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The Problem of Physician Pay

There's a lot of smart stuff in this roundtable about how much doctors should be paid. I'd just note that doctor compensation, like executive compensation, is less about how much doctors get paid than what the payment structure incentivizes them to do.

As example, Liam Yore, an emergency room doctor, notes that emergency rooms pay a lot more for procedures than for so-called "cognitive medicine" like diagnoses and medical management. "Sewing a facial laceration pays far better than accurately diagnosing a heart attack," he writes. "The same principle applies to any procedure — from angiograms to colonoscopies." Start with that insight and it's not hard to build a model in which the ranks of doctors slowly fill with the sort of people who prefer surgical interventions to cognitive medicine because the other people drop out or don't have enough revenue to advertise, popularize, and modernize their practices. Changing that is hard. And Dr. Steffie Woolhandler and David Himmelstein aren't saying anything particularly controversial when they write that "there are a variety of bad ways of paying doctors, but no particularly good ones."

By Ezra Klein  |  June 26, 2009; 3:04 PM ET
Categories:  Health  
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I can see how changing incentives could improve outcomes, as the example shows. But I don't see how you get costs down without getting physician incomes down. US physicians take home 2x more of US GDP than Euro docs. How do you cut costs if you don't "fix" that?

Posted by: lfstevens | June 27, 2009 10:44 AM | Report abuse

"Sewing a facial laceration pays far better than accurately diagnosing a heart attack"

Yes, if you assume that the same person getting paid the same rate is necessary to perform both tasks. Paying the same doctor differently to do both tasks is intriguing, why not question how simple sutures came to be the province of people who would clearly be more valuable diagnosing heart attacks in the first place?

If PAs and RNs took care of facial lacerations it would increase the competition to diagnose heart attacks, lowering the cost of both procedures.

I'm not saying that doctors can't necessarily do better stitches, but I'm saying that RN-quality stitchery needs to be legal, since many more people can afford it.

If we demand that only doctors be permitted to do the stitches, with the commensurate liability they assume for doing doctor-quality work and defending doctor-sized malpractice suits, then it's no surprise that the procedure costs far more than it needs to.

Unfortunately, the current model outlaws the execution of the procedure by someone who is both competent enough to perform it and competent enough to determine when a doctor is necessary. When this time-consuming but basic procedure is reserved for hourly workers with doctorates, it's no wonder things get screwed up.

A regulation requiring a doctor to do anything is also a law prohibiting a low-cost alternative for a healthcare consumer who has less money, less coverage, or lower premiums.

Why do you seek to make unaffordable care universal instead of making affordable care legal? In the context of "tough choices" all the government's going to do is make inferior care the new standard anyway, with a bias toward longer lines wherever they refuse to compromise on quality.

There is no such thing as a free lunch.

Posted by: whoisjohngaltcom | June 27, 2009 11:19 AM | Report abuse

lfstevens...physician salaries are less than 10% of healthcare expenditures in the US. Therefore a 50% reduction in salary is only a 5% reduction in health expenditures.

As far as US physicians making less than European physicians....US doctors have to fund their own medical training, while in Europe the gov't pays for it. I will finish my surgical training this year at age 35 with $300,000 in educational loans. My European doctor friends are astonished at this. Many people think we just woke up one day and were a doctor, but there is much more to it.

Posted by: toofache32 | June 30, 2009 10:38 PM | Report abuse

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