Now as background, I work as a civil servant in a sensitive position involving spending taxpayer monies. I can’t even accept a cup of coffee without being perceived as accepting a bribe. Yet, I’ve had medical doctors tell me that accepting such trinkets is a sign of “respect”. Since doctors usually directly deal with life and death issues, which should be more important that money, why do they think they are exempt from such unethical behavior and I’m not? And I make a small fraction of what doctors make.

I’m still not seeing anyone on this blog getting away from the price approach to fees; the postings seem to want to go back to it. Why? Why does the industry work so hard at hiding cost information? For instance, when I see doctors complain about malpractice insurance being so high, sometimes stating a alleged scary actual cost; I never see them say what percentage of the fee is for malpractice insurance. So if malpractice lawsuits were made illegal how much would the fees go down? 1%? 5%? 95%? No one, not even the AMA will commit to a range, say 50% to 55%. I suspect the money will be pocketed and the “usual and customary” fees will still go up just as fast anyway. If so, then why change the malpractice laws? It won’t benefit the patient.

Now if the true costs were known, then it would be known what fee is necessary to make the medical practitioner whole, that is reimburse the only the costs needed to make the provider, and their suppliers (who also overcharge), are in the same financial situation they were before they saw the patient. Then a fair fee can be set. Right now, there is no way of determining that, and the medical industry doesn’t want a way of determining that. If you say they do, well the perception is they don’t, they want fees based on price, and perceptions matter. If such a perception is false, then the medical community has a serious public relations problem that will no longer go away by the current policy of stonewalling. Instead of discussing it with the public, they want to discuss it only with their lawyers and legislators and keep the public confused and in the dark.

Likewise with patients. If you want an agent of your insurance company controlling your care, if you trust corporate American that much, then limit yourself to the docs who accept the low-ball rates and get on their panels. You will accept with that the rushed schedules and doctors who are demoralized and unable to give their best. If you want someone who is constantly driving themselves to perform at the razors edge, you usually won’t find them on the panel. There are exceptions, but people like that usually like to put themselves where they can be rewarded for their achievements.

Another aspect of this is that some people generate fees all out of proportion to any economic rationality and thereby force patients to accept the protection of the insurance company from rapacious fee setting. Fees should not, ideally, be set by what insurance companies will pay. They should be set by the economic reality of what pricing signals in the community about what that level of skill and effort is “worth”–with a bit of English on it for what people can afford. One should look not only at what the other docs are charging, but also other professionals–accounting for the differences in risk, effort, and previous educational investment. When my CPA is charging more than I do, I know that I am undercharging unless he is a really top dog specialist CPA, for I invested a great deal more years and hours in my training.

Doctors and patients would ultimately be better served charging rational fees and insisting on collecting them, severing the, medical profession from the insurance industry. If insurance pays for lab and hospital charges leaving docs to deal with patients on the basis on mutual terms (including charity as appropriate), then we can start to restore of the professionalism that has been lost. As it is, medicine is becoming a profession of indentured servants and grifters.

I admit that trying to decide on the price of time managed activities is challenging.

The markup on many other things is almost zilch.

Cost of Gardasil vaccine: $124.75
Payment from insurance: $125.50

This is pretty much how it is for all the vaccines. Your are lucky if you get a profit of $1.00. For that dollar you are supposed to order the vaccine, store the vaccine a fridge (not free), keep the fridge cool, manage your stock of vaccines, submit payment for the vaccine to the supplier, etc. Where is the profit? I actually lose money if you look at the investment vs reimbursement for the vaccines.