Here's the Final Tally on How Much Money Trump Raised for Hurricane Victims
WATCH: California's Harsher Criminal Penalties Are Working
Here's the Latest on That University of Oregon Employee Who Said Trump Supporters...
Watch an Eagles Fan 'Crash' a New York Giants Fan's Event...and the Reaction...
We Almost Had Another Friendly Fire Incident
Not Quite As Crusty As Biden Yet
Legal Group Puts Sanctuary Jurisdictions on Notice Ahead of Trump's Mass Deportation Opera...
The International Criminal Court Pretends to Be About Justice
The Best Christmas Gift of All: Trump Saved The United States of America
Who Can Trust White House Reporters Who Hid Biden's Infirmity?
The Debt This Congress Leaves Behind
How Cops, Politicians and Bureaucrats Tried to Dodge Responsibility in 2024
Meet the Worst of the Worst Biden Just Spared From Execution
Celebrating the Miracle of Light
Chimney Rock Demonstrates Why America Must Stay United
OPINION

Why Pay Physicians Anything At All For Providing Healthcare?

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
Advertisement
Advertisement
Advertisement

Last week, the National Commission on Physician Payment Reform released its recommendations, calling for the elimination of fee-for-service healthcare within the next 5 years. This organization, funded by the Robert Wood Johnson Foundation, is populated by physicians from academia, the insurance industry and from the public policy world. Having former GOP Senate Majority leader and cardiac surgeon Bill Frist serving as honorary chairman gives the imprimatur of bipartisanship and legitimacy. However, Dr. Frist, a former academic himself, has long favored a government supervised healthcare system, and is therefore less than objective in this regard.

Advertisement

The Commission was formed to assess by what means and how much doctors should be paid. Their position is that payments to physicians are one of the key drivers of escalating healthcare expenditures. They want to pay for the sustainable growth rate (SGR or "doc fix") by cutting physician payments for services, just as they aspire to hasten the implementation of the Affordable Care Act by fast tracking new and unproven concepts such as accountable care organizations (ACOs), patient-centered medical homes and value-based purchasing.

Sadly, the objectivity of this group has been clouded by its ideology and perhaps itsself-interests. Although physician payment is one of the components of healthcare costs, it is hardly the major driver. According to a 2012 study from Jackson Healthcare, compensation to physicians was 8.6% of healthcare costs, or $216 Billion annually- amongst the lowest of the major Western nations. Germany spends 15% of their healthcare costs on physician compensation, Australia 11.6% and France spends 11%.

Placing blame for runaway healthcare costs solely on physicians is simply an attempt to divert attention from the real perpetrators. In his recent Time magazine feature story, Steven Brill painstakingly outlined how hospitals throughout the country are generating obscene charges and profits. Over 30% of healthcare spending is generated by hospitals, a large share of which goes to managers and executives; many taking home seven figure salaries. Ignoring this, the Patient Payment Reform Commission wants to give the hospital administrators, through the new ACO model, even more control by directing payments to them, effectively making them the gatekeepers of reimbursements. The false narrative that has been created for public consumption is that in doing so, savings are created by consolidating and delivering care more efficiently and effectively. So far this is simply false.

Advertisement

Two of the major drivers of out of control healthcare spending are medical liability and the 3rd party payment system.

Medical liability costs, both the money spent to defend claims and the awards, is greater in the United States than in all of the Western democracies combined. The largest contributor to these costs comes from extra tests ordered by physicians, to protect themselves from frivolous lawsuits-defensive medicine. A Harvard study in 2008 calculated these costs to be about 2.4% of healthcare spending or $65 billion annually. The 2011 newsletter of the American Health Insurance Plans (AHIP) reported that these costs were actually somewhere between $650-850B annually.

The 3rd party payment system is perhaps the most potent driver of runaway healthcare spending. Without any restraint on spending, largely because individuals are disconnected from the costs of their healthcare, patients routinely expect tests and procedures that may be unnecessary simply because someone else is paying the bill. Doctors have little incentive to dissuade this behavior since the cost is also opaque to them and the threat of malpractice always lingers in the background.

Physician compensation is not the reason that healthcare costs are out of control. Annual healthcare spending is estimated to be $2.7 Trillion. There are many parties uninvolved in direct patient care, who have devised ingenious ways to get a share of this limited pot of money. If one considers that the basic relationship in medical care is between one doctor and one patient, and that the physician is responsible for referrals, tests, hospitalization and x-rays, it becomes clear how others could profit by controlling physician behavior and reimbursement. When doctors have less discretion over their decisions, entities that have had a hand in imposing these controls stand to profit, and they currently are. As a result of current regulation and payment policies preventing physicians from competing against hospitals, doctors are often forced to direct patients to these institutions, where costs are often as much as 10X higher for the same services that could have been offered in a physician owned center.

Advertisement

It is easy to be swayed by "experts" who find it quite convenient to make scapegoats of doctors and their compensation; attempting to convince the public that fee-for-service is the problem while using worn out clichés such as "doctors are being paid for sickness instead of wellness". Physician compensation plays a minor role as a driver of escalating healthcare costs. Anyone who suggests otherwise is protecting their own interests and deflecting scrutiny away from the real culprits- the hospitals, the insurance companies, the federal government, and the trial bar.

Hal Scherz is the President & Founder of Docs4PatientCare. He is a full time pediatric urologist at Children’s Hospital of Atlanta and a clinical associate professor of urology at Emory University.

Join the conversation as a VIP Member

Recommended

Trending on Townhall Videos