Malpractice? High physician salaries? Aging of the population?
All partly responsible, but none more so than advancing medical technology combined with low productivity.
Maggie Mahar writes that new technology, such as MRIs, are being used inefficiently due to the proliferation of free-standing outpatient facilities:
The problem is this: rather than collaborating to share new technology, hospitals and outpatient centers all invest in the same equipment as they vie for well-insured patients. As a result, “costs in outpatient settings are higher” than they need be, and higher than in many hospitals “because of subscale operation of facilities.” Ginsburg explains: “In contrast to a hospital where CT equipment is being used for 20″“30 scans per day, freestanding outpatient facilities,” which charge “very high prices” and enjoy “lower overhead” can “earn a profit at 4″“8 scans per day.”
Re-aligning the financial incentives would go a long way to rectifying the problem. Not paying for excess procedures will prevent these centers from being built, perhaps improving the efficiency and reducing waste.
Another area touched upon are high American physician salaries, a favorite area that many health policy wonks would salivate to cut:
Physician compensation in the United States is 6.6 times per capita GDP for specialists and 4.2 times for primary care physicians. By contrast, in the average OECD country, specialists 4 percent of GDP per capita, while primary care doctors take home 3.2 percent.
Although Maggie does fairly point out that exorbitant medical school costs somewhat justifies the high pay.
I’ll go one step further, and say that comparing American physician salaries with foreign doctors is completely irrelevant.
In addition to the medical school cost difference, other countries do not have the malpractice costs that physicians face in the United States. Furthermore, when you compare the average CEO and attorney salary with those abroad, there is likely to be a similar disparity. Why aren’t more people clamoring to cut lawyer’s fees?
American physician salaries are what they are because of factors unique to this country. It is impossible, and irrelevant, to compare the numbers with those abroad.
