AMA: Getting the best value for our health care dollars

A guest column by the American Medical Association, exclusive to

As physicians, many of us realize on some level that our practices contribute to our state and national economies – we just lacked the empirical evidence to understand how much.

That changed last month, when the American Medical Association released a report that studied the economic impact of office-based physicians. While a handful of states have previously studied the economic impact of physicians in individual states, this is the first report to study the nationwide and state-by-state economic impact of office-based physicians.

Although physicians are primarily focused on the health of their patients, the report found that physician offices and the jobs and revenue they produce are significant contributors to the health of national and state economies. Office-based physicians play a vital role in national and state economies by supporting jobs, purchasing goods and services and generating tax revenue.

In 2009, office-based physicians supported 4 million jobs and $1.4 trillion in economic activity nationwide.  The study found that, in the median state, every dollar spent inside physician offices has a total impact of 1.8 times that in the community.

The results of this report provide tools for lawmakers and health policy experts on the economic value of the physician practice to states and the nation. This data will be invaluable as we continue to work with Congress on issues of vital importance to physicians, such as implementing medical liability reforms and achieving a permanent fix to the flawed Medicare physician payment formula. But as we begin to understand the economic role we as physicians play, we must also think about the other major economic variable associated with our profession – the rising costs of health care.

According to the Kaiser Family Foundation, some of the major factors driving health care costs are chronic disease, aging of the population, technology and prescription drugs. The AMA advocates for proposals to address rising health care costs that aim to improve clinical outcomes, quality of care and patient satisfaction per dollar spent. Instead of simply focusing our efforts on reducing costs alone, our ultimate goal should be to achieve better value for our health care spending.

The AMA has identified four broad strategies to address rising health care costs to ensure we get the most for our health care dollars: reducing the burden of preventable disease, making health care delivery more efficient, reducing nonclinical health system costs that do not contribute to patient care, and promoting value-based decision-making at all levels. Detailed information about these and other strategies to reduce health care costs while improving health quality and outcomes can be found on the AMA’s website at

We, as physicians, have an important role to play as our nation addresses health care costs. Recognizing the need to get the best value from health care spending, the AMA has convened the Physician Consortium for Performance Improvement (PCPI) for more than a decade to develop evidence-based, physician-level quality measures in a collaborative process based on “best care” practices for patients. In addition, widespread adoption and use of health information technology (HIT) over the long term can help address health care costs by improving efficiency and the quality of health care decision making, and incorporating electronic health records into physician practices can help improve quality of care delivery while ultimately enhancing practice efficiencies.

However, physicians cannot bend the cost curve alone – all health care stakeholders must participate in this effort. For instance, patients can focus on adopting and maintaining healthy lifestyles, insurers can adopt more standardized claims-filing processes and Congress can enact meaningful medical liability reform that has the potential to lower health care costs and improve patient access to physician services.

By focusing on specific, synergistic actions, we can actively work together to make our health care dollars count. And in doing so, physicians can continue to provide quality care to their patients while simultaneously contributing to the health of our economy.

Cecil B. Wilson is President of the American Medical Association.

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  • Pay per Head

    What I want to know is…how they figured out that every dollar spent in a doctor’s office is multiplied 1.8 times? How exactly does THAT work? I was always under the impression a dollar is a dollar no matter where you spend it…

  • soloFP

    When a primary doctor orders a lab test or MRI, that provides income for lab and hospital workers. Order physical therapy or home health also provides jobs and services. Ordering durable medical goods and seeeing nursing home patients provides jobs. The physician, NP, and PA all are people who provide many services and jobs to support the community.

  • pcp

    Maybe it means for every $1 I am paid by Medicare, I spend $1.80 on overhead?

  • soloFP

    The key with Medicare and other insurance companies is to review your office visits and procedures. Unless you make a profit or break even, discontinue the office visit or procedure for the condition and refer it out. If it is a complicated patient, only address the top 2-3 concerns, and schedule a visit 2-3 weeks out of additional concerns. Look into being overstaffed. There are docs in town that grouped into a large group but setup as “solo” docs by a hospital system. Each office has an office manger, 3-4 medical assistants per doctor, and a centralized billing office. The overhead is much higher than the national average. I give my own flu shots to Medicare patients and find that Medicare is one of my best payors in the area. The patients are rewarding and the profits are fair.
    I am my own office manager and have a staff of two. Keeping the overhead as low as possible is how to survive in primary care.

    • Jo

      If PCPs are just triage agents for specialists then what a waste of their medical school costs and also a waste of medical dollars and may be one reason Medicare is bankrupt and the reason for the Administration thinking they can replace them with a NP or PA.

      The AMA’s decision to reward procedures and to disrespect coordination of care and prevention of disease with a $3 million difference in career revenue between PCPs and Radiologists should not deter PCPs falling into the trap of letting others define you. You are the first line in the defense of disease. Your ability to diagnose disease is usually a patient’s first line of defense of a medical problem and your counseling and education is what keeps them continuing treatment. A “non-covered services” fee on the practice would be better than giving in.

      • Jo

        Correction: per the Kaiser report there is a $3.5mil difference between PCP and Specialists. Due to this we are losing our PCPs, the great diagnosticians.

  • American Medical Association

    To read more about how the multiplier is calculated, please view page 2 (page 5 of the PDF) in the study: .