Dr. Atul Gawande on the “Fight for the Soul of American Medicine”

McAllen, Texas likes to think of itself as the Square Dance Capital of the World. McAllen doesn’t like to think of itself as the home of the most over-priced health care in the U.S..

Yet it is, as surgeon/author Dr. Atul Gawande reports in the June 1, issue of The New Yorker. (Thanks to reader Jim Jaffe for calling my attention to the article when it first hit the blogosphere)

McAllen seems an unlikely spot for Gold-Coast Medicine.  “Lonesome Dove was set around here,” Gawande writes.  “McAllen is in Hidalgo County, which has the lowest household income in the country.”  Nevertheless, if you have the patience to pore over nationwide Medicare data, you’ll discover that “only Miami—which has much higher labor and living costs—spends more [than McAllen] per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average,” Gawande notes. “The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.”

And it’s not just Medicare. Research shows that in regions where Medicare spends more, private insurers also have been shelling out more and more each year. Indeed, nationwide, reimbursements from private insurers have been climbing by an average of roughly 8% a year. (See figure 1 here)

The Mystery of Health Care in McAllen

Gawande, who is both a surgeon at the Brigham and Women's Hospital in Boston and an assistant professor at the Harvard School of Public Health, begins by emphasizing that runaway health care inflation is leading the nation toward an economic Armageddon. He quotes President Obama: “The greatest threat to America’s fiscal health is not Social Security. It’s not the investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.”

“The question we’re now frantically grappling with is how this came to be, and what can be done about it,” Gawande observes. “McAllen, Texas, the most expensive town in the most expensive country for health care in the world, seemed a good place to look for some answers.” 

What Gawande found in McAllen will shock some—though it shouldn’t surprise anyone who has read Money-Driven Medicine: The Real Reason Health Care Costs So Much. “Here, along the banks of the Rio Grande, in the Square Dance Capital of the World,” Gawande reports, “a medical community has come to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers.

When Gawande began asking local doctors and hospital administrators why health care in McAllen cost so much than in other places, at first, many expressed surprise: “Really, are you sure?” 

Disbelief gave way to many of the usual rationalizations for the high cost of care in the U.S.  First, blame the patients—particularly Fat People: “Just look around,” said one McAllen resident who Gawande met at McDonald’s.  “People are not healthy here.”

At first glance, this seems to make sense.  “McAllen, with its high poverty rate, has an incidence of heavy drinking sixty per cent higher than the national average,” Gawande notes. “And the Tex-Mex diet has contributed to a thirty-eight-per-cent obesity rate.”  When he meets a local heart surgeon, he learns that business is brisk: this physicians explains that in the past twenty years, he has done some eight thousand heart operations, “which exhausts me just thinking about it,” Gawande comments.
But when Gawande studied local public-health statistics, he discovered “that cardiovascular-disease rates in the county are actually lower than average, probably because its smoking rates are quite low. Rates of asthma, H.I.V., infant mortality, cancer, and injury are lower, too. El Paso County, eight hundred miles up the border, has essentially the same demographics. Both counties have a population of roughly seven hundred thousand, similar public-health statistics, and similar percentages of non-English speakers, illegal immigrants, and the unemployed. Yet in 2006 Medicare expenditures (our best approximation of over-all spending patterns) in El Paso were $7,504 per enrollee—half as much as in McAllen.

“An unhealthy population couldn’t possibly be the reason that McAllen’s health-care costs are so high. (Or the reason that America’s are. We may be more obese than any other industrialized nation, but we have among the lowest rates of smoking and alcoholism, and we are in the middle of the range for cardiovascular disease and diabetes.)”

Searching for another answer, Gawande asked himself, “Was the explanation, that McAllen was providing unusually good health care? He took a walk through Doctors Hospital at Renaissance,  a physician-owned hospital in the McAllen metropolitan area,  and was impressed by what he saw: “the sixteen operating rooms, the laparoscopy suite, with its flat-screen video monitors, the hybrid operating room with built-in imaging equipment, the surgical robot for minimally invasive robotic surgery . . . virtually everything you’d find at Harvard and Stanford and the Mayo Clinic.”

And yet, and yet . . ..  Gawande acknowledges  there’s no evidence that the treatments and technologies available at McAllen are better than those found elsewhere in the country. The annual reports that hospitals file with Medicare show that those in McAllen and El Paso offer comparable technologies—neonatal intensive-care units, advanced cardiac services, PET scans, and so on. Public statistics show no difference in the supply of doctors. Hidalgo County actually has fewer specialists than the national average.

“Nor does the care given in McAllen stand out for its quality. Medicare ranks hospitals on twenty-five metrics of care. On all but two of these, McAllen’s five largest hospitals performed worse, on average, than El Paso’s. McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it’s delivering better health care.”

Granted, we’re still learning out to measure quality of care. But with bills so much higher in McAllen, you would expect to find at least one of the five hospitals to show superior performance in some areas.

The Doctors Let Down Their Hair 

Next Gawande went out to dinner with a group of doctors.“All were busy, full-time, private-practice doctors who work from seven in the morning to seven at night and sometimes later, their waiting rooms teeming and their desks stacked with medical charts to review,” Gawande explains.

“Some were dubious when I told them that McAllen was the country’s most expensive place for health care. I gave them the spending data from Medicare.”  But Gawande showed them how health care bill in McAllen had soared in the past 17 years. “In 1992, in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.

“’Maybe the service is better here,’ the cardiologist suggested. ‘People can be seen faster and get their tests more readily,’ he said.

“Others were skeptical. ‘I don’t think that explains the costs he’s talking about,’ the general surgeon said.”

Then, inevitably, one doctor hit upon the explanation that so many physicians cling to:
“’It’s malpractice,’ a family physician who had practiced here for thirty-three years said.

“’McAllen is legal hell,’ the cardiologist agreed. ‘Doctors order unnecessary tests just to protect themselves,’ he said. Everyone thought the lawyers here were worse than elsewhere.

“That explanation puzzled me,” Gawande notes. “Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down?”

“’Practically to zero,’ the cardiologist admitted.

Then, someone broke the white-coat version of the “blue wall of silence” that we associate with policeman who don’t share their guild’s secrets with the public.

 “’Come on,’ the general surgeon finally said. ‘We all know these arguments are bullshit. There is over utilization here, pure and simple.’ Doctors, he said, were racking up charges with extra tests, services, and procedures.

“The surgeon came to McAllen in the mid-nineties,” Gawande explains.  Since then, this surgeon told him, “‘
the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you [the doctor] benefit?’

“Everyone agreed that something fundamental had changed since the days when health-care costs in McAllen were the same as those in El Paso and elsewhere. Yes, they had more technology. ‘But young doctors don’t think anymore,’ the family physician said.”

The surgeon offered an example.  General surgeons are frequently asked to see patients suffering with pain caused by gallstones. If there aren’t any complications, the pain goes away on its own or with pain medication. After switching to a lower-fat diet, most patients have no further problems. Only those who suffer recurrent episodes need surgery. .

“But increasingly,” Gawande was told, “in McAllen surgeons simply operate. The patient wasn’t going to moderate her diet [anyway], they tell themselves. The pain was just going to come back. And by operating they happen to make an extra seven hundred dollars.”

Gawande offered the doctors another scenario: “A forty-year-old woman comes in with chest pain after a fight with her husband. An EKG is normal. The chest pain goes away. She has no family history of heart disease. What did McAllen doctors do fifteen years ago?

“Send her home, they said. Maybe get a stress test to confirm that there’s no issue, but even that might be overkill.

“And today? Today, the cardiologist said, ‘she would get a stress test, an echocardiogram, a mobile Holter monitor, and maybe even a cardiac catheterization.’

“Oh, she’s definitely getting a cath,’ the internist said, laughing grimly.”

The Numbers Support the Stories.

To determine whether overtreatment was truly the problem in McAllen, Gawande sought information from three sources:  Jonathan Skinner, an economist at Dartmouth’s Institute for Health Policy and Clinical Practice, which has three decades of expertise in examining regional patterns in Medicare payment data; and two private firms that digest data from private insures,  D2Hawkeye, an independent company, and Ingenix, UnitedHealthcare’s data-analysis company—to analyze commercial insurance data for McAllen. “The answer was yes,” Gawande reports. “Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything—more diagnostic testing, more hospital treatment, more surgery, more home care.”

For example “Between 2001 and 2005, critically ill Medicare patients received almost fifty per cent more specialist visits in McAllen than in El Paso, and were two-thirds more likely to see ten or more specialists in a six-month period.”  Keep in mind that demographics are very similar in McAllen and in El Paso. “ In 2005 and 2006, patients in McAllen received twenty per cent more abdominal ultrasounds, thirty per cent more bone-density studies, sixty per cent more stress tests with echocardiography, two hundred per cent more nerve-conduction studies to diagnose carpal-tunnel syndrome, and fie hundred and fifty per cent more urine-flow studies to diagnose prostate troubles. “

“They received one-fifth to two-thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received two to three times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents. And Medicare paid for five times as many home-nurse visits.”

  Gawande’s conclusion: “The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.”

The Culture of Money

But Gawande still hadn’t solved the mystery of McAllen. Why do doctors in McAllen practice medicine so very differently from doctors in El Paso?

He considered the possibility that the doctors in McAllen were trained differently. Another blind alley: “There was no sign, that McAllen’s doctors as a group were trained any differently from El Paso’s.”
Could  the difference have something to do with the fact that one of McAllen’s hospitals is for-profit, while a second is physician-owned?  The hospital that is owned by doctors “has a reputation (which it disclaims) for aggressively recruiting high-volume physicians to become investors and send patients there,” Gawande writes. “Physicians who do so receive not only their fee for whatever service they provide but also a percentage of the hospital’s profits from the tests, surgery, or other care patients are given. (In 2007, its profits totaled thirty-four million dollars.)”  Some argued that this gives physicians “an unholy temptation to over order.”

“Such an arrangement can make physician investors rich,” Gawande concedes. “But it can’t be the whole explanation. The hospital gets barely a sixth of the patients in the region; its margins are no bigger than the other hospitals’—whether for profit or not for profit—and it didn’t have much of a presence until 2004 at the earliest, a full decade after the cost explosion in McAllen began.”

But one morning, Gawande reports, he met with “a hospital administrator who had extensive experience managing for-profit hospitals along the border” and he offered a broader explanation of why doctors in McAllen practicing differently than those in El Paso: the culture of money.

“’In El Paso, if you took a random doctor and looked at his tax returns eighty-five per cent of his income would come from the usual practice of medicine,’” he told Gawande.  “But in McAllen, the administrator thought, that percentage would be a lot less.

“He knew of doctors who owned strip malls, orange groves, apartment complexes—or imaging centers, surgery centers, or another part of the hospital they directed patients to. They had ‘entrepreneurial spirit,’ he said. They were innovative and aggressive in finding ways to increase revenues from patient care. ‘There’s no lack of work ethic,’” he added. “But he had often seen financial considerations drive the decisions doctors made for patients—the tests they ordered, the doctors and hospitals they recommended—and it bothered him. Several doctors who were unhappy about the direction medicine had taken in McAllen told me the same thing,” Gawande confides. “‘It’s a machine, my friend,’ one surgeon explained.

“No one teaches you how to think about money in medical school or residency,” Gawande adds. “Yet, from the moment you start practicing, you must think about it. You must consider what is covered for a patient and what is not. You must pay attention to insurance rejections and government-reimbursement rules. You must think about having enough money for the secretary and the nurse and the rent and the malpractice insurance.”

But while many doctors think about finances only when they must, others are intoxicated by the smell of freshly-printed green paper. These “are the physicians who see their practice primarily as a revenue stream,” Gawande writes. “They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patients’ scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work. This is a business, after all.”

“In every community, you’ll find a mixture of these views among physicians, but one or another tends to predominate. McAllen seems simply to be the community at one extreme,” Gawande explains. In other words, a focus on money has become part of the “signature” of clinical care in McAllen. In some communities it i
s acceptable for doctors to talk openly about money. In others it is not.
In McCallen, Gawande reports, one “hospital executive told me, he’d seen the behavior cross over into what seemed like outright fraud. ‘I’ve had doctors here come up to me and say, ‘You want me to admit patients to your hospital, you’re going to have to pay me.’ ”

“How much?” Gawande asked.

“’The amounts—all of them were over a hundred thousand dollars per year,’ he said ,The doctors were specific. The most he was asked for was five hundred thousand dollars per year.”

“He didn’t pay any of them, he said: ‘I mean, I gotta sleep at night.’ And he emphasized that these were just a handful of doctors. But he had never been asked for a kickback before coming to McAllen.”

In part 2 of this post, I’ll talk about how physicians in different communities view medicine differently. This isn’t to say that money isn’t an obsession for some doctors in Boston, where Gawande practices. Because there are so many doctors and hospitals in that city, competition is fierce, which tends to lift prices as hospitals and some doctors invest in the most expensive equipment and the most luxurious amenities available while vying for affluent well-insured patients. In order to pay for the equipment, they use it –and overuse it—research shows, padding medical bills.

But in various parts of the country there are communities where doctors are fighting for what Gawande calls “the soul of medicine.”  These doctors are setting up “accountable care organizations,” he reports “in which doctors collaborate to increase prevention and the quality of care, while discouraging overtreatment, undertreatment, and sheer profiteering.” 

This, Gawande says, is why it doesn’t make a difference who pays for healthcare, whether it is a for-profit insurer or the government. Ultimately, he argues doctors and hospitals in local medical communities must be willing to band together to put people before profits. Health care providers must hold themselves accountable for containing costs and lifting quality. Thus, “it doesn’t matter who is paying health care bills. . . . Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. . . . These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no  . . . difference.”

In part 2, I will explain why I disagree with Gawande on this critical point. I completely agree that local health care providers must be in the front lines of reform. But I believe that physicians who recognize the problem of over treatment in our system need help, both from government and from non-profit insurers who share their goals.  We need organized medicine.  And I would argue that, in the course of telling his story, Dr. Gawande himself illustrates how non-profit insurers have helped create health care delivery systems that allow doctors and hospitals to collaborate in providing patient-centered, accountable for care. 

That said, I also believe that nothing will happen unless physicians themselves want to fight for the soul of medicine. External carrots and sticks are not sufficient. We’ll have true health care reform only if physicians face up to the fact that the current course is unsustainable. If over-use of advance medical technologies continues to drive health care inflation, and the cost of care continues to climb by 8 percent a year, our medical bills will double in just nine years. That is not going to happen: What can’t happen, won’t. Instead, the system will hit a wall and crash– splitting in half. At that point, we will find ourselves living in a third-world health care system that over-treats our wealthiest citizens while under-treating everyone else. In that scenario, there will be no winners except those who profit from over treatment. Even the wealthy will die of a thousand cuts and a thousand burns


62 thoughts on “Dr. Atul Gawande on the “Fight for the Soul of American Medicine”

  1. The gallstone example seems questionable to me. Symptomatic gallstone disease is a reasonable indication for elective cholecystectomy. Any surgeons out there? What do you think? I agree with the heartburn example. Gawande’s larger point is entirely correct. It’s cultural. The business culture of the United States has infected medicine. It was always there, but more latent. It has taken off. How do you change culture? It’s hard, and it takes a while. Of course, you could rein the docs in, and I expect the government is working on this as we speak, but, like fighting the Taliban, it won’t be as easy as they think going in.
    It is the best of times and the worst of times. As an FP, I couldn’t make enough money to keep the doors open in private practice in small-town Oregon, trying to make a living off Medicare E and M codes. The derms and ophthos didn’t seem to have the same problem. Med students have taken notice.

  2. The 800 pound gorilla is over treatments and agree it needs attention. I’m certain there is huge discrepancy betwen private practice and other places.I would bet that residency programs have optimal care since there is always discussion of the tests being ordered. Seen my grandmother getting all kinds of work ups including echo, stress tests and 4 specialists were involved when she has Viral pneumonia recently. I think physicians are decent people and the current trend is going on because the oversight is too lax and younger generation is profit oriented rather than patient oriented. Once the word is out that there is someone is looking over your shoulder, there will be a shift in practice to appropriate care. That is where govt can play a role, they need penalities and rest will fall in line. Physicans are no Taliban or GM but badly in need of a whip right now.

  3. I think asking health care providers to change their mindset (even with outside help) is not going to work well.
    Look at the success rate with behavior modification efforts for overeating or drug abuse (including alcohol). The long-term results are only fair.
    I think medical care is going to require “guidelines”. Perhaps the ones used by the NHS in the UK are a bit crude and heavy handed, but this is the legacy of Thatcherism which deliberately undercut spending for a national health program.
    A revision to how Medicare/Medicaid pays, so that they not only set reimbursement amounts, but the conditions under which charges will be accepted is a good first step. If Medicare gets tougher the private insurance funds will follow. The trick, of course, is to find the right balance. Every time we hear some story about a dying person being denied the chance to use some far fetched treatment those who support the status quo get another arrow for their quiver.
    Attempts to use outcomes or comprehensive treatment fee structures instead of paying for each item might be a good starting point. I could see some state offering to adopt this as a pilot case, especially if physicians and hospitals could opt in.
    As with many things, the example of something actually working takes the wind out of the sails of those fighting against change.

  4. While reading this excellent posting, I was reminded of WSJ’s article yesterday of a Dallas small business seeing its health-insurance premiums increase to more than $800 a month per employee from about $200 five years ago. They decided to drop coverage, making it the first time in the company’s 64-year-history. More signs of things to come, if we don’t get a handle on our U.S. healthcare inflation!

  5. Once again living national treasure Atul Gawande nails it. When the answer is right in front of your face, the answer is right in front of your face.
    Robertdfeinman and Ray are right. We are reaching a point where we no longer have the luxury of allowing health care to be run by what is the equivalent of 800,000 mom and pop grocery stores. We need to introduce policies that decrease the spending due to ineffective and expensive management. We need to do that not by cutting costs across the board, which penalizes both people doing things wrong and those doing them right. We need practice standards for most common illnesses (Gawande cites a bunch of examples) that are enforced by third party payers refusing to pay for ineffective care.
    Every other country in the world reached this conclusion about 20 years ago. It is time for the US.

  6. McAllen seems to be the “partial birth abortion” for healthcare reform; it is so aggregious we can all agree that it is wrong. Everyone, doctors included, needs adult supervision.
    It is my unscientific biased observation that the younger, the less well trained, and the farther from ultimate responsibility (i.e. physician extenders) the more dubious tesing and treatment is ordered. This does not bode well for the future.
    Academic medicine patients are high on the list of the overtreated, over overtested. Some for good reasons, and some not for a good reason.
    Ray, the academic culture rewards prudent treatment much less than it punishes undertreatment and testing. Partners is not the most expensive in the world because it get the best results or pays its staff particularly well.
    JRossi, I think you have to do a lot of gallbladder surgery on asymptomatic stones to prevent a death from acute cholecystitis. We are a pretty busy place, and we only see a few dozen cases of acute cholecyctitis or gallstone pancreatitis in a year. (Cholecystectomies are counted in the thousands…) Besides, if you read the chart, I am going to guess that symptomatic disease is documented whether it is present of not.
    Can we devise a system, starting from where we are now, that will reward the prudent without creating a bureaucracy which will be more expensive than the cost savings?

  7. I tend to agree that younger doctors as a group order more tests than older ones, and believe it is because they are following patterns learned at some (not all) training centers. I will say that over my 30 year career standing in the middle of the path to high health care spending that younger doctors are more trainable and will listen to arguments for other approaches, and tend to change in positive ways over the first few years of their careers. Older doctors with bad habits, not so much.
    I disagree completely with the contention that NP’s and PA’s tend to order more questionable tests. I found exactly the opposite, and also found them much more open to advice on choosing tests appropriately than doctors. I can believe that they may make more referrals to specialists, since they are specifically trained to refer patients upward when they are having trouble, and since PCP’s frequently prefer to have the patients from non-MD providers referred to specialists rather than to themselves, partly due to payment patterns.
    As far as the issue of gallbladder surgery. Over my career, the policy of removing gallbladders for stones in patients complaining of initial symptoms has become much more common, and the rationale that patients will go on to get into serious trouble is usually offered. However, I have never seen a good study supporting this approach in non-diabetic patients. In particular, I would be interested in seeing the rate of serious problems related to untreated GB disease compared with the rate of complications from GB surgery, which though not huge is large enough. My mother had GB stones found after a bout of clinical acute cholecystitis 25 years ago. She was managed conservatively, and still has her gallbladder and has had no further GB disease.
    In reality, I think the increase in GB surgery is related to two developments. The first is GB ultrasound, which offers an accurate, painless, safe (not counting the risk of surgery,) and fairly inexpensive way of making the diagnosis of stones known to both the patient and the doctors, increasing the patient base and demand. The second is laporoscopic cholecystectomy, which shortens hospital stays and reduces stress on the patients, reduces costs by shortening hospital stays, and increases the surgeon’s income compared with the old fees for open surgery.
    This procedure would be an excellent topic for a large controlled study, and is a classic example of what a national committee for health care effectiveness should be looking at.
    I don’t know what the results would be, but given the fact that Gawande is a general surgeon I am suspicious as to what would be found.

  8. BTW — McAllen is a particularly dramatic example of runaway medical costs, but is by no means atypical. As the Dartmouth Atlas data point out, you could throw a dart at a map of the East Coast, the Sunbelt, the rustbelt part of the Midwest, and California and the odds are that you would hit an area where health care costs are much higher than other parts of the country because of over-utilization of expensive management.
    This is not a problem limited to an impoverished county in Texas. It extends from Boston to San Diego, and to a lot of other places.
    The true tragedy here is that patients actually do worse with these management patterns. Using more reasonable management not only saves money, it saves lives.

  9. j rossi, RAy, Robert, Gregory –thanks for the comments
    J. Rossi
    Gawande IS a surgeon.
    Google “gallbladder” and “unncessary surgeries” and you’l find it’s near the top of the list.
    Yes, ovetreatment is the 800 pound gorilla–and difficult to change.
    I’m not so sure about residency programs–it probably depends on the program. Some doctors and students complain that these days, residents don’t learn how to do a hands-on diagnosis (listening to the patient, touching the patient).
    They just learn how to order tests.
    As for younger docs being more profit-oriented, I have to say that anyone who went to medical school after the beginning of the 1990s had to know that profits were far from assured.
    Managed Care was cutting into doctorss’ incomes.
    So I actually think this youngest crop of doctors may not be as profit-oriented. When they chose to go to medical school they should have known that there are much, much easier ways to make money–like becoming a banker.
    But there definitely was a generation that went to medical school thinking that a high income was assured (at the beginning of the 1980s.) This doesn’t mean that money was what motivated most of these students to go into medicine, but if it did,
    many now realize they made a mistake.
    Finally, I agree, govt can play a role by realigning financial incentives to encourage qualty rather than volume. But carrots and sticks can only do so much. Docs need to care–and I think the majority do.
    I think we have to assume that only a fairly small percentage of docs are truly addicted to the smell of money. (Though certainly a small number can probably begin to infect a medical culture, as in McAllen).
    By appealing to the idealism that most docs start out with, I think minds and hearts can change.
    People like to feel good about themselves and their work.
    Getting away form paying fee-for-service will also help.
    Medicare will be doing pilot projects along those lines this year.
    I don’t think most people realize how much Medicare is likely to change over the next few years. Many in Washington see it as the catalyst for heatlhcare reform.
    Gregory– Exactly. The health care system was heading for a wall before
    this recession began–and the economic meltdown is speeding things up.
    This may be all to the good. It’s going to be hard for anyone to ignore all of the evidence about overtreatment, or to argue that we Don’t need to get a handle on health care inflation.

  10. Maggie: “I think we have to assume that only a fairly small percentage of docs are truly addicted to the smell of money. (Though certainly a small number can probably begin to infect a medical culture, as in McAllen).”
    I think this is a great insight into a lot of the problems in health care costs
    If you are a doctor, a young doctor starting out or an older doctor looking at college costs for kids and retirement, it is very easy to look at people who are practicing in your field and making a lot more money or to listen to vendors urging you to implement ways of making more money and to think “I have been being a sucker.”
    They may not implement all of the ways to suck more money out of the system, and they may not engage in some of the less ethical behaviors highlighted in Gawande’s article, but they do start thinking about an office ultrasound machine here, partnership in a lab there, taking a course in doing laporoscopic gastric bypass, learning to administer botox, and so on.
    I have seen this happen, and I have seen hospitals and other health care systems joining in the parade.
    This is the classic example of bad practice driving out good practice. Or as my mother would say, a few bad apples spoiling the barrel.

  11. First, the only thing I disagreed with:
    “Whom do we want in charge of managing the full complexity of medical care? We can turn to insurers (whether public or private), which have proved repeatedly that they can’t do it. Or we can turn to the local medical communities, which have proved that they can.”
    Really? Says who.
    Second, and the key passage for me:
    “Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coördination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.”
    Overall, brilliant piece. This guy is something else.

  12. I would like to see an analysis of private insurers’ experience regarding per capita spending on the insured adult population below age 65 in McAllen vs. El Paso. If insurers employ such strategies as efficient provider networks, Centers of Excellence, drug tiering, etc. in order to steer patients toward the most cost-effective care, the variance between the two markets should be materially lower than CMS’ experience with the Medicare population.
    While Medicare pays less than private payers per procedure because it dictates rather than negotiates prices, it has shown little or no ability to reward cost-effective care and penalize excessive utilization because it accepts all providers who are willing to abide by its rules. I call this the big dumb payer model of healthcare reimbursement.
    I think CMS needs to start to publicize aggregate physician and hospital utilization data for all providers in a geographical area such as a city, county or metropolitan statistical area (MSA). After adjusting the data for patient risk and differences in local input costs such as wage rates, real estate costs, etc., it needs to let the public know whether utilization in each locale is well above average, below average or average. As a second step, it should follow that up by imposing higher co-pays or some other appropriate penalty on patients in the high cost areas in order to create pressure on providers to improve their practice patterns. If high utilizers can be identified at the individual doctor, group or hospital level, so much the better. At the end of the day, excessive utilization needs to be exposed and penalized because incentives matter. Episode pricing for expensive surgical procedures and courses of cancer treatment would also be helpful. Without proper incentives, we will never be able to fix the system.

  13. What if it turns out that true MEANINGFUL reform comes about mainly because of financial incentives to providers! What would that say about the health professions and their real social role? Looks like we may yet find out as Mass. is trying to now deal with this aspect in their reform effort. See:
    “In August 2008 Gov. Deval Patrick signed into law An Act to Promote Cost Containment, Transparency, and Efficiency in the Delivery of Quality Health Care, which seeks to contain health care costs as well as to improve access to and quality of care.20 The current proposal being developed would undertake fundamental reform of the health care payment system, moving away from fee-for-service to a global payment system that emphasizes care coordination and collaboration.”

  14. I don’t agree with the house-building analogy the way it’s used, you DO pay for every faucet the plumber installs, every shingle the roofer lays, every outlet the electrician wires. The difference in construction is there are building codes and regulations that dictate how many shingles will go on the roof, how many outlets and where they will go, plumbing, etc, and permitting processes to prevent builders from building a house that will fall down a month later. That’s what’s missing in healthcare, oversight and regulation.

  15. , Pat S. Christopher
    Thanks for your comments.
    Pat S.–I agree, bad apples can begin to spoil the whole barrel and McCallen is not the only place where that has happened.
    Christopher– I think we can create a system that will reward the prudent without creating a huge bureaucracy.
    Just moving away from fee-for-servce and experimenting with other ways of paying, whether bundling payments to doctors and hopsitals for an episode of care(as they do at Geisinger) with bonuses for better outcomes, or paying doctors salaires plus bonuses for types of care we want to encourage, paying docotrs for the time they spend talking to patients, listening to patiients, e-mailing patients so they don’t feel they have to “do something” to get paid.
    Finally, I think the change needs to begin in medical school–we must stop training docs to “do everything possible”, and start praising and rewarding residents and others who practice more thoughtful, prudent medicine.
    Finally, as I have said before, I think we should subsidize medical education (completely) , and not pay any doctors more than ??
    ($300,000 a year would put them in roughly the top 2/10 of one percent of all Americans.
    People who don’t think that is enough are the type of people who wind up spoiling the barrel (see my comment to Pat above) because they are so obsessed with earning more.
    Those people should go into a business that is all about money–and stay out of medicine.

  16. Brad F., Pat S. (you more recent comments), Lisa, Barry, NG
    Thank you all for weiging in.
    You write: “First, the only thing I disagreed with:
    “Whom do we want in charge of managing the full complexity of medical care? We can turn to insurers (whether public or private), which have proved repeatedly that they can’t do it. Or we can turn to the local medical communities, which have proved that they can.”
    “Really? Says who.”
    I agree. I don’t see evidence that local medical communities have shown that they can solve the problem.
    See part 2 of this post.
    But despite disagreeing with Gawande on this point, I share your admiration: “He’s something else.”
    Pat S.– I agree. We no longer have the luxury of allowing health care to be run by the equivlante of 800,000 Mom & Pop grocery stores. We need practice standards.
    I also have never seen any research suggsting that nurse-practioners run more tests.
    On gallbaldder surgery: the fact that the proceudre is less invasive and quite lucrative may well explain why it has become more popular.
    The research I have seen suggests it is high on the list of “unncessary surgeries”–but I agree that
    “This procedure would be an excellent topic for a large controlled study, and is a classic example of what a national committee for health care effectiveness should be looking at.”
    I think this is exactly what they will target first: relatively lucrative treatments that have increased in volume in recent years.
    And yes, what goes on in McAllen goes on in much of the corridor from Boston to Florida–and in Southern California.
    It’s more subtle, and driven, to a large degree by excess supply (too mnay docs and hospitals beds), But there’s a “money culture” in many cities in these regions.
    You’re absolutely right- we do pay for every outlet, every faucet.
    But, as you say, the difference is that the
    construciton industry is
    REGULATED. Healthcare isn’t.
    An excellent point.
    Barry– good to hear from you.
    You write: ” I would like to see an analysis of private insurers’ experience regarding per capita spending on the insured adult population below age 65 in McAllen vs. El Paso.”
    Gawande explained that he did just that. AS I explain in the post: “Gawande sought information from three sources: Jonathan Skinner, an economist at Dartmouth’s Institute for Health Policy and Clinical Practice, which has three decades of expertise in examining regional patterns in Medicare payment data; and two private firms that digest data from private insures, D2Hawkeye, an independent company, and Ingenix, UnitedHealthcare’s data-analysis company—to analyze commercial insurance data for McAllen”
    He observes that private insurers, like Medicare were paying for a great deal of overtreatment.
    Nationwide, reserach shows that private insurers are just as likely to pay for unncessary treatment. This helps explain why reimbursements form private insurers have been growing by about 8% a year for the past 9 years. (Reimbursements from Medicare have not been growing as fast–up only about 5.5% over the past 9 years.)
    Most private insurers do not do the things you recommend to contain costs.
    You suggest: that Medicare should “impose higher co-pays or some other appropriate penalty on patients in the high cost areas in order to create pressure on providers to improve their practice patterns.”
    This won’t happen because Congresmen in high cost areas (New York, New Jersey, Massachusetts, Florida, California, Texas, etc.) are just too powerful.
    Secondly, imposing penalities on patients wouldn’t change doctors’ behavior.
    But Medicare may begin imposing penalisties on hopsitals in high-cost areas. The plan is to first: send them confidential letters letting them know that they are outliers when it comes to how many speicalists patients see, how many day they spend in teh hospital, how many die in an ICU; then, a couple of years later, make that info public, and finally, if thye don’t improve, stop paying for Medicare patients at that hopsital (which basically means closing down the hospital)
    You ask: “What if it turns out that true MEANINGFUL reform comes about mainly because of financial incentives to providers! What would that say about the health professions and their real social role? ”
    That would be depressing. But my life experience in various jobs and professions has taught me that people who are working mainly for the money (or the glory) are much less likely to improve and succeed than people who truly care about the quality fo the work they are doing.
    I don’t think financial incentives alone will do it.
    We have to raise morale among doctors and nurses, creating a system where the vast majority can feel proud of the job they are doing.

  17. Maggie – Did a mini -review of Gawande article. Here it is-
    Gawande Article on Health Care in The New Yorker- “The Cost Conundrum”-
    Review by Dr. Rick Lippin
    This was a thoroughly engaging and very informative article by Dr. Atul Gawande in The New Yorker magazine (June 1, 2009)
    His comparisons of McAllen, Texas’ high cost, entrepreneurial spirit, quantity based medicine to other quality and accountability oriented lower cost medical centers like the Mayo Systems hospitals and Grand Junction, Colorado were presented through striking detailed contrasts. ( I was personally rendered almost ill by the McAllen excessive and craven greed practices as Gawande depicted them)
    Gawande hit a high mark in his article when he said not only do we need to study the comparative effectiveness of different medical treatments and medical procedures as President Obama and team are clearly investing in, but says Gawande, “we also need to fund research that compares the effectiveness of different systems of care-to reduce our uncertainty about which systems work best for communities”
    I was disappointed, but not surprised, because Dr. Gawande was trained as a surgeon, that the issue of death and dying did not appear once in this otherwise excellent article.To most doctors- but perhaps especially surgeons, death still remains the ultimate “enemy to be conquered”. Yet wise anthropologists have noted that the predominant model of health in any culture is fundamentally driven by that culture’s views on death.
    So my personal positive way of saying it is “that every American citizen deserves a dignified, pain-free death with as little suffering as possible”-ral. In addition to saving huge amounts of money, it is my belief that this death and dying issue is the single most important “health care” issue around which our US medical profession , we as individuals, and we as a very young US culture can possibly mature.
    I urge Dr. Gawande to make one more visit to his research sites of McAllen,Texas and to the other places that he visited to explore this death and dying issue and to “take off his surgeons mask”(persona) while doing so. I suspect the doctors and hospitals of McAllen would fall far short on grasping the importance and centrality of this issue as they did on others as compared to their peers in other higher quality medicine locations.
    Dr. Rick Lippin

  18. I would like to offer some comments about gall bladder surgery based on my experience as a patient. While it took about nine months before it was definitively diagnosed, I had what, in retrospect, was my first attack about six weeks after my CABG and the loss of 40 pounds. I wound up in the ER following that one, was told in was not heart related and sent home. After several relatively mild incidents, I had another bad attack about eight months later, landed in the ER again and was admitted. Gall bladder disease was diagnosed, and I had it removed about three weeks later. That was nearly nine years ago, and I haven’t had a problem since then. I was only in the hospital for about six or seven hours including the preparation, the surgery and the recovery time. No further treatment, including medications were required though I pay a lot more attention to what I eat.
    By contrast, after undergoing a CABG in 1999 and needing a stent six years later, I have to take five prescription drugs forever at a cost of, probably, several thousand dollars per year even though four of the five drugs are generics. That’s probably a big part of what makes heart disease so expensive for the healthcare system – the need for lifelong drug therapy. In that context, gall bladder surgery was a relative bargain. I would like to see the results of a well designed study of treatment options for gall bladder disease, though.

  19. Dr. Rick–
    I agree that end-of-life over-treatment deserves attention, not so much because it is so expensive (which it is), but because it is so (unintentionally) cruel.
    On the other hand, I just wouldn’t expect Gawande to cover everything in one story–or in the few days that he was in McAllen.
    Also, given the fact that he is practicing surgery full time, I can’t imagine how he finds time to write these stories–so I wouldn’t really expect him to go back to McAllen.
    I totally agree with you that it was great to see him emphasizing the need for researchon health care DELIVERY. This is what Jack Wennberg (Dartmouth) Don Berwick (IHI) and others have been saying for a long time and they are absolutely right.
    It sounds as if you needed to have your gallbladder removed.
    But Gawande is talking about people who suffer only one episode of gallbladder stones and pain.
    From what I have read (and I’m far from an expert on this) that probably doesn’t justify surgery. They need pain medication and advice on diet.
    Surgery always exposes patients to risks, beginning with infections . . .
    But I agree that, if we don’t already have research on this, we need research comparing gallbladder patients had gallstones once–and had surgery– to those who had gallstones once, and didn’t .

  20. Lisa,
    In many ways, I am sympathetic to the car repair or home building model, but there are many limitations. We have no spare parts, imperfect knowledge of the character, extent of the malady, and generally poor ability to impose the “repair” on a reluctant patient.
    In medicine, unlike construction, the individual variation means that the same thing does not always work on apparently similar patients.
    The law of diminishing return means that you can always spend more to exclude more and more exotic possibilities. Just as the meal cooked in the stainless steel and granite kitchen is no better than the one cooked on an old electric range with formica counters, the expensive medical encounter does not yield a better outcome, on the average.
    The first thing we need is a standard of care determined by doctors and doctor guidelines, not by bored retired postal workers on juries inflamed by retrospective sophistry. Enlightened Europe does not have our tort system.
    1. Most doctors are already making much less than $300,000 a year. They are working in hospitals and clinics where layer after layer of managers and administrators and drug salesmen and device salesmen, and lawyers and lobbyists and insurance agents and executives and middlemen of all sorts are making several times the figure you mention (while generally performing nothing useful, with less training and education and much better and shorter hours and less responsibility). If we are going to limit income, let’s limit it for everyone connected with medicine. We don’t need money oriented doctors or money driven hospital CEO’s.
    2. Naturally, places like the Geisinger will have great trouble recruiting doctors in the new order. Especially the highly trained specialists you feel are so overvalued, because as the salary and hours of doctors are trimmed, many more doctors will be required. A similar job in NYC may be more appealing. When the music stops many places in less desirable places will have no specialists at all. Call up any number of cities in Ohio NOW, and ask if they have a permanent general surgeon, the backbone of an acute care hospital. Like the rest of us, doctors will prefer to work in someplace trendy or someplace where their unique hard earned skills are actually appreciated, if any such places will continue to exist. When you need a surgeon, you need a surgeon. An army of empathetic caretakers won’t relieve a bowel obstruction by listening.
    3. Outcome based quality ratings are going to have mostly unintended consequences. For one thing, they will tend to drive the rational doctor away from poor people. Its one thing to mandate a clinical pathway… it is another to judge on the results. For a hundred reasons poor people have wretched results. You can correct for a few of them, but not all of them. Going out on a limb here, I wager that no variable associated with poverty is going to be positively correlated with a good medical outcome. All of the hidden or unidentified variables will degrade the outcome for the doctors in Roxbury, compared with Beacon Hill or Chestnut Hill.
    And assigning responsibility for the bad outcome is going to be crude. Was it the missed appointments?, was it the primary who didn’t control the diabetes, was it the patient for letting herself become morbidly obese, was it the cardiologist who failed to puncture the proper artery, the radiologist who did or didn’t perform the angioplasty, was it the covering physician who ordered the potentially un-necessary antibiotic that caused the colitis..and on and on. It sounds good as a sound bite, but execution is going to be treacherous.
    However blame is assigned, expect pushback by physicians to buff the benchmark at the expense of the overall care of the patient.
    At University of Chicago Hospital, this phenomenon was referred to as the “Harvard Death”. All the laboratory values were normal, but the patient expired.
    Finding similarly situated patients in sufficient numbers to make any sort of meaningful comparisons is silly. It is one thing to collect pooled data on large populations to infer a rough quality measurement for a particular clinical strategy. The Law of Small Numbers means it is silly to look at outcomes for individual doctors too closely.
    In this world, good doctors will be the ones who can transfer the care of the truly sick to someone else, the opposite of the current situation. Our best surgeon has by far the most complications. But he does many times the workload, with the sickest patients.
    While we are at it, lets pay the police in inverse proportion to the crime rate.

  21. Christopher–
    Go to this link to see waht U.S. physicians were earnign in 2008– before bonuses. http://mdsalaries.blogspot.com/2008/07/2008-md-salary-survey-by-mh-pulmonology.html
    You will notice that the average radiologist, orthopeidst, cardioloigst, oncologist, urologist, and dermatoloigst earn well more than $300,000,
    And that’s just the “average” doc.
    Ob/GYNs, general surgeons, gastrointologists, and pulmonologist at the high end of income in their field also earn well more than $300,00.
    Many average somewhere between $500,00 and $700,000.
    The data is from a huge physician recruiting firm.
    The numbers are confirmed by other sources.
    And as the recruiting firm points out this what doctors are earnign– before bonues..
    Theg firm alsopoints out that those who hire these doctors also pay their malpractice insurance and give them health insurance.
    And these are docs who work for someone. Many specialists in private sprcgtice earn more.
    As I have said, I do think that the government should subisdize medial education–as other develoepd countires do–so that med students don’t come out with these huge loans.
    If we do that, they really wouldn’t need to earn $700,000–or far more.

  22. Maggie,
    Emedicine cholelithiasis states that elective cholecystectomy is the treatment of choice for symptomatic gallstones. I’ll look it up in UpToDate when I get the time, even though Gawande is a surgeon and Google nothwithstanding.
    Chris, I was talking about symptomatic gallbladder disease.

  23. Maggie, Subsidizing medical education won’t work. The salary discrepancies are too great, and medical students are capable of doing the analysis, which requires sixth grade arithmetic. It’s the salary discrepancies, not the ed debt. Fix the ed debt and we’ll be in the same boat we’re in now with the primary care shortage. Curious how people miss this.

  24. The average doctor would include a lot of already employed doctors, residents, and primary care doctors. The salaries can appear inflated because the cost of a self employed doctor (or anyone else)is enormous without the tax breaks given to corporate employers. I bet the doctors making these huge salaries are working very long hours in geographically undesirable locations. Even after the revolution, we will be paying doctors more to practice in Lubbock, Tx.
    I don’t see how we save money by having three times as many shift working doctors paid half as much.

  25. I would like to make a few comments about physician compensation.
    First, there was an interesting article in The Wall Street Journal a couple of days ago about work / life balance. The focus was on (mainly) women who choose to leave the workforce for a few years to raise young children and how hard or easy it is to re-enter their chosen profession once the kids are a bit older. It turns out that, despite the long and grueling training period to become a doctor, medicine is among the easiest fields to get back into, including on a part time basis, with relatively little income penalty (vs. prior earnings) for taking time off. By contrast, finance, which pays very well, is extremely difficult to re-enter. Part time jobs are scarce and the pay reduction, if one can get back in at all, is often huge. Moreover, physicians can practice their profession virtually anywhere while the opportunities for finance professionals and corporate lawyers are much more limiting geographically. With women accounting for roughly half of medical students these days, the work / life balance issue, I think, is underreported and underappreciated. Nurses and pharmacists also have more opportunities for part time work than professionals in other fields.
    Second, a salaried compensation model for doctors has the potential to better control resource utilization but at the risk of materially lower productivity. The productivity issue could be mitigated if the culture of the organization does not tolerate slackers. At the same time, there should be lots of potential to drive down utilization without impacting doctors’ own income. I’m thinking of fewer blood chemistry and imaging tests done by independent companies or hospital owned facilities. End of life care is another area where salaried doctors would not be penalized financially if they guided the patient and family toward less aggressive treatment when appropriate. Shared decision making for many surgical procedures could shrink the number of surgeries performed. Tort reform that protects doctors from lawsuits based on a failure to diagnose a disease or condition if evidence based standards were followed would also be helpful and a necessary component of reform.
    Finally, if I were the CEO of a large healthcare organization that included a hospital or hospitals as well as doctors covering all specialties who were paid within a salary and, perhaps, bonus compensation structure, I would want and expect to pay enough to attract and hold competent and talented people. If I had a sufficient patient base to make a capitated revenue model viable, the risk adjusted capitated payment per patient / member would have to be sufficient to adequately pay all of the staff from doctors, nurses and administrators to food service workers, housekeepers and transporters. To compete effectively, we will all have to operate efficiently, employ best practices and embrace continuous improvement.

  26. Christopher, I think at the end of the day we agree, but I will again speak up about the construction comparisons:
    “In medicine, unlike construction, the individual variation means that the same thing does not always work on apparently similar patients.”
    Construction and medicine are remarkably similar. Do you think a roof goes on every house exactly the same every time? Ask anybody in the construction industry and they will tell you their primary job description is a problem solver. No two projects (patients) are alike, even if you’re installing the exact same faucet you installed yesterday in the house next door (if you’re a plumber). Expecting the unexpected and staying flexible every minute of the day is how any successful contractor stays in business, whether you’re a builder, plumber or electrician. No two projects (patients) are alike, and what worked to solve the same problem yesterday on that other project might not work today. Construction and medicine are eerily similar, except medicine doesn’t have “rules” to follow like contractors do.

  27. Christopher, Barry, J. Rossi Lisa
    Christopher, You just don’t seem to understand that a great many professionals do good work for the sake of doing good work– whether they are paid $300,000 or $700,000.
    A place like Geisinger would not have trouble finding good doctors even if salaries were capped at $300,000.
    At Mayo, salaries are capped. After a few years, every doctor in a particular specialty earns the same amount–whether they are world-famous celebrities or “just” excellent clinicians.
    On paying for outcomes: We are not talking about penalizing or paying bonsues to individual doctors. We are talking about bundling payment to all doctors and the hospital involved during a
    particular episode of care (including 3-6 months before admission ot the hospital and 3-6 months after discharge.
    (This is what is done at Geisinger)
    So we are talking about large numberes.
    On imcome: If you look at the table I’ve sent you on this thread, you will see the average income in a great many specialties is well over $300,000.
    You write: “I bet the doctors earning these large salaries are working long hours.” That is pure speculation; you have no evidence. And how many hours they work really is not pertinent to the argument.
    These are “average” salaries in these specialities.
    Finally, we don’t have a dearth of specialists in very many places. (Though we do have a shortage of primary care docs.)
    If you look at models of efficient medicine like Mayo, you find that many fewer specialists are needed if doctors are practicing evidence-based collaborative medicine.
    This is why people like Dr. Jack Wennberg (founder of the Dartmouth Reserach) are writing that we do not need to train more sub-specialists in this country–even though the boomers are aging.
    If you think that $300,000 a year is not enough to attract “competent people” then, I have to say, that even you have been corrupted by the
    large amounts of money sloshing around on Wall Street for the past 20 years or so.
    Do you really think that anyone needs to earn more than what 99.7% of the
    population earns?
    When there is too much money on the table, the cockroaches come out of hiding. We have seen this time and time again on Wall Street.
    Wall Street became more and more corrupt as the amount of money in the game rose. Fannie Mae and Freddie Mac became more and more corrupt as executive salaries there rose.
    Professional sports has become more and more corrupt as the amount of money at stake climbed
    Very good studies of CEO pay show that the best-paid CEOs don’t work harder. But they are more likely to be involved in corporate fraud. And because greed makes them short-sighted, they don’t manage their companies as well.
    I’m was talking about all doctors, not just primary care.
    But let me address primary care: if a doctor came out of med school with no debt, and could expect to make $140,000 ayear to start, moving up to $175,000 or so (with expenses covered by the medical center where he works), I would think that many young primary care doctors would be content (assuming good working conditions.)
    Those who wouldn’t be content really shouldn’t go into medicine. If their desire to be a doctor is that weak– and their desire to make far, far more than 99% of the country that strong–then they really should do something else.
    They should go into a field where they are less likely to hurt someone–a less important field.
    Regarding the analogy between construction and medicine- I have to say there are more surprises in medicine (human bodies are more complicated than furnaces, ec.)
    But I agree with the important point you made earlier: Construction is Regulated.

  28. Maggie,
    I’m somewhat surprised at how you interpreted my last comment.
    I supported the idea that salaried docs are more likely to reduce resource utilization than doctors working under a fee for service model. I also commented on some work / life balance issues that don’t get much publicity. The paragraph about attracting talented people specifically did not quantify how much it would take to attract doctors from various specialties or any other employees for that matter. I don’t know what the market would demand, though I suspect that pay would be higher in NYC and Boston than in Houston or Dallas simply to reflect significant cost of living differentials. It would probably also require something of a premium to entice doctors to practice in less desirable (from a lifestyle perspective) rural areas. $300K may or may not be enough even in NYC, but I just don’t know. Pay scales at Academic Medical Centers, where doctors teach and do research as well as see patients, may not be a good indicator of what it would take to attract doctors who are expected to treat patients exclusively. Perhaps some of your experts could weigh in on what, say, neurosurgeons, orthopedic surgeons and oncologists are paid in a non-academic salaried environment, especially in the cities with high living costs like NYC, Boston, SF, and LA.

  29. Barry–
    I am not suggesting that we “let the market decide” how much to pay doctors.
    I am not suggesting that we poll orthopedists and ask them how much they would like to be paid.
    I am suggesting that we pay for medical education, and put a cap what we pay specialists at around $300,000.
    This can be done in various ways as it is in other countires:
    doctors could be on salary; the number of procedures that a doctor could do in a given year (say the number of by-passes) could be limited (since we know that a great many patients don’t benefit, this would encourage doctors to recommend by-pass only to those who do benefit) . . .
    My point is that $300,000 is enough for anyone to live very well anywhere in the U.S. I know it is enough in Manhattan.
    Obviously, this would have to be phased in, starting say with students entering medical school in 2012. They would understand tha they would come out of med school without debt –and that their future salary would be capped.
    If $300,000 seems too little, then we are talking about people who don’t really want to become doctors for any of the good reasons (love of science, love of hte idea of helping people) but who simply want to make a lot of money.
    As Gawande points out, we don’t want them in medicine–not when we’re fighting for the soul of medicine.
    We also don’t want them running the nation’s hospitals. And ultimately we don’t want them running the nation’s corporations.
    Before this bear market is over, I would not be at all surprised if shareholders begin to demand similar caps on executive pay.
    Bottom line: no one “NEEDS”
    more than $300,000.
    And this country just cannot afford to continue to pay a small group of people obscene amounts for their services.
    We have too many poor people, and too many other problems.
    The recession/depressoin is telling us something: ‘
    American-style capitalism, what the French calls “The Capitalisme Sauvage” has not worked out well.
    As Pricneton heath care economist Uwe Reinhardt points out, economics professors all over hte country are having to rewrite their lecture notes.
    “How can anyone stand up in front of a class and teach that markets are rational:” he asks ” that we should let markets decide, etc. etc. etc.

  30. I came upon the article by Gawande through a link from a physician blog that I follow.
    I thought that it was a very good article and much of it parallels my experience as a physician.
    There is a huge amount of unnecessary, poorly thought out and poorly coordinated medical care being provided in this country. I see it every day and I work in what I believe is a relatively low usage area.
    Gawande is right, much of it is money driven. However, it is malpractice driven as well.
    And the bad news is that younger doctors order more tests and treatments than older docs. i.e. the problem is only going to get worse.
    I think an important remedy would be to have good relative effectiveness information and practice guidelines that protect physicians who follow them from malpractice.
    Again, I will say that I am not optimistic that the government will take an intelligent approach to this problem. Instead I expect across the board cuts rather than selective targeting of ineffective treatments.

  31. Barry,
    You have it backwards with respect to pay. The best pay is in the South and Midwest. The worst pay is on the coasts and in major metro areas.

  32. Maggie, I appreciate your sentiment that making over 175k is enough and that people who demand more than that should not go into medicine. But the concept of a just price or a just salary is risky–put that salary too low and you get a shortage. What is happening in primary care and general surgery could affect other specialties. You say that no one needs more than 300k–very true, but somewhat irrelevant. It’s not about need; it’s about desire for money, in this case the desire of people who have options–med students. We have a market for medical labor–a clearly noncompetitive market, but a market nonetheless. The correct salary for a doc is not what we think it should be but but where the lines cross on the supply-demand diagram. I seem to recall this issue being addressed in the market for stolen babies in “Raising Arizona.” Fuming about greedy doctors is all well and good, and, frankly, I agree with you that many docs get absurdly high incomes. But I see no evidence that third-year med students agree with you.
    Maybe getting a different kind of person to go into medicine is the answer. It won’t come quick. I would submit that that requires broad cultural change. The US is of course hyper-materialistic, and docs and med students are caught up in this, as Gawande points out so well. The idea of service is less valued in America. I expect that this will continue for the near future. It might worsen or it might get better over the next decade. It will be interesting to see what happens with the primary care matches in the upcoming years. That could be an early indicator, in medicine at least.
    Of course the government could come in and change all the rules, an increasingly like prospect. This certainly could help lower HC inflation in the long-run but could cause quite a doc shortage in the short-run. Maybe not if they’re clever and lucky. Interesting times we live in.

  33. The concern with physicians income is actually a misleading way to look at the problem of medical costs. Let me tell you what is happening from a different perspective.
    For many doctors, there has been a real decrease in income over the past 15 to 20 years. Reimbursements have been cut and or have been raised at less than the rate of inflation. This has been my personal experience.
    This has lead many doctors to try to supplement their incomes in a variety of ways. In my specialty (Radiology) we see the effects of this every day. Groups of physicians will get together and buy their own CT or MRI and then self refer. The reason this is not good for the country (and this has been clearly demonstrated by multiple studies)is that when a group of docs owns a piece of equipment, their utilization goes way up.
    And this is an expensive way to generate extra income for a physician since the physician only gets the profit after a break even number is reached. In other words, it would be far cheaper to pay a physician an extra $10, rather than have him order an uneccessary test for $100 that he derives $10 profit from.
    Physician income (not payments to physicians which cover employee salary, office rent, malpractice, etc.) is currently about 10% of the cost of medical care in the US. Even if you cut physician income in half, you would only save one years increase in the cost of care.
    However, if you can change physicians prescribing habits which are often wasteful due to a number of factors; unexamined habit, fear of malpractice, greed (as Dr. Gawande shows) you can save a lot more than you can by “nickeling and diming” reimbursements for office visits, etc.

  34. “The best pay is in the South and Midwest.”
    True and not true. Doctors make more in the South and Midwest, but are paid less by third party payers.
    Doctors’ incomes are higher in the Midwest and South because doctors do more work in the Midwest and South. That, in turn, is because there are fewer doctors in the Midwest and South. In my specialty, the average doctor in the upper Midwest does 50% more work than the average on the coasts. This is not related to Gawande style higher utilization but to the relative shortage/surplus of doctors in the various areas. The upper Midwest is actually near the bottom in over-utilization in the Dartmouth data, although we certainly still have over-utilization here.
    Payment for doctors’ work is higher on the coasts, with payments by third party payers, both Medicare and private payers, for each service considerably higher, sometimes as much as double.
    The one exception to that rule is Medicaid. Medicaid is all over the board, with payment standards more closely related to the political climate than to anything else. For example, NY State has one of the poorest rates of payment for Medicaid services.
    BTW — “South” here means the Deep South — Alabama, Mississippi, Arkansas, Louisiana, and so on — not Sunbelt Hot Spots.

  35. Legacy Flyer, Your analysis of the problem is correct. I like to call the phenomenon that you describe “leverage.” We docs get paid x by doing something, but it costs the system 5x or 10x. I also agree that docs are most resistant to seeing their real incomes fall, and a that a subset of docs have lost their way and de-differentiated into businessmen. Combine these facts with leverage, pt expectations, malpractice fears, and you get a mess.
    Maggie’s salary cap idea is one potential solution to the cost crisis. I’d be interested in yours.

  36. “Maggie’s salary cap idea is one potential solution to the cost crisis. I’d be interested in yours.”

  37. I don’t understand why the only high salaries that bother you are doctor’s salaries. I bet there isn’t a doctor in the US that wouldn’t trade work hours, salary and golden parachute with any hospital CEO in the country.
    Most doctors don’t have any more respect for a hospital bureaucracy than they do for a government one or a corporate one. I wonder why the blogging public doesn’t feel the same way.
    Regarding how much is enough. I have a partner in his middle thirties. His education debt is $400,000. Sure medical education should be paid by the government. I would pay for Engineering education while I was at it. But back here on earth… his education is like buying a second house and giving it away for the opportunity to work 80 hours a week. How old should he be before he “breaks even”?
    Your experience with doctors seems to be with academic doctors for whom the actual practice of medicine is a sideline. If every doctor had their productivity, we would need three times the number of doctors that we currently have.
    One of our busy general surgeons probably does more actual surgery than an academic does in his in a decade. And a part time surgeon’s patients do much worse than those of a busy one. A busy general surgeon is much more likely to decline a marginal case than one with an empty schedule. That is just human nature. Our employed surgeons are legion, because they don’t want to be on-call very often. This means their schedules are light in the OR and their anesthesia times are longer than the private surgeons.
    Lisa, and others, I can’t believe that you don’t believe medicine is not regulated. It is actually regulated to death. Badly regulated, but regulated. I sign my name on scores of regulatory forms every day. It is the regulatory version of the law of diminishing return. It is the mentality that every routine error results in a new ad hoc solution, typically involving another meaningless form to sign before doing a (needless, I am sure) operation. It is the regulation that many don’t think there is enough of that is sucking the professional satifaction out of medicine, and whose cost in time and hassle is never tallyed.
    I really don’t actually know these fraudulent doctors which seem to be ubicuitous. I don’t defend them, I just wonder we don’t spend too much time on them. Villifying doctors is part of a campaign to grease the skids for top-down healthcare, and I am sure it is supposedly for a greater good. Is healthcare reform about improving access and quality or is it about humbling, disenfranchising and denegrating and controlling the doctor? Sometimes I wonder. If you wonder what medical care is like when the doctor morale is low, you can always fly to England, and have a look.
    Believe it or not, the usual circumstance in an East Coast hospital is the doctors are trying to get the hospital to institute policies to improve actual safety and the hospital is saying what is the matter with the old way. Disempower doctors and don’t expect things to change for the better. Administrators typically use their power to intimidate employed doctors who seek improvements some of which cost money. But it is more fun to discuss greedy doctors isn’t it?
    Nate, financial professionals are largely salesmen whose job depends on current contacts. These erode rapidly over time. Whatever skill is involved won’t get you a job. Hospital executive jobs, lawyers, and others get their jobs by being insiders; it depends, not on skill so much as connections. A hospital administrator’s job is to keep his job. It is like Survivor; don’t piss anyone off that might be able to fire you.
    Medicine is an actual profession, where one’s abilitities actually matter. That is why it is more transportable.
    Regarding Texas tort reform, just as the pernicious effects of “Queen for a Day” liability took a long time to corrupt medical practice, it will take a long time for the overhang of past abusive lawsuits to disapate. As doctors are paid less and less (our local experience where medicare and poverty are large parts of our practice) doctors are even more likely to waste resourses to further reduce any possibility that might keep themselves out of a (completely money driven) lawyer’s office. Newsflash: tort reform is a dead letter. As more and more resourses are shifted from actual medical care to overhead and second guessing, medical care will get worse, and the trial bar will be, in their TV infomercials at least, your only line of defense.
    There are plenty of physician problems, but fundementally, the demand side from patients and the capricious litigation angle are much more important components.

  38. J Rossi, Legacy Flyer,–
    Thanks much for your very candid response.
    You write: “It’s not about need; it’s about desire for money, in this case the desire of people who have options–med students.”
    I understand that people who go to med school have options and many of them desire money.
    This is a demographic that I know well; I taught at Yale for more than 7 years, and even though I taught English literature, I had quite a few pre-med students.
    More recently, my two children were in college- my son went to Johns Hopkins where, inevitably, he knew many pre-meds, and my daughter was at McGill.
    They were both very good students and so had options and knew many college students who had many options
    But, in their generation, many kids just aren’t as money-driven as students were in the 1980s and much of the 1990s.
    Generations go in cycles– and rebel against the generations who preceded them.
    (See the very good book, Generations.)
    Many (not all) of the young people who helped elect Obama are coming from a different place.
    Perhaps more importantly, if we subsidize the whole cost of medical school education, we open med school to a much wider pool of applications.
    Most students coming from a working-class background
    would be overwhelmed by the idea of taking on $200,000 of debt. And, they wouldn’t have a family who could bail them out if they got into financial trouble.
    Not long ago, I wrote a post about attenting a Mayo Clnic conference on reforming medical education.
    One speaker suggested that when admitting students, on GPAa and MedCAts, and more emphasis on interviews in order to pick form a much broader pool of students.
    He pointed out that students coming from poor families (white as well as minorities) don’t do as well on MedCats which discriminate against non-urban, non-wealthy students.
    But these poorer students are much more likely to be intersted in going back to the places where they grew up (whether rural poor or inner cities) to practice medicine.
    And they are much more likely to consdier $175,000 to $300,000 an excellent salary.
    So while the average 3rd year med student might demand more, I’m suggesting that if
    we broaden the pool of applicants (by subsidzing med school education and placing less emphasis on MCATS) we’ll fund an abundant supply of undergraduates whith a GPA of, say, 3.5 who want to be doctors, and who are neither so spoiled nor so greedy that they would turn up their collective noses at $175,000.
    Finally, as the speaker at the Mayo conference points out, we need doctors who better reflect the diverity of American patietns.
    Legacy Flyer —
    On physician income:
    First, let’s step back and take a broad look at physician incomes, and then zero in on the last 10 years.
    Before 1960, doctors didn’t earn that much more than other Americans. Sure, the doctor was likely to live in the nice brick house on a larger corner lot in a leafy neighborhood, but he didn’t live in a mansion.
    He probably drove a nice car; he didn’t have 3 cars.
    Physician income began to rise sharply after Medicare passed in 1965.
    And doctors’ income really took off in 1984,
    Even in the 1970s, the average doctor didn’t earn 6 times as much as the average American. Now they do. As of 2005 the average specialist earned $274,000–and this is after paying for malpractice insurance and other expeness.
    Better paid specialists earned 9, 10, 11, 12 . . times the average American.
    The numbers come from McKinsey, using AMA data, and double-checking the calculations with the Bureau of Labor Statistics Occupational survey.
    The same report shows primary care physicians averaging $173,000 in 2005–again after paying for malpractice insurance and other expenses.
    After accelerating in the 1980s, physician income leveled off in the late 1990s (Beginning in 1996).
    This is what people are talkign about when they refer to doctors’ incomes falling off.
    Incomes plateaued (and in some cases fell after adjusting for inflatioin) –but only after sky-rocketing in the previous decade
    Of course everything depends on when you began practicing.
    You’ll probably be suprised to hear that more recently, doctors’ incomes have been climbing.
    “spending on physician fee-for-service reimbursement has been rising sharply since 1999, reflecting many of the factors that are driving up overall spending on physician compensation. According to the 2007 annual report of the Boards of Trustees of the Medicare trust funds, Medicare fee-for-service spending growth rates began to accelerate in 2000, rising to $36.936 billion from $33.348 billion in the prior year. In 2005, the total had jumped 73 percent over the level in 1999, rising to $57.740 billion. In 2006, spending rose again to $58.351.
    Docotrs’ expenses did not jump by an average of 73 percent in 1005.
    Medicare has beeen trying to keep fees flat. But doctors have been working harder, “doing more” to more patients, and so total reimbursements climbed.
    “Per capita volume in imaging is the leader in volume growth, increasing 10.3 percent annually between 2000 and 2004 and 8.7 percent 2004 and 2005. There was a slower 3.8
    percent growth per year for major procedures, including cardiovascular procedures, knee replacement, hip fracture replacement and others. Yet, given the cost of these procedures, this steady growth is costly. The category known as “other procedures,” which includes minor procedures, such as radiation therapy or colonoscopy, among others, rose 6.4 percent between 2004 and 2005, and 8.5 percent between 2000 and 2004”
    As you point out, many of these procedures are unnecessary–no benefit to the patient. If we could put a cap on how much physicians do (perhpas by capping how many surgeries a surgeon can do in a given year–encouraging how to focus on the patients who will actually benefit) we could save an enormous amount of money.
    Becuase it’s not just the fee paid to the doctor, it’s all of the other bills that have to be paid when a doctor “does something.”
    For instance, if he performs surgery, you automatically also have a hospital bill–perhpas a huge hospital bill. You have an anesthesiologists bill. You may have a bill for post-operative rehab.
    That’s how doctors “drive costs”–even though they take home only a relatively small part of that money.
    Moroever, as physicians have become more entrepreneurial, hysiciana income from physician-owned hospitals and other facilities have also climbed sharplly in the past 10 years.
    And we know that when doctors build a center that specialized in heart surgery, suddenly you have more heart surgeries in that town.
    I totally agree: we need to put a cap on volume, but we also need to cut fees for some of the most lucrative procedures. Over-payment encourages doing more than necessary.
    I’m told that we’re paying too much for colonoscopies– which is why too many doctors do them more often than guidelines recommend. We really dont’ want doctors buying MRI machines for their offices. Experience shows they overuse them. We don’t want doctors buildling surgical centers
    –it encourages overutilization.
    Legacy Flyer, I know you are not optimistic that Washington will rein in costs in an intelligent way.
    That’s because we haven’t had truly intelligent peolple in D.C. for a very, very long time.
    But I know some of the people involved; in other cases I have read all of their work–thousands of pages of reports and Congressional testimony.
    People like White House Budget director Orszag understand the problem, in all of its complexity. These people in the White House have read all fo the Dartmouth reserach. They have read the hundreds of pages of MedPac reports. We have a president capable fo understanding when they brief him.
    Admittedly, Congress is not a brain trust. But over the next few years, we’ll be seeing some turnover. Better, brighter people will be willing to go to Washington. A lot of talent left, very discouraged in the mid to late nineties and never came back.
    Also so far, this administrationhas managed to get quite a bit done in just a few months, I think Obama will be shrewd about working with Congress–and around Congress, if necessary.
    J Rossi– you are right, a doctor is paid x and it costs the system 10 times x.
    That’s why we need doctors who won’t do X unless it is necessary.
    As Gawande suggests, . we need doctors who pay less attention to the money and more attention to the patients, and the waste. The waste hurts patients. And doctors need to be more reponsible about realizing that if we waste healthcare dollars, someone else doesn’t get something they truly need.
    We all need to think collectively.
    I’m suggesting that if we make the profession less lucrative (but still very well-paid,) and subsidize education we would attract a different, more diverse, equally bright less money-hungry group of doctors.
    NG–Yes, if we’re going to cap doctor’s income in some way–perhaps by capping the number of procedures they can do in a given year, we need to make the decision based o n medical evidence. We need to look at comparative effectiveness information and target areas where we know that too many unnccessary procedures are done.
    And we need to give doctors guidelines. They can deviate from the guidelines, but it becomes apparent that one hospital/physican network is an outlier doing many more procedures and tests, then we have to ask why.
    The Medicare Payment Advisory Commission has already recommended this.
    And there are areas where we know many patients don’t benefit: MRI breast scans for average-risk patients; angioplasties to temporariliy relieve angina (rather than change of diet and exericse to premanently relieve) etc. etc.
    I know you like to talk about malpractice, but as
    Gawande points out (and the other doctors admit) that isn’t that much of an issue in Texas.
    Medical education can be subsidized, “back here on earth.” It is subsidized in virtually every other devleoped country on the planet.
    I’m afraid much of the rest of your comment is simply rant. Personal opinions without evidence.
    But I do agree on one point: hospital CEOs are overpaid and like excessive CEO pay in any corporation, this sets the wrong tone.
    We need hospital CEOs who are more patient-driven and less money-driven.
    I like the idea of nurses becoming hospital administrators. They know more about what happens inside a hosptial than virutally anyone (though hospitalists should also be good candidates.) And a very good nurse is a good manager.
    Does anyone know a hospital CEO or COO with a nursing background?? I’d love to interview her.

  39. Several interesting comments have been made about improving the selection of prospective medical students. I tend to doubt that admissions officers will be able to pick out the applicants who have the right motivation. I also doubt that favoring students from underserved areas or underserved ethnic groups will be very helpful, though I would like to see some research on that. (That is not to say that diversity among medical professionals does not have other advantages.) Most educated people from undesirable places will tend to want to live in a place nicer than where they grew up. [Disclosure: I went half way. Chosen for acceptance from a small Midwest town to a state medical school, I did practice my entire career in the rural half of the state, but in one of the nicer small cities.]
    Notwithstanding McAllen, Texas, I suspect that generally the highest medical expenses do occur in communities with the most medical specialists, and that there is a correlation between the cost of living of a community and the concentration of physicians (as with other highly paid members of society). I would argue that at least we should not encourage this trend by paying higher rates in areas with higher cost of living, as we do now with Medicare. I will not weep for a physician who is having a hard time meeting expenses in a high cost of living city with a glut of physicians.
    Our fee-for-service system is undoubtedly the cause of the overutilization problem. Without the incentive of more money, providers will be much less inclined to do extra work they recognize as unneeded. I understand that paying decision makers a fixed salary risks the doctors becoming lazy, but I suspect that in a group practice most will at least feel the obligation to carry their own weight. Not to mention that their employers or partners will be inclined to get rid of the shirkers. I think the challenge of the medical profession will continue to attract very smart hard-working young people even if the prospects for million dollar salaries disappear. And if some who might have become physicians use their science aptitude to solve our energy problem, or would rather take their chances as entrepreneurs, that is fine.
    Paying a per capita fee to each provider group rather than fee-for-service might incentivize the provision of too little care, but appropriate quality control should minimize that tendency. Again, as in a March 09 post, I encourage consideration of the plan of Fuchs and Emanuel. Regarding the proposed VAT that finances that plan, I failed to mention that their plan could be started immediately with deficit financing, delaying the VAT until after the recession is over, perhaps phasing it in starting Jan 2009. This deficit financing proposal might have been more palatable had we not already gone that route in spades with the Economic Recovery Act (I would have included the entire health plan in that act, however politically impractical). Though I know less about roads and bridges than I do about health care, I urged spending the bulk of the recovery money on health reform and clean energy. I lost.

  40. Richard:
    Thanks for your comment.
    I agree with most of what you say, particularly about the Emanuel/Fuchs plan for healthcare reform.
    I’ve written about it on the blog in a two-part post.
    It’s brilliant: the best plan I’ve seen.
    But, as you say, we’re not going to create a VAT in the middle of a depressoin.
    As for using deficit spending until we can afford a VAT: I agree with Obama and Orszag: we cannot fund healthcare with deficit spending. If we do, we’ll never contain costs.
    Deficit money alays seems like play money. No one takes it seriously. We have to put helathcare on a budget and face the fact that we have to make choices. If we want everyone to have access to healthcare (which we do) then we must rein in all of the ineffective overtreatment –all of the unnecessary tets and surgeries.
    This will be hard. One man’s overteratment is another man’s income stream. And most patietns don’t understand how much of our medical care is unnecessary. . . .
    Finally, if we do contain costs and manage to cover everyone, then we might take another look at the Emanuel/Fuchs plan (say six or seven years from now.) At that point the country might be ready for a VAT, and since a VAT dedicated to heatlhcare is not regressive, I think it would be a very good idea.
    On Medicare paying higher fees in areas where cost of living is higher. . . If we’re talking about primary care docs, pediatricians and others earning under $200,000 or $250,000 a year, I do think they do need higher fees to live comfortably and raise a family in a place like Manhattan..
    So some variation in Medicare fees based on cost-of -living is justified.
    But if we’re talking about specialists earning $600,000 or $800,000 I think we’ve entered a realm of excess that has little to do with cost of living.
    I definitely agree that we need to get away from fee-for-service. The danger that salary or capitation will lead to lazy doctors providing too little care doeson’t seem to me nearly as great as the danger that
    fee-for-service leads to overtreatment.
    As you suggest, both group practice and monitoring for quality can address these isssues.
    On medical school admissions, however, I am more optimistic than you are that more diverity would produce to more doctors who are interested in service, and serving a community.
    We have a large number of studies showing that minority medical students “are more likely to work in underserved areas” when they graduate.
    They are more likely to want to “give back” to their communities.
    Wealthier students raised in affluent suburbs often just don’t understand much about the problems of poverty–or how poverty leads to poor health.
    We also have a 2004 study in economic diversity in medical education which “classified sutdents into groups of high, moderate, and low income based on their parental income. During the basic science years, the high-income group performed better; however, in the clinical years, performance measures were similar. Those in the high-income group tended to pursue surgery, while those in the low-income group preferred family medicine.”
    So when it comes to clinical work–which is what ultimatley matters
    in family medicine– students coming from low-income backgrounds appear to do just as well. And they are more likely to pick family practice.
    Another study, published in Academic Medicine showed that while minoirty students tended to have mor debt when they graduated than other med students, they neverthless showed more interest in primary care and in working in underserved areas. . .
    In terms of what admissions officers can or can’t pick out about motivation. . . .As a former college professor I have to say that most ivy-league 21-year-olds are fairly transparent. You can tell when they are saying what they think you want to hear . . .
    Med school
    admissions officers can also tell a lot about a student by looking at what courses they took that were not pre-med. This will
    tell you something about what interests them . .

  41. I would love to be salaried, then I would go home at 4pm and not see patients on call and tell patients to wait an extra month for surgery than try to fit them in. I’m all for that.

  42. Francisco–
    Luckily many doctors are professionals who take great satisfaction in doing the job well–and putting patients first.
    I guess you wouldn’t make the grade at Mayo, or at the Cleveland Clinic or at . . ..well any really good accountable care organization.

  43. Maggie, can I ask what clinical experience you have? Have you ever spent time in a medical clinic following a busy private practitioner or has all that time been served in your ivory towers of the Cleveland Clinic and Mayo?
    Have you ever had to come in with a physician on call at 2am? Actually woken up with them and come in, started a case for 2 hours, then gone to clinic to see another 40 patients starting at 8am? Have you ever had to tell your child you can’t come to their school play or soccer game because your job has called you away? I don’t know of a single job in this country where you have that much responsibility placed on your shoulders and are held to the constant scrutiny of patients expectations, malpractice attorneys, and insurers. No one begrudges an attorney for charging $1000 an hour for their services, yet a physician seems greedy doing so.
    I know for a fact that there are extremely poor physicians out there. Their motives for what they do can be poor training, and certainly financially driven. But to censure all physicians for the outliers is a mistake. We use radiological studies to a tremendous excess, some of it has to do with patients expectations of an MRI for everything, some of it has to do with the fact that physicians have become technicians as opposed to diagnosticians, some of it has to do with legal exposure, and certainly some has to do with ownership interest in these facilities.
    Take the example of ambulatory surgical centers – the facilities can perform the same procedures for a fraction of the cost of the hospital. This is most definitely true because medicare reimburses them at a lower rate, so they HAVE to. They do so with better results as they are specialty oriented and perform the same tasks repeatly. So why take these away when they perform services for a lower price and do so with better results?
    There is no doubt the medical system is broken and needs to be fixed. So my point is, great, pay physicians a salary and you’ll get the same results as the post-office, DMV, or IRS. In the end you get what you pay for. Don’t ever forget, drug companies, device manufacturers, xrays, MRIs, and hospitals do not take care of people, doctors and nurses do.

  44. Franicsco–
    No I’m not a doctor, but many of the people who read this blog are doctors or nurses.
    And many disagree wtiih the idea that if doctors are on salary, “you’ll get the same results as the postal service . . . you get what you pay for.”
    Most have a higher opinion of their profession–and view it as a profession.

  45. I doubt the 4 people who read this blog form a consensus for the medical community….

  46. Actually, I think the Postal Service does a good job, all things considered. First class mail delivery especially is reliable and quite fast. Due to one of my hobbies, I have received literally hundreds of insured and registered packages over the last five or six years and never had a problem. Since 1971, when Congress ordered the Postal Service to cover its costs solely from postage and related mail service charges (certified mail, registered mail, insurance, etc.), first class mail rates increased only about in line with the Consumer Price Index from 8 cents in 1971 to 44 cents currently.
    I know that technological advances from new drugs and devices to sophisticated imaging to less invasive surgical techniques means modern medicine can do much more for patients than was possible 40 years ago. However, excessive and often inappropriate utilization driven by a combination of money, defensive medicine and sometimes unrealistic and unreasonable patient expectations is pushing healthcare costs beyond what the society can afford and sustain.
    I agree with a comment made by Medco Health Solutions CEO, David Snow, in a speech last year when he said (I’m paraphrasing): The role of government is to promulgate and regulate while the role of the private sector is to operate and innovate. I think a good portion of the excess utilization could be squeezed out over time by incorporating comparative effectiveness research into insurance coverage limitations while using the regulatory structure and new legislation to fix the litigation environment by protecting doctors from lawsuits if they follow evidence based protocols and by shifting medical dispute resolution from juries that don’t have any expertise to fairly and consistently decide these matters to specialized health courts that do. Of course, to do that, Democrats will have to take on the trial lawyers, a powerful constituency.

  47. Francisco —
    Many doctors in the US are salaried. They work for institutions like the VA, Mayo Clinic, Marshfield Clinic, Kaiser in Northern California, Group Health in Puget Sound, etc, etc.
    And here’s the interesting thing — those institutions, and others like them, produce the best and most efficient health care in the US.
    The idea that paying physicians on salary would destroy quality in US health care is wrong on the face of it, and observation of the real world proves that.

  48. Francisco Caycedo, if you’re the same MD who came up in Google as an Ortho Surgeon in VA then you’re making an excellent case for specialist MDs to be salaried.
    P.S. FC is also reinforcing the stereotype of surgeons being especially rude and arrogant. Thankfully I had the opportunity to work with surgeons Glenn Steele and Jerome Richie many years back when I was at a regional cancer center–they were both gems as people and excellent surgeons, too (good to know that this is possible…).

  49. I hope you all have had your fun beating up on Dr. Caycedo. The idea he expresses is not really all that unusual – the idea that paying a person for the work he/she performs leads to greater productivity than a salary.
    The kicker here of course is that, unlike making widgets, sometimes less “healthcare” is better than more.
    I have no fear of being put on salary. In the first place I am old enough that I can retire and/or go part time if I don’t like how things are going.
    In the second place, I have seen how my specialty is practiced at the VA and Kaiser and know that I won’t be working as hard as I am now – the perfect way to wind down to retirement.
    Several other comments:
    Pat S is wrong about physician reimbursement – at least in my specialty. In my specialty reimbursement is higher in the South and Midwest, not just salaries.
    Maggie says: “I like the idea of nurses becoming hospital administrators. They know more about what happens inside a hospital than virtually anyone (though hospitalists should also be good candidates.) And a very good nurse is a good manager.
    Does anyone know a hospital CEO or COO with a nursing background??”
    I have been in practice (mostly in a hospital setting) for almost 30 years. I was Chief of a Department at a mid size hospital for 6 years. The best administrator I ever dealt with was a Physician (and he was not particularly kind to me or my group). The worst administrator I ever worked with was a nurse. She was not very smart and she was “mean as a snake”. Her experience in nursing undoubtedly gave her insight into how nursing works, but didn’t help her in other areas. If you contact me offline I can give you her name.
    Of course my experience is limited, but undoubtedly greater than Maggie’s. Maggie’s comments strike me as naive and frankly sexist.

  50. Legacy Flyer-
    Often, I agree with you, but here I can’t.
    You write: “The worst administrator I ever worked with was a nurse. She was not very smart and she was “mean as a snake”. Her experience in nursing undoubtedly gave her insight into how nursing works, but didn’t help her in other areas. If you contact me offline I can give you her name.
    “Of course my experience is limited, but undoubtedly greater than Maggie’s. Maggie’s comments strike me as naive and frankly sexist.”
    Legacy Flyer, as I’m sure you know, “mean as a snake” has been used, repeatedly, in recent commentaries to refer to Nancy Pelosi.
    One could say that your comment is sexist.
    You suggest that my experience is “limited” and that I am “naive” becaue I am not an M.D.
    Many state medical assoications that have invited me to speak as a keynote speaker–not to mention places like Mayo–might disagree.
    But they have read my book.
    It’s a long book–you might not want to invest that much time. But if you did, you would be in a better position to judge how much I understand about healthcare.

  51. I don’t mean to rant.
    At one of our hospitals the vast majority of doctors are on salary, and they do not practice medicine that is “leaner” than the fee for service ones. The younger ones practice in an expensive way, on salary or not.
    I think JRossi pointed out earlier, many doctors don’t want to be corporate drones. This is independant of how much you decide you want to pay them.
    Malpractice fear is going to have a long hangover effect. This is just my opinion.
    I can speak for Boston. Specialists salaries are not high, but there is a huge supply of people who want to live there. The real problem is going to be in the small cities where higher income tended to balance an undesirable location.
    Productivity falls dramatically on a salaried model. This will dramatically increase the number doctors required. This won’t be a problem in NYC, but it will be in many other places.
    I think the idea that doctor greed as the primary problem in American medicine is incomplete. As far as doctor pay is concerned, I think you are going to get your wish…pay is falling and work hours increasing, at least in our neck of the woods. ( I don’t think doctor income will ever be low enough to suit some people.)Total healthcare costs are going to continue to spiral out of control without iron clad tort protection, as they have in Europe, and dramatic patient demand reductions, as they have in (Enlightened) Europe.

  52. Maggie,
    Frankly, I didn’t know that “mean as a snake” was reserved for Nancy Pelosi. The term has been around a long time and I have used it in the past -not in association with Nancy Pelosi. I don’t feel strongly one way or the other about Nancy Pelosi – any more than I feel strongly about Steny Hoyer or Harry Reid.
    I am also sure that you know quite a bit about healthcare – I never intended to imply that you didn’t. Also, I never suggested that you didn’t know what you were saying because you weren’t a doctor. I know that doctors don’t have all the answers or posess magical understanding that others don’t.
    I am sure that you have met many hospital administrators, and lectured at many conferences attended by hospital administrators. You have probably met them in situations where they were all dressed up and acting sweet. I on the other hand have met them (over the course of almost 30 years) during times when we had to make a budget, make cuts in spending and fire employees (as well as get rid of physicians). The sweet and lovely ladies and gentlemen you meet at lectures and conferences can look and act differently in the cold hard light of dawn. I do believe that I have a better understanding of (the reality of) hospital administrators than you do.
    To make an analogy – you used to teach/work at a college. I believe that gives you a better perspective about college administrators than I have. I think you would think me naive if I said: “I think Chemistry Professors make the best college administrators and I would like to interview college administrators who were Chemistry Professors”.
    I like Health Beat and wouldn’t waste my time if I didn’t. You deal with important and interesting issues, although I will say that sometimes Health Beat gets off on tangents that could decrease its impact.
    As to your book, I may take the time to read it some day. Especially if it were sent to me for free (hint, hint)

  53. Christopher George is correct with respect to the ordering practices of older vs. younger docs. The younger ones order a lot more tests and have a lower “hit rate” than the older ones.
    Since most of the docs I work with are not salaried this is not about the “greedy, private practitioner” vs. the “noble, team oriented, salaried doc” but instead about; training, habit and fear of malpractice.
    Good luck getting the “young-uns” to stop ordering so many tests – especially without significant tort reform.

  54. Legacy Flyer —
    Since we are both radiologists, I would be very interested in seeing data that supports your contention that the individual fees for individual services paid to radiologists in the Midwest by third party payers are higher than on the coasts. Every report I have ever seen shows the opposite. I know that Medicare payments are higher on the coasts.
    Payments in Chicago and Detroit may be higher than in Utica, but payments in Utica are higher than in Duluth and payments in NYC higher than Chicago. Metric for metric, payments are lower in the Midwest.
    Radiologists in the Midwest do make more in total. That is based entirely on higher volumes, in turn based on lower numbers of providers per population. Salaried radiologists also make more in the Midwest, because of market considerations due to competing with fee for service settings in the region.
    As I pointed out, the term the “South” is a little problematic. Miami, Atlanta, Dallas, and Houston are all in the South, and have very high payment rates. However, much of the rest of the South has low rates.

  55. In this discussion about doctors incomes, there are two points that people seem to be missing.
    The first is that no one is arguing that doctors will not tend to do more work under fee for service than salary. However, as Gawande observes, based on data from Dartmouth and other sources, doctors doing more work is often a problem, not a benefit.
    Second, there are no real-world reform proposals that envision changing most US doctors to salaries. Proposals from Obama’s to Emmanuel’s to Single Payer all propose that the current system for medical payments to doctors largely be continued as is. Various changes in the health care financial environment are pushing more and more doctors into salaried positions, but that is related to market situations, not to reform proposals.

  56. Pat S,
    You may have better data that I do. I can tell you that private payors where we are (Baltimore) are paying on average about 80% of Medicare. It is my understanding that in many areas of the South and Midwest payors are paying at 120% of Medicare and above.
    Payment rates generally relate to HMO penetration – hence are lower in the Minneapolis area and other major metro area in the South and Midwest.
    Do you have good data on what commercial insurance is paying in various areas of the country?
    I am aware of the Medicare practice costs adjustment.

  57. Just a few comments on facts:
    On Medicare payments to doctors: nationwide, commercial insurers pay an average of 1.23% more than Medicare . . .
    But Pat is right, in some areas, Medicare actually pays more for certain services. When I was writing the book I interviewed docs who told me that Medicare actually paid better than private insurers in their area. (A lot depends on how much clout the private insurer has in a particular area. As they consolidated, they grew stronger.)
    Primary care salaries in Boston are low. Specialists salaries in Boston are all over the place–depending on who your patients are and where you work.
    But in many cases, specialists income is very high–as it is in Manhattan.
    The notion that incomes are lower in more desirable cities is not borne out by research–
    Reserach shows that in medicine, competition does not lead to lower prices.
    Legacy Flyer–
    Thanks for the conciliatory words. (Mean as a snake was originally a phrase used by slaves to refer to owners. But most recently, it has been used repeated to apply to Pelosi. )
    Most of my encounters with hospital administrators have been in interviews, not at conferences.
    And frequently, when I have interviewed hospital administrators, they have become quite upset. I’m a journalist, so I ask the questions you are not supposed to ask.
    There was, for instance, the CEO at Cedar Sinai in L.A. who really didn’t want to talk about how much money they lost when they were forced to junk their entire HIT system . . .
    Then there was the CEO of a Manhattan hospital who appeared ready to lunge across the dinner table and strangle me (this was a working dinner for health care experts in NY) when I suggested that these days, patients really need a patient advocate with them in the hospital–at all times if possible–to watch out for medication mix-ups, etc.
    (I cited Dr. Don Berwick’s experience when his wife was in the hospital.)
    “Not in my hospital,” he shouted. “We don’t make mistakes!” (Mental note: warn friends never to go to his hospital).
    I could go on, but my experiences with hospital administrators are varied, and, on the whole, I fear that hospital administrators are all too likely to see medicine as a “business” rather than as a “mission”
    I would send you a book–but I don’t have any. I gave away the last book a long time ago. But you can purchase a “like new”used copy on Amazon for a few dollars.
    Pat– There are actually plans to encourage (but not force) doctors to become part of groups (accountable care organizations) and often that means being on salary. It definitely means moving away from fee-for-service.
    I’ll be talking about a Medicare demonstratoin project in part 2 of this post.
    Medicare pilot projects will offer physicians an opportunity (but not a guarantee) to earn more if they join one of these groups. (As part of the group they will be eligible for bonsues –if the groups’ outcomes approach a benchmark for quality and efficiency.)
    Medicare reform is going to pave the way for natoinal health reform. If a Medicare pilot project works–and Medicare adopts it–you can be all but certain that it will become part of natoinal health reform by the end of the President’s first term (when he hopes to achieve universal coverage.)
    So keep your eye on what Medicare is doing. It will tell you where we are headed.
    Over time, fee-for-service is likely to disappear (private insuers will follow Medicare). Virtually all reformers talk about the “perverse incentives” of fee-for-service.
    Most likely, some doctors will receive capitated payment, some will receive bundled payment per episode of care (bundled with other docs and a hospital); some will be on salary.
    The self-employed doctor in a solo or small practice is likely to disappear (over a period of years) because the overhead (including Health IT) is so expensive.

  58. Fee-for-service leads to overtreatment:true.
    Capitation leads to undertreatment:true.
    Salaries lead to the proper amount of treatment:not necessarily true, as several docs have indicated. Salaries sometimes lead to an increased interest in coffee breaks and getting out at 5 pm. Now maybe that’s because those are bad greedy docs, and the good dedicated docs at Mayo and Geisinger would never act that way. But maybe that’s because docs are human beings, and human beings, over time, inexorably respond to incentives and to their social environment. We shall see.My experience at Kaiser when I was there from 1989 to 1996: Different docs acted differently: some stayed late and risked burnout. Some docs left at 5 pm come hell or high water, and quite a few took the admin cure, not that they were good at admin, but it got them off the 15-minute per pt treadmill, which is what they wanted. Quite a few became hospitalists.
    I was talking to a friend who is a hospitalist at Kaiser recently. He complained bitterly about the lazy outpt docs. The more things change….
    The point is clear: Putting docs on salary might decrease productivity. Would a productivity decrease be good or bad? It depends, as you all know, on whether increased productivity results in better pt care. I suspect we might find that sometimes a productivity decrease would not increase suffering and death and sometimes it would. We’ll know only after the experiments have been done in each individual practice setting.
    Maggie writes that fee-for-service and solo and small groups will get rarer in the future because of reformers’ efforts. No doubt. I also think they will get rarer in primary care because primary care docs will get rarer.

  59. Insurers that attempt to form efficient provider networks include up to 80% of practitioners and try to avoid about 20%. The reason for avoiding the doctors in the bottom 20% is not incompetence. It’s that they are high utilizers either because they are too money driven or practice excessive defensive medicine or both. Salaried doctors can fall into that category almost as easily as doctors paid on a fee for service basis if bonus compensation is determined, at least in part, by revenue and profit generation for the practice or hospital.
    From a patient’s perspective, I think it’s useful to know whether a given doctor is a high utilizer or not even irrespective of outcomes which often cannot be adequately measured due to a combination of a too small patient panel and inadequate risk adjustment capabilities. In this context, we are talking mainly about PCP’s and doctors who manage a lot of chronic disease like diabetes, heart disease, asthma, COPD, etc. where there is lots of discretion in how often to order tests and how frequently the patient should come in for routine monitoring. Surgeons probably need to be evaluated differently. Interestingly, there are quite a few patients who equate high utilization with thoroughness. These patients may see the high utilizers as the best doctors and prefer to go to them rather than a doctor who scores better on cost-effectiveness metrics. It could well be that the patient and his expectations is the bigger problem than the doctor. Partly for this reason, I think we should copy the Taiwan approach of giving every person a smart card that would track his or her utilization with the potential for intervention if and when a given individual’s utilization is deemed excessive relative to his or her overall health status.

  60. “On Medicare payments to doctors: nationwide, commercial insurers pay an average of 1.23% more than Medicare . . .”
    I think this may be a typo. Charlie Baker, CEO of Harvard-Pilgrim Healthcare, has said in the past that his health plan pays, on average, 120%-135% of Medicare rates and even more for certain procedures. The consensus among private insurers is that they pay hospitals about 30% more than Medicare and physicians 20% more than Medicare. This accounts for why, in part, there is so much opposition to a public insurance option that would pay Medicare rates or even slightly more and require providers to accept the public plan if they want to continue to do business with Medicare. If the payment gap between Medicare and private insurers were really only 1.23%, the public insurance option concept wouldn’t be anywhere near as controversial as it is. For certain procedures in some locations, private insurers pay less than Medicare, but that is likely the exception and not the rule.

  61. Barry–
    Yes, it’s a typo. I meant 1.23 times– which is 123% as much.
    You write ” The consensus among private insurers is that they pay hospitals about 30% more than Medicare and physicians 20% more than Medicare.”
    Unfortunate what private insurers say about how much they pay out is usually an exaggeration– PR designed to make customers feel that they really aren’t keeping that much of your premiums–they are paying docs and hospitals so much money!
    The fact is that nationwide, they pay about 23 percent more, on average. And in some cases Medicare actually pays more for certain services in certain places.
    More importantly, for-profit insurers make virtually No Effort to figure out whether what they are paying for actually benefits patients.
    The best non-profit insurers do this, and Medicare is making increased effrots to do this.
    Even when they were trying to “manage care” in the 1990s, for-profit insurers made little effort to investigate whether the care would help patients. That’s why they were just as likely to deny necessary effective care as they were to deny ineffective, unneeded care.
    As for for-profit insurers setting up “efficient networks”– the same problem crops up. They look at how much the doctors bill–and avoid those that tend to bill more–without looking at whether this means that they are doing a better job (spending more time actually try to manage a chronic disease) or whether they are over-treating.
    By the same token for-profit insurers put doctors in their networks who bill less–Even if this is because they are Skimping on Patient Care.
    I once had a primary doctor become very angry with me because I had set up an appointment for a bone-density test and for a
    gynecological exam. (I had reached an age where bone-density is appropriate to set a baseline.)
    He indicated that the insurer watched how many referrals he did, and that it wasn’t up to me to decide that I needed these referrals. (He was in a fo-profit network that was considered very good, but he himself was not impressive. His office was dirty. I never went to him again. Still, he’ll stay in the network as long as he keeps the referrals and billing down.
    I called the insurer who was not at all concerned that the doctor was discouraging gynecological exams and bone-density tests.
    J Rossi–
    Individual anecdotes from docs don’t tell us much about quality of care at Kaiser.
    The Dartmouth research does. Kaiser Northern California has very high ratings for outcomes and efficiency.
    I said that small practices are going to disappear because, in many places, they are not economically sustainable.
    Overhead (real estate, utilities, etc.) is too high, and eventually patients are going to expect every doc to have healthcare IT.
    Small practices won’t be able to afford it.
    The fact that are healthcare system is so fragmented is one of the problems that makes it so expensive. We need economies of scale. And we need the collaboration Gawande describes at Mayo.
    On producitity– We have over two decades of evidence showing that, among Medicare patients and paitnets with comprehensive insurance, undertreatment is rarely a problem in this country.
    Overtreatment is a huge problem.
    ON balance, lower productivity would be better for those patients.
    Patients living in regions where they undergo fewer tests and procedures fare better.
    Underinsured, uninsured and Medicaid patients on the other hand are regularly undertreated. That’s where we need doctors doing “more.” But unfortunately, they won’t make much money “doing more” for those patients . . .