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.
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{ 7 comments }
Why not say the same for nurses? Or for that matter, IT workers?
should a pcp who didn’t have to take call in the 2nd and 3rd year of residency like at my institution and also who got out after 3 years get paid the same as a ct surgeon who had to spend 10 years in residency?
Maggie often talks about supply leading the way for rising costs. I look at things in the exact opposite way. Demand is causing the supply. And the demand is from third parties. The only reason we have MRI’s on every street corner is because insurance pays for it. Medicare, Medicaid, Blue Cross. All of them. I remember as a resident, nobody paid for PET scan technology. Even though I had patient after patient with metastatic cancer, I couldn’t order a PET scan because patients couldn’t afford to pay cash up front, and no third parties would pay for them. Now, you can find PET scanners everywhere. Not until they are paid for did they become so common. The same will happen with CT scanners used for cardiac calcium scores. When nobody pays for them, nobody builds them. With the new payment rules, I’m sure they will be everywhere.
It’s not supply that leads demand, it’s the other way around. When you have a third party paying for everything, you get exactly what you ask for.
High physician salaries? I must have missed them. Thanks to the MCO’s in my neck of the woods, the days of high physician salaries are gone. I know some docs who periodically need loans to make payroll.
As far as med tech, it’s been my observation that technology is additive – new technology supplements not replaces older technology.
Finally, use of new technology seems spurred more by patient demand, liability fears or both. Both aspects need to be addressed before costs can come down. By that time, I hope we can still find a Kevin MD to see our patients.
I would expect a physician to say that physician salaries are not part of the problem.
It’s also the patient’s fault. Doctors can advise patients to cut down on saturated fat, alcohol, cigarettes, salt intake, energy drinks, etc., but if the patient does not follow up on the doctor’s advise and end up with a costly bypass in excess of $100k, health care gets expensive for all of us.
Who knows. In the future, health insurance may not exist. The health insurance is already forcing more patients to contribute more out of pocket expenses each year.
If every doctor in the country took nothing home, at at the salvation army, work clothes out of church rag box, and slept on a park bench, that would take out one year’s healthcare inflation and then the climb would continue. It is a personal problem for people with envy issue but not a big financial factor. If you could figure out how to make a slight shift in utilization patterns, you could double their incomes and till come out spending less.
Those are facts that can be easily inferred from readily available data.
Another fact well demonstrated by a Dutch study recently was that the common belief that patient lifestyle is the cause for high health cost is completely false. Those who smoke and are fat end up costing less in the end because they die younger–yet entire reform programs are structured around this false belief. Any surprise that they fail?
I’ll compare my income to my European colleagues when I can take those 6 to 8 week vacations regularly that they are on when I get to visit with them–instead of 2 desperate weeks spread out over they year paid for by working 60 hours weeks before and after.
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