October 24, 2011 11:16 PM UTC

Greedy Doctors/Physician Compensation not the driver behind high healthcare costs

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• by: DaftPunk

(Have you hugged your doctor lately? (Er, it’s flu season, please don’t, but feel free to direct health care questions and e-hugs to Daft in the comments thread here.) – promoted by ProgressiveCowgirl)

Some poorly informed individuals like to maintain that “greedy doctors” constantly raising their rates are part of why health care costs so much.  While this may appeal to a stereotypical emotional notion of doctors being rich beyond what they deserve, the facts say otherwise.  Physicians are paid according to Medicare and Medicaid formulas, and by Insurance companies under contract as a set percentage of Medicare rates.  

I could start charging $20,000 for a hysterectomy tomorrow, but United Health Care is still only going to pony up $1500 (Medicaid $1000.)  Physicians are prohibited by law from bargaining collectively, and our supposed national lobby, the AMA, is more interested in preserving the income stream they make from their CPT codes than representing physicians.  Most lobbying is therefore done by specialty associations who have their own parochial and occasionally conflicting interests.

For a long time, physician compensation has not kept up with inflation, and of course, the biggest expense driver of any medical practice/small business, particularly those that care to retain quality employees, is healthcare benefits, which any dolt knows have been increasing faster than inflation.  Of course, since medical care is so expensive, the potential liability awards in malpractice cases also become more expensive, and those rates have outstripped inflation as well.Does that sound like a sustainable business model?

Physician compensation must be measured against the opportunity cost invested in the years of medical training as well as the financial expense.  Becoming a doctor is expensive and time consuming, more so than any other profession. Your prejudices may support the notion that doctors are greedy, but  no honest commentator would say they are dumb and lazy.

The question is would paying these smart hard-working people less solve our health care cost crisis?  Consider that physician compensation represents 8% of all US healthcare spending, you could zero out all pay to “greedy doctors”, and you’d cut health care costs from 15% of GDP to 13.8%.

While doctors’ pay represents a small percentage, 100% of remaining costs are produced by the most expensive piece of medical technology that exists, the doctor’s pen.  How we order tests and procedures, and how we do them effects costs greatly.  Some docs can achieve the same quality of result at a lower cost than others, and there ought to be a way to reward them better than their  peers who get worse results or spend more money.  This would be geared toward the “more procedures=more money” mindset that the fee for service model engenders.

Of course if you want to enlist doctors in spending less on health care and making rational decisions in the patient’s best interest, demonizing them as greedy bloodsuckers more interested in their own financial well-being is a surefire way to incentivise those same smart hard-working people to go into business or law.