retired doc says the results were predictable:
The predictable effects of price controls have been seen. Demand for services has increased, quality has decreased.We have seen gaming of the system and politicalization of health care. The type of medical practice that has come to be known as primary care has particularly felt the impact. FP and IM physicians have found it increasingly difficult to deal with the reduced fees . Primary care docs-whose fees were smaller to begin with-have tended to attempt to increase their output by seeing more patients to try and compensate for the decreased compensation per patient encounter.
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Yes. This is insightful and true but one economci factor missing in this comment must be clarified. Not only is the price of medical practice controlled to counfound the practice and consumption of medicine but the supply of physicians is tightly restricted, too. Note, that I am personally against lowering any standards for qualifications or training of physicians.
In the current climate many patients often seen physicians as the enemy and physicians see patients as adversaries.
Medicine does not lend itself entirely to free market arguments and analysis. Consider that chiropractic was legalized only after a lawsuit won that argued that prohibiting the practice of chiropractic amounted to restraint of trade.
Heisenberg
Retired doc reminds us of basic economic observations made long ago. The price controls of Medicare create a race to the bottom in quality. In every free market, you have venders who focus on the lowest price, while other venders will focus on providing a targeted quality of product and service, and then price at whatever level it takes to produce that. Some customers will choose one, some the other. The efficient operators in each niche will make a reasonable profit.
Fixed prices means that the greatest profit will always be made by the vender who puts the least that they possibley can into the product, and still move any product. In other words, the quacks, the slobs, the fiction history writers, the performers of “examinettes” will make the most money. A dollar for 10 cents worth of work is good money.
It gets better. The next step is for quality providers to drop out, as they are losing too much money in the fixed price market. The centralized planners do not however perceive that the price is too low because there are plenty of venders offering to provide product. The have long ago excluded from their mind the plain fact that some producers do better work, having decided all are paid the same and therefore worth the same. Meanwhile what has happened is that the lowest quality providers are the only ones playing. The planners squeze prices down as long as anyone plays, but they are now in a situation where the only people left playing are those with no professionalism or pride of craft, who will, and eventually do, reduce themselves to merely pretending to provide a service in order to keep it profitable at the low payment rates.
Just in case there aren’t enough docs with no standards, the planners are making sure that there are plenty of other “professionals” getting legislative permission to practice medicine.
I must disagree with Heisenberg. When you consider the explosion in the number of doctors, and non-physician providers relative to the population, restraint of provider supply is not a plausible factor.
In order to pay for quality, we have to capture and measure quality. We are taking the first steps, regardless of the complaining that quality can be measured. There will be measures.
The US has to decide that healthcare is really important and that we, as a society, will spend on caring for our people. The move in Washington - the Republican Party at the lead - is to cut spending more, and shift the burden even more so to individuals. Individuals currently carry about 25% of the private spending on healthcare out of pocket - over $2,000 a year per person. That adds up very, very quickly for a family, and if you get really sick…..
Medical costs have become much too expensive for the market, so the market is pushing back. While primary care physician incomes are flat, specialists can be popping a half million or more. They’re the incomes that are out of kilter with what the market will bear, and they will have to come crashing down. Plenty of good people will still go into medicine once we get over the notion of being rich in medicine and come back to doing well and doing good.
Peter
I write the Physician Businss Blog at All Business,com