Freeing the Doctor

The case for liberating physicians from the dictates of third-party payers

Of all the people in the healthcare system, none is more central than the physician. As I explain in my book Priceless: Curing the Healthcare Crisis, fundamental reform that lowers costs, raises quality, and improves access to care is almost inconceivable without physicians leading and directing the changes. Yet of all the actors in modern healthcare, none are more trapped than our nation’s doctors. Let’s consider just a few of the ways your doctor is constrained, unlike any other professional.[1]

Sometime in the early part of the last century, all the other professionals in our society—lawyers, accountants, architects, engineers, and so on—discovered the telephone. It’s a handy device. Ideal for communicating with clients. Yet, telephone consultations are not on Medicare’s list of about 7,500 tasks it pays physicians to perform. (At least, it’s not there in a way that makes telephone consultations practical.) Private insurance tends to pay the way Medicare pays. So do most employers.

Sometime toward the end of the last century, all the other professionals discovered email. In some ways, it’s even better than the phone. But reading and responding to emails doesn’t make Medicare’s list in a practical way, either.[2]

At a time when doctors feel that third-party payers are squeezing their fees from every direction, most are going to try to minimize their non-billable time. Because patients cannot conveniently use modern media to consult with physicians, they make unnecessary office visits. The result is more rationing by waiting at the doctor’s office, which imposes disproportionate costs on chronic patients who need more contact with physicians. This might be one reason why so many are not getting what they most need from primary care physicians and what is most likely to prevent more costly problems later on: prescription drugs.[3]

The ability to consult with doctors by phone or email could be a boon to chronic care. Face-to-face meetings with physicians would be less frequent, especially if patients learned how to monitor their own conditions and manage their own care.

Other doctor tasks that might be helpful—but are not compensated by Medicare and other insurers—are providing advice about the cost of brand-name drugs versus generic and therapeutic substitutes as well as over-the-counter alternatives. Information about comparative prices and how patients can save money through smart shopping would be a valuable service, and who would be in a better position to provide it than the physician? In addition, numerous studies have shown that chronic patients—people with diabetes or asthma, for example—can often manage their own care, with lower costs and as good or better health outcomes than with traditional care, reducing the number of trips they make to the emergency room. ER doctors could save themselves and future doctors a lot of additional time and trouble if they took the time to educate the mother of a diabetic or asthmatic child about how to monitor and manage the child’s healthcare. But time spent on such education is generally not billable.

What is the common denominator for all of these problems? Unlike other professionals, doctors are not free to repackage and reprice their services in ways they believe will best help their patients. Instead, third-party payer bureaucracies tell them what tasks they will get paid for performing and how much they will be paid to charge. Doctors are the least free of any professional we deal with. Yet these unfree actors are directing one-fifth of all consumer spending.

By now readers will be familiar with what I regard as the essential way out of this trap: Medicare should be willing to pay for innovative improvements that save taxpayers money. And doctors and hospitals should be able to repackage and reprice their services (the way other professionals do), provided that the total cost to government does not increase and the quality of care does not decrease. This change in Medicare would almost certainly be followed by similar changes in the private sector.

[1] John C. Goodman, “What’s Wrong with the Way We Pay Doctors?” John Goodman’s Health Policy Blog, December 2009.

[2] About 34 percent of physicians email their patients. Wall Street Journal Staff, “Vote: Should Physicians Use Email to Communicate With Patients?” Wall Street Journal Health Blog, January 10, 2012. These are usually messages alerting the patient about an appointment or other notification. Email consultations are rare.

[3] John C.Goodman,“Time, Money, and the Market for Drugs,” in Innovation and the Pharmaceutical Industry: Critical Reflections on the Values of Profit, eds. H. Tristram Engelhardt, Jr. and Jeremy Garrett (Salem, MA: M & M Scrivener Press, 2008), 153–183.

[Cross-posted from Psychology Today.]

John C. Goodman is a Research Fellow at the Independent Institute, President of the Goodman Institute for Public Policy Research, and author of the Independent books, Priceless: Curing the Healthcare Crisis and A Better Choice: Healthcare Solutions for America.
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