Correction Appended: Oct. 19, 2009
It's hard to feel sorry for America's family doctors. Any job that averages $179,000 per year and lets you be your own boss is a job most folks wouldn't turn down. With the effort to rein in health-care costs increasingly framed as an unhappy trade-off in which insurers either slash benefits or raise premiums, some in Washington are beginning to ask a question long considered off-limits: Do we simply pay doctors too much?
The truth is, we pay them all wrong.
Doctors themselves could tell you that particularly primary-care providers (PCPs), the foot soldiers of the U.S. medical system. New doctors graduate from medical school lugging up to $200,000 in student loans. Paying that off takes a big bite out of even a low-six-figure salary. Add to that the high costs, long days and billing headaches involved in running a practice, and it's no wonder so many family docs are trading up to specialties like orthopedics, where the pay can be three times as great and the hours a whole lot shorter. Only 3 out of 10 doctors in the U.S. now are PCPs, compared with 5 out of 10 elsewhere in the world. Those family physicians who remain find themselves in a constant money chase, meeting their monthly nut with the help of the revenue they make by prescribing tests X-rays, CT scans, EKGs that may or may not be strictly necessary but generate a lot of separate billing.
This so-called fee-for-service tradition has contributed to the dysfunction of the U.S. health-care system. Americans buy health care the same way they buy furniture, clothes and food: one item at a time. Physicians bill by the visit; radiologists bill by the X-ray; hospitals bill by the day. That drunken spending has led to the familiar horror-story numbers: a health-care system that gobbles up 16% of gross domestic product, compared with 9% in other industrialized countries, yet leaves the U.S. trailing those countries in such critical metrics as life expectancy and infant mortality.
Bad as that is for consumers and the national debt, it's also turned doctors into fee chasers. More and more of them invest in labs or radiology clinics so they generate revenue not just from the procedures they do themselves but also from the ones they farm out. Others buy state-of-the-art diagnostic hardware and charge state-of-the-art fees to use it. "Focus on your bottom line," urges a brochure for in-office CT-scan machines from one manufacturer. And as long as insurers pay the bills, patients don't ask what things cost. "A colonoscopy used to take 45 minutes to perform," says Ted Epperly, board chairman of the American Academy of Family Physicians. "Now it takes 15, but the cost hasn't come down."
Indeed, across the board, costs are going up. And between the millstones of fee-for-service and pressure from insurers to curb all the extra billing, family doctors are being ground into paste. "We've made it systematically as unpleasant to be a PCP as it is to be a primary-school teacher," says Gene Lindsey, president of Atrius Health, a nonprofit alliance of medical providers in Massachusetts. "We're real adept at that."
But there are ways to fix what ails the docs and repair the health-care system in the process. In the rolling hills of central Pennsylvania, the Geisinger Health System is trying something different. The 726 physicians and 257 residents and fellows who work there don't do piecework. They are paid a salary benchmarked against the national average plus potential bonuses based on how well their patients do under their care. One result is that Geisinger is able to hang on to its PCPs while other hospitals are losing theirs. Another is that Geisinger makes money, and, oh yes, the patients get well.
In his Sept. 9 speech to Congress, President Obama singled out Geisinger and Utah's Intermountain Healthcare as examples of organizations that are learning to do things right. He could have cited others too: the Cleveland Clinic, the Mayo Clinic, Kaiser Permanente. What these providers have in common are the creative ways they're doing away with fee-for-service and replacing it with an imaginative mix of systems that cost less, keep patients healthier and make doctors happier. "We need a transition to rewarding the actual value of care," says Dr. Elliott Fisher, director of population health and policy at the Dartmouth Institute. "For now, our payment system is getting in the way."
Less Is Much More
In the years since the reviled health-maintenance organizations (HMOs) were at their peak, all manner of fixes have been proposed to the health-care system, from small tweaks to wholesale overhauls. There's pay-for-performance: compensation depending on doctors' success in keeping costs down and getting patients well. There's episode care: a fixed price for a procedure like a heart bypass that covers everything from pre-op to surgery to full recuperation. Most broadly, there's global care, which provides access to a diverse team of caregivers who cover all of a patient's needs for a single premium over the length of a policy essentially episode care writ large.