaried doctors often have some types of provisions to earn more for bringing in more money, but this can vary as to whether it is meaningful. I’ve heard that many of the people who sold out to the hospitals have such provisions on paper, but the system is rigged so that they cannot actually bring in enough money to meaningfully increase their salaries.

    As I’m briefly outlining ways in which doctors are paid, I should mention pay for performance. There is a trend towards giving bonuses based upon a wide variety of measures which in theory pay more for doing a better job of taking care of patients. In theory this is great. In practice this has not yet worked. It is not easy to agree on what constitutes higher quality care and how to measure it.  The ways that insurance companies and others try to determine what is being done for patients are seriously flawed. Often performance bonuses are too small to make much of a difference.

  3. 3
    Eclectic Radical says:

    “As I’m briefly outlining ways in which doctors are paid, I should mention pay for performance. There is a trend towards giving bonuses based upon a wide variety of measures which in theory pay more for doing a better job of taking care of patients. In theory this is great. In practice this has not yet worked. It is not easy to agree on what constitutes higher quality care and how to measure it.  The ways that insurance companies and others try to determine what is being done for patients are seriously flawed. Often performance bonuses are too small to make much of a difference.”

    The idea of ‘performance pay’ is always a bad one in practice, no matter how good it sounds in theory, in any area where performance is not easily gradated. If the level of performance can be measured in quantifiable numbers, great. When it comes to performance pay for doctors, teachers, or other professions in which ‘quality’ of performance is subjective and not entirely dependent upon the professional, it is just plain asinine. The only ‘performance’ pay that matters in such circumstances are merit-based raises based on the opinion of the individual’s superiors and many find this too subjective a reed on which to balance a system.

Leave a comment