Why physicians need to organize

In my previous post, “Have physicians finally joined the working class,” I discussed the changes in the health care system regarding physicians roles in these systems. In this post, I propose two strategies that could help physicians regain some influence over their work and to participate fully not just in the execution of strategy from management but also have an input in creating it.

Building unions

There has been a resurgence of interest in in physicians’ ability to collectively bargain the terms and conditions of their employment. There have already been a few examples of physicians having successfully organized to defend their contracts and improve working conditions. This includes examples such as the Oakland-based doctors and dentists’ union who sued California’s State Labor Board in the early 1990s. The group won the right to renew a labor agreement with state employees, and negotiated pay raises for their members, instead of being forced to follow the proposed budget cut plan. Another similar example is a union formed by hospital employees in an Oregon hospital who successfully fought a hospital administration plan which would have outsourced their jobs to a management company.

Given the relative inaction of medical societies on this front, there are increasing calls for leadership in organizing of what is typically a fragmented workforce into union-like entities referred to as “solidarity networks.” These solidarity networks/unions aim to accomplish the daunting task of bringing physicians from different specialties together under a single umbrella to enhance the collective economic and professional status. In addition, for this formula to work, unions must include both employed and independent doctors (since both groups are affected by largely the same forces), and must deal with the contentious politics of health care.

However, as one author eloquently puts it: “And then there’s politics, but I have faith that intelligent and educated people understand by now that the sole difference between progressive and conservative agendas is a personal preference to have your serfdom managed either through a government intermediary, or directly by the business overlords.”

Creating financial systems where clinicians have more input on strategy and operational decisions

Nothing represents the alienation of doctors from their work more clearly than the financial system of the typical mid-sized hospital. Even though doctors make the bulk of decisions that affect the financial health of a hospital, they rarely get involved in the financial deliberations and programs of the health care system. There is often a clear separation between physicians and administrators on these matters.

Most health care organizations use a method called “full costing” to analyze their costs. The full cost of a unit delivered is the combination of the direct cost plus what is called “fair share.” Direct cost is related to the actual cost incurred by the cost object, and a “fair share” which is the additional overhead of the institution (administration, finance, and IT).

Fair share is determined by dividing the overhead cost of the whole system on all clinical departments using an arbitrary method like each departments’ clinical hours or square space. While this sounds easy to accomplish in theory, in practice it often becomes a contentious issue for health administrators. Even though several authors have demonstrated the shortcomings of this method to accurately depict the dynamics of the business of health care, it is still very popular among managers for variety of reasons. These reasons include that it enables the hospital to fulfill its reporting obligations to regulatory agencies, it makes it easy to prepare financial statements, and a cynical person will add that it allows administrators to do their job without needing the clinician inputs.

Alternative costing methods such as the differential costing method, which classifies cost into four categories: a) variable, b) fixed, c) semi-variable, and d) semi-fixed. Deciding to which categories each item belongs to requires both financial input and clinical input. Even so, it provides a more accurate picture of the underlying costs of operation a healthcare business, and it helps in integrating physicians in the decision-making process.

Physicians are typically responsible for the variable direct cost of a business, which represents 35 percent of the total cost. This contrasts with the fixed and direct cost (65 percent of total cost), over which physicians have little control. The current ways of cost containment through resource utilization and increased efficiency might have yielded positive results — if variable costs made up most total cost — which they do not. Hence, implementing efficiency measures and resource utilization will not likely yield major reductions in cost per patient, unless this could be accompanied by a reduction in fixed costs. This implies that physicians must become more aware of the different drivers of cost in their institutions, and push for more transparency and inclusion in the decision process.

In previous decades, medical practitioners were an effective professional class with a major voice in how services were organized and delivered. However, they have now been reduced to a guild that is good at protecting their own reimbursement, but without enjoying political clout to change the system that they and their patients complain so much about. A major factor in this decline is due to the loss of their control of the means of production. Physicians need to organize to regain influence on the way their jobs are organized and executed, and to get more involved in the financial decisions at their institutions.

Andres Barkil-Oteo is a psychiatrist and can be reached on Twitter @andre06511.

Image credit: Shutterstock.com

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