One Man’s Cost is Another Man’s Income

The latest must-read New Yorker piece by Atul Gawande describes recent efforts to cut costs and improve quality by coordinating patient care – in particular that of the most expensive patients. In “The Hot Spotter” (gated), he follows several innovators, including Rushika Fernandopulle, who directs a clinic-based program in Atlantic City, New Jersey. Fernandopulle and his team face many challenges in managing costs and improving the care of his patients. But:

Their most difficult obstacle, however, has been the waywardness not of patients but of doctors-the doctors whom the patients see outside the clinic. … The Atlantic City casino workers and hospital staff … had the best-paying insurance in town. Some doctors weren’t about to let that business slip away.

Fernandopulle told me about a woman who had seen a cardiologist for chest pain two decades ago, when she was in her twenties. It was the result of a temporary, inflammatory condition, but he continued to have her see him for an examination and an electrocardiogram every three months, and a cardiac ultrasound every year. The results were always normal. After the clinic doctors advised her to stop, the cardiologist called her at home to say that her health was at risk if she didn’t keep seeing him. She went back.

The clinic encountered similar troubles with some of the doctors who saw its hospitalized patients. One group of hospital-based internists was excellent, and coordinated its care plans with the clinic. But the others refused, resulting in longer stays and higher costs.

Any guesses which internists were on salary and which were fee-for-service?

Commentators often worry that third-party payment leads to moral hazard and overconsumption by patients. That’s true, but we should also keep an eye on the providers. Payment reform is one of the key challenges in future health care reform.

5 thoughts on “One Man’s Cost is Another Man’s Income”

  1. Very good observation. For confirmation of this, see the graph on volume of Medicare services over the past 10 years in the following post.

    The growth of testing and imaging, the services most susceptible to abuse, has been much greater than the growth in major treatment. There is a large element of greed here, I’m sure. It would also seem that the artificial decrease in government set Medicare fees has encouraged some doctors to charge for multiple services to make the same money they would have previously earned on just one. For example, if a doctor thinks he should have a profit margin of 10 percent and he is only allowed 5 by Medicare, then to earn $10 he would need to charge for two $100 tests rather than one. This puts another $5 in the doc’s pocket, but costs the government $100. The problem is exacerbated when the doctor has an ownership interest in the testing or imaging service. These conflicts need to be banned.

  2. Personally, I’d rather pay $10 extra paid directly to an MD than a single penny to the parasitic expense of the health insurance industry.

    Even as there are worse profiteers in the health care system, the overall cost of the health insurance industry in our total medical system is obscene, and self serving – even as we accuse Dr’s of the same in this article.

  3. This is not a recent problem nor only endemic to Atlantic City, New Jersey.
    I no longer live there, but many years ago I lived in California. I had a problem with internal bleeding because a miniscule piece of glass was in some food I had eaten. I received good medical care, the bleeding was stopped, and I recovered. I don’t know what California does presently, but at that time I had Medicaid through the State of California, and I was told to go home and that the biling would come to me along with a sticker. All I had to do was put the sticker on the bill and mail it in and not to worry about payment. The state would pay the doctors.

    I did what they said. The bill arrived. A sticker arrived. I sent them in to the state office. Then about two weeks later the same bill arrived along with a new sticker. And this kept going on and on and on. I called the doctors office that had performed the procedure to stop the internal bleeding and told them I keep receiving the very same bill along with a payment sticker, and this has gone on now for many weeks.

    Their response? Keep sending the stickers in! I did not. In total they sent me EIGHT identical bills and EIGHT stickers in an attempt to get paid EIGHT TIMES for one procedure.

    We are in grave error to think people are inherently good, or that there are “only a few bad apples” around. People, including doctors who are just people and are as corropt as the next person, will always gravitate the the lowest common denominator. They will always try to get something for nothing. They always think they are entitled to beat the system and we live in a “Well if I don’t do it someone else will!” mentality society that is on the verge of total collapse not only economically but morally.

    This corruption and fraud is endless. People are only aware of the tip of the iceberg.

  4. While I understand the concerns, several factors in each of these stories have not been considered. In the first anecdote, about the woman with the heart issue, questions need to be asked: was there a history of heart problems in her family? how severe had her inflammatory response been? what is the medical-legal climate in NJ? Sometimes doctors are just covering their behinds rather than trying to make a buck. This is often the reason for “unnecessary” tests. While for decades, some have seen fee-for-service as the root of all evil in the medical system, that simply isn’t true. The greatest parasites in the system are the health care insurance companies – what exactly are they providing as middle-men that merit their millions? Salaried physicians are frequently overworked and underpaid. When the going gets tough, they are the ones whose pay is cut and whose hours are increased. Talk to people with socialized medicine: see how happy their doctors are and how wonderful their health care is. It’s not. It’s hideously expensive, you wait for treatment and anything that isn’t on the list doesn’t get paid for. The physicians whose fees are capitated (paid a set monthly fee per patient) are basically paid to collect patients but not actually see any of them. Neither plan has proven to be a holy grail. Ultimately fee-for-service has remained the best (but not the perfect) solution. Getting rid of it will not miraculously cause health care fees to drop. Only the reining in of health care insurance companies will do that. I wonder whose side you’re really on, Donald.

    1. Clare,

      I did not read the article to be anti-physician, just against a system that encourages and rewards abuse, including over-charging. I think we can all agree that payment reform is desirable despite the fact that many of the reforms you’ve mentioned have been disappointing or worse.

      And although I suspect this is off-topic, your response asserts several emphatically stated generalities that are at best controversial.

      For example, whether they are just crazy or not, most patients and doctors in countries with more socialized medicine are approximately as happy as Americans. Here is an international physician satisfaction survey from the Commonwealth fund. It is true that physician pay is generally lower, but so are malpractice premiums. And medical school is often largely subsidized.

      The American system contains many well-documented strengths and weaknesses relative to other countries. I believe our goal should be to keep what works and learn from other countries where appropriate. For example, the French carte vitale with automatic credit-card-like billing and complete electronic patient records – could that work for us?

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