Marcus Welby, Where Are You? The Decline and Fall of House Calls

I saw an interesting Tweet on Friday from Jay Parkinson, MD, one of America’s new breed of entrepreneurial physicians: “There’s a reason why house calls went out of fashion. Grossly inefficient use of very expensive doctor time + extremely limited capability.”

The economist in me took umbrage at that remark, so I replied and we got into a short exchange:

What I found remarkable was Dr. Parkinson’s complete focus on the costs to the doctor, not the costs to the patient, of the reduction in house calls. The almost complete elimination of house calls has not increased efficiency; it has only transferred the cost of travel from the doctor to the patient.

Keith Wagstaff of ABC News covered this very well in his discussion of a study estimating that the average American lost $43 in wasted time waiting for a scheduled appointment – more than the amount of the out-of-pocket payment!

Further, the time spent actually consulting the doctor has shrunk to maybe 15 minutes. So, from a patient’s perspective, the ratio of productive time to wasted time is getting worse.

House calls made up 40 percent of U.S. doctors’ visits in the 1940s, before going into decline in the 1960s. Today they comprise less than one percent of consultations [H. Kao, et al., “The Past Present and Future of House Calls,” Clinics in Geriatric Medicine, vol. 25, no. 1 (February 2009), pages 19-34].

Although Dr. Parkinson insists that we also wait in barbershops and lawyers’ offices, I beg to differ. Like most men, I drop in for a haircut, and can therefore ensure I wait at the least expensive time for me. My wife, who makes appointments, would never tolerate waiting as long for her hairdresser as for her doctor. Nor do lawyers keep clients with scheduled appointments waiting for an hour or more to read old magazines in a “waiting room.” (In other sectors of society, they are called “reception areas.”)

What explains the significant shift in cost of travelling to a consultation from the doctor to the patient? I would argue the most significant factor is patients’ having lost control of paying doctors. According to the National Health Expenditure Accounts, private patients (not those enrolled in programs like the military, veterans’ benefits, or workers’ compensation) paid 67 percent of the aggregate bill for consultations in 1960. By 2014, that had collapsed to 11 percent. Private insurance paid 50 percent, Medicare 27 percent, Medicaid 12 percent, and Children’s Health Insurance Program one percent.

As patients lost control of payment, they lost the ability to signal how much they valued their time, and house calls declined. Remarkably, this occurred over a period when people’s time became more valuable as our incomes increased, and our tolerance for queueing and visiting different vendors shrank. This is one reason for the rise of department stores, supermarkets, and (later) big box stores.

Remarkably, Dr. Parkinson’s own business, Sherpaa, is a solution to this problem:

We’re doctors and insurance guides, empowered by our first-of-its-kind secure communication and care coordination platform, who diagnose, treat and partner with your employees to get them better fast.”

Sherpaa uses innovations such as mobile technology to deliver faster, better care to clients’ employees. Those clients do not care about the doctors’ time. They care about their employees’ time.

Is it too late to invest?