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Delivery System Day Stragglers: Shannon Brownlee and Stuart Butler

A couple of delivery system commentaries came in late yesterday, after I'd finished writing the blog for the day. By coincidence, both of them are critical of Baucus's bill, and so offer an interesting counter-perspective to the generally complimentary missives I published yesterday.

First up is Shannon Brownlee, author of the excellent book Overtreated. She says the key change in the Baucus bill is actually a bad one: It increases the number of doctors.

The Baucus bill includes provisions to increase the number of physicians in the U.S. That’s a good way to increase spending, not decrease it – and it is unlikely to lead to better care and better outcomes. Unfortunately, many members of Congress and the public have accepted the erroneous arguments being made by groups like the Association of Medical Colleges that we need more doctors.

The AAMC and others are basing their projections on a couple of faulty premises. One, the current supply of doctors is about right, and two, as the population ages, we will need more doctors than we already have. But if you look at the supply of physicians relative to the population in different parts of the country, there’s not much relationship between how old and sick people are on average (and thus how many doctors might be needed to care for them) and the rate of doctors. That suggests on the face of it that the current supply of doctors in any particular place isn’t based on what patients need. Second, there’s also no consistent relationship between the number of doctors and patient outcomes. In other words, more doctors doesn’t lead to better care or better health.

On the other hand, there is a relationship between the number of doctors and how much we spend per capita. Spending is generally higher in places with more physicians, particularly more specialists. Los Angeles, for instance, is awash in doctors compared with the size of the population. So is Miami. What all this says is more doctors – and particularly more specialists – probably won’t lead to better health, but it will lead to higher costs.

Next is Stuart Butler, a health-care expert at the Heritage Foundation, who argues that delivery system tweaks are too small to really make a difference:

The most important but undercovered cost control measure is real competition within a “defined contribution” (i.e. a capped and restructured tax exclusion and a real budget for Medicare and Medicaid). Micro changes in delivery system can improve efficiency and improve medical outcomes, but it does not follow at all that there will be cost control in the sense of total spending falling. That’s why we can have huge “delivery system” improvement in iPhones and laptops while total spending on each continues to surge. Real competition, within exchanges or similar “shopping malls” with families able to choose plans that compete in the way they organize services and the total price they offer – even to a subsidized family – is the key to cost control.

By Ezra Klein  |  September 23, 2009; 12:03 PM ET
 
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Comments

Brownlee makes a good point; what we really don't have enough of us *primary care* doctors. (Or really, primary care providers - nurse practitioners and physicians' assistants can do most of what a primary care doctor does.)

Posted by: Liz_B | September 23, 2009 12:23 PM | Report abuse

I would agree with Shannon except that we are going to add millions to the healthcare 'system', actually treating them before they explode and go to an ER.

As for the Heritage Foundation, does anyone really listen to them?

Posted by: scott1959 | September 23, 2009 12:23 PM | Report abuse

If we increase the number of doctors we need to restrict where and how they can practice. I'm totally with Brownlee on that one.

The Heritage Foundation should like Obamacare, since it's a back door to Wyden. I foresee high costs for workers and government, and gutting of preventive care.

Posted by: bmull | September 23, 2009 12:36 PM | Report abuse

Brownlee is spot-on.

If anything, there is evidence to suggest that supply DETERMINES demand, and hence an increase in doctors is LIKELY to increase spending.

Posted by: wisewon | September 23, 2009 12:38 PM | Report abuse

More doctors and more competition will work out well if, and only if, insurers, public or private, implement pay-for-outcome instead of fee for service. This is the ultimate implication of Atul Gawande's findings in The Valley (as we call it here) in Texas.

Pay for outcome can be implemented incrementally, as I suggested in my last comment yesterday.

Posted by: HalHorvath | September 23, 2009 12:40 PM | Report abuse

Shannon Brownlee's argument does not really make sense.

More doctors should mean more competition, lowering prices.

There may be more doctors in areas with high healthcare spending because doctors to go where the money is. Doctors go where the money is without regard for abstract notions of "patient need."

I like Dean Baker's suggestion - we let doctors licensed in other countries practice here, to increase the supply of doctors and lower costs.

Posted by: fuse | September 23, 2009 12:41 PM | Report abuse

"Shannon Brownlee's argument does not really make sense. More doctors should mean more competition, lowering prices."

Brownlee's argument only doesn't make sense if you ignore the actual evidence. As for Dean Baker's suggestion, one quarter of all practicing physicians in the US already were trained in foreign countries. How did that work out at holding down costs?

Posted by: steveh46 | September 23, 2009 12:55 PM | Report abuse

I'd easily prefer giving a boost to the nurse practitioner program for increasing our level of preventative care and routine healthcare. We have the greatest nurses in the world and we should take advantage of that. It doesn't take 4 years of med school and 3 years of residency to fill this role. We have nurses with a wealth of experience and this would do FAR more to bring down the cost of healthcare in this country.

Posted by: spotatl | September 23, 2009 12:56 PM | Report abuse

so who wants to tell the Doctor in NYC that he needs to move to Valentine Nebraska for Ms. Brownlee?


when will you people get that doctors won't lower cost until THEY"RE FORCED to lower cost. More doctors from other countries won't help that. The word you're searching for is "CAPITATION"

Posted by: visionbrkr | September 23, 2009 12:59 PM | Report abuse

Please provide evidence that basic rules of supply and demand don't work with regard to doctors - that having more doctors *causes* increased prices.

Posted by: fuse | September 23, 2009 1:01 PM | Report abuse

>>As for Dean Baker's suggestion, one quarter of all practicing physicians in the US already were trained in foreign countries. How did that work out at holding down costs??>>

Compared to not having them here? Probably a fair amount.

State licensing restrictions hold down competition. Restrictions on foreign licensed doctors, nurse practitioners, etc. is not helpful. The best argument for state licensing boards is quality control, a function they very rarely perform - almost no one ever loses a license no matter how bad their conduct.

Posted by: fuse | September 23, 2009 1:09 PM | Report abuse

Ezra rants at how inhuman the GOP is, and then softball interviews spreadsheet jockey Peter Orzag----whose fervent desire is to get IMAC's power to limit access to Medicare and Medicaid services by cutting reimbursements to the suppliers of those services -----

Medicare and Medicaid beneficiaries will "keep their benefits", they just won't have anywhere to use the benefits.

Orzag assumes these hardy old goats can get along without seeing so many doctors or getting expensive procedures.

Orzag obviously went to the same Med school as E Emanuel.

Posted by: johnowl | September 23, 2009 1:20 PM | Report abuse

fuse,

It doesn't "Cause" increased prices. It has no effect. Normal supply and demand don't work with healthcare. Mainly because we aren't given a true cost. We're buffered with copays. Doctors don't post their costs.

Don't you think that a normal person if they had to pay the full cost of an office visit would rather pay $200 vs paying $400?

When our copay is $30 for each visit then who cares what we pay, right?

I'd be all for junking our current system and having an old style indemnity system with a $1000 deductible and 80% coverage with reasonable caps. That would FORCE patients to care what doctors charge. Heck maybe they'd even ASK a doctor what he charges an insurer. Have you ever asked your doctor what he or she charges?

Posted by: visionbrkr | September 23, 2009 1:27 PM | Report abuse

Brownlee's claim about doctor supply and price is completely off base, at least in the context she's given it. Okay, so prices are higher for doctors in Miami and Los Angeles despite an ample supply of providers... Those places have a higher standard of living, so you'd expect doctors to try to get more for their services there than they would in a place like Des Moines. I don't think that the laws of supply and demand apply strictly to the availability of medical services (i.e. doctors) due to the high regulatory control over the industry, a general rule is that the higher the supply, the higher the price.

Posted by: Balto-outsider | September 23, 2009 1:49 PM | Report abuse

> The Baucus bill includes provisions to
> increase the number of physicians in the
> U.S. That’s a good way to increase
> spending, not decrease it – and it is
> unlikely to lead to better care and better
> outcomes.

Spoken as a person who hasn't had to find a new primary care physician in the last few years, I bet. I live in a good sized metro area, two medical schools and three large hospital complexes, and a massive, massive shortage of adult medicine doctors. My last primary care doc left for a teaching position 3 years ago and I haven't been able to find or keep a new one for more than 6 months since. I am by no means alone: everyone I talk to in this and other cities is in the same boat (my rural relatives in IL are driving over 75 miles for primary care now).

sPh

Posted by: sphealey | September 23, 2009 1:55 PM | Report abuse

visionbrkr - I was reacting to the posters who said studies existed which proved their point.

As to comparison pricing healthcare, how are you going to shop when you've had a heart attack or otherwise need very expensive urgent care? That's where the real money is, not routine checkups. How are you going to judge whether doctors are right when they say you need something?

Posted by: fuse | September 23, 2009 2:11 PM | Report abuse


It's a tricky argument to make. Cities saturated with doctors do have lower physician salaries (and, as brownlee says, higher healthcare costs); but it's not clear if that's due to the saturation, or to the higher prevalence of lower-paying academic medicine jobs in those cities, or if it's just simply a case of hospitals knowing that doctors would prefer to live in a cool city than in the middle of nowhere and therefore pay less.

And how come the ARRA PCP incentives aren't being mentioned here? Seems relevant. Loan forgiveness is huge and might help those on the fence between primary care and specializing go to primary care instead.


Posted by: ThomasEN | September 23, 2009 2:19 PM | Report abuse

fuse,

you can't shop for that. To that end I'd favor what Mass. is looking at (at least before the national scene took precedent) into having providers being paid on a capitation basis. make the capitation a fair amount to let them stay in business and make a profit, but the current system we all can agree that pays providers on a FFS basis is wrong. Too many instances like the Cleveland clinic where docs are paid a salary work too well. I'd be in favor of EVERY SECTOR of healthcare being limited by profit. I'd be interested in finding out how Germany has private insurers that can't make a profit. I'd assume that they'd need to be very strictly regulated and watched and forced to give back to policy holders every year the amounts of admin plus claims. I'd be 100% in favor of that. Pharma would be tough because of innovation but certainly they can cut costs.

Posted by: visionbrkr | September 23, 2009 3:12 PM | Report abuse

The obvious problem with a pure capitation system is making sure providers to what they should, as the incentive is to do as little as possible. If we can't police a FFS system, why believe we can police a capitation system?

Posted by: fuse | September 23, 2009 3:19 PM | Report abuse

fuse,

I agree but capitation is better than FFS. I guess I'd be more interested in a captation system that also added in incentives to providers set up in such a way that it doesn't pay for less care, just more effective care. What we're doing with all these bills in congress is having a FFS hybrid as opposed to a capitation hybrid mainly because we don't want to tick off another sector of the healthcare pie (doctors) for fear I would expect that the reform path would go off the track with much more anti-reform talk.

Posted by: visionbrkr | September 23, 2009 3:36 PM | Report abuse

Brownlee's comments seem on the mark -- if you consider the key relationship is between MD supply and medical care utilization, rather than price. I wonder whether Elliott Fisher (Dartmouth Atlas) agrees with her comments, given how his research has shown that supply drives utilization (and thus spending). As doctors remind us, the most costly item in any physician's medical bag is the pen he uses to sign orders and prescriptions. More MDs, that many more pens.

Posted by: bill0465 | September 23, 2009 3:51 PM | Report abuse

I agree with visionbrkr...capitation with a link to outcomes or some such measure to insure appropriate care (as opposed to under treatment) is a preferable way to reimburse physicians.

But as for going back to an old style indemnity system, that would not change a thing. Having been in the business a bit longer than you :-) I remember those days and the distortions of insurance still pollute the market. People do not ask now, nor did they then, what something costs.

Posted by: scott1959 | September 23, 2009 4:34 PM | Report abuse

Capitation might be better, but figuring out what is effective (or cost effective care) is not easy, else we could make FFS work.

Under either system, doctors will want to be paid more and people will be under the impression that ineffective treatments are necessary, leading to political pressure to expand coverage.

People in the rest of the developed world don't ask what something costs, yet their costs are much lower than ours.

Posted by: fuse | September 23, 2009 5:00 PM | Report abuse

scott,

My GOD. I finally agree with SOMEONE on here. I guess I'd like to think that people (since they have a personal financial stake in the matter) would care what something costs just like they would if they were buying groceries and clipping coupons for them but they don't. Maybe they won't ask what something costs but maybe they'll think before going to the ER for non-emergent care. Maybe they'll take an over the counter cold medicine before running to a doctor thinking its just $20 when in reality its $300 or more.

Posted by: visionbrkr | September 23, 2009 5:02 PM | Report abuse


yeah, I think an 80/20 mix or so of capitation/quality outcomes might be the best reimbursement idea I've seen around the industry lately. Though I also like the idea of tweaking capitation to be a bit more condition-based.

Posted by: ThomasEN | September 23, 2009 5:09 PM | Report abuse

Uh guys we already tried capitation once in the HMO era in the mid 90s. It wasnt the doctors who killed it, it was the patients. They rebelled and refused to participate in a system where doctors got paid more for limiting care. Rightly or wrongly, thats the perception. Lets quit pretending that its a brand new concept that nobody has ever thought of before.

Posted by: platon201 | September 23, 2009 6:56 PM | Report abuse

There's absolutely zero evidence that nurse practitioners lower costs. Sure they get paid less than doctors, but overall healthcare spending is unchanged in areas with high numbers of NPs. Boston, NYC, Chicago, LA and elsewhere all high very high utilization rates of NPs, yet costs there are still higher than other areas.

Futhermore, insurance companies charge the same co-pays regardless of whether you see an NP or an MD.

There's also evidence that using NPs as your "primary care provider" results in more referrals to specialists. As we all know, specialist referrals are extremely expensive and are usually a waste of money.

Posted by: platon201 | September 23, 2009 6:59 PM | Report abuse

As for forcing doctors where to practice, thats obviously a non-starter. No other profession operates that way, not even the "public service" professions of teaching, firemen, policemen, etc. A government edict declaring that doctors can only work in certain areas, or forcing doctors to move from NYC to rural Alabama is a joke and will never happen.

What you can do is use incentives to encourage docs to move away from big cities to rural areas. There are tons of those programs out there, but they are underfunded and dont do very much to fix the problem.

As for foreign medical grads, the US already takes in more FMGs than all other nations on earth, combined. A full 30% of the workforce are FMGs. Thats higher than any other industrialized nation in the world, yet it has made absolutely no difference in lowering costs.

Posted by: platon201 | September 23, 2009 7:03 PM | Report abuse

platon201,

but we'll force doctors to accept single payer? Yes patients rebelled but at some point we'll have to keep costs in line and the only way that's worked is capitation. Its inevitable. If you don't like capitation with a mix of incentives when its installed then go out and pay to see your doctor outside of your care model but at some point the system can't pay for all the care that's required.


And as far as NP's are concerned i'm not worried about the copays but rather what the provider charges the insurer and in turn what the TRUE COST of the visit is. If PCP's charge $200 for an office visit and NP's charge $75-$100 then we're better off assuming its something that NP's can handle.

Posted by: visionbrkr | September 23, 2009 8:40 PM | Report abuse

visionbrkr...I have agreed with you a couple of times before, so it does happen occasionally. Your point is that nominal copays distort any rational consumer behavior. I agree. But, having lived through both, a deductible/coinsurance approach is in reality not much better. It is the presence of the third party payment system in and of itself that causes the distortion.

Posted by: scott1959 | September 23, 2009 8:44 PM | Report abuse

"As for forcing doctors where to practice, thats obviously a non-starter. No other profession operates that way."

Medicine is different because the cost of training is enormously subsidized by the taxpayer. Many countries require at least a year of service in an underserved area following graduation. I don't see any problem with it.

Posted by: bmull | September 23, 2009 9:48 PM | Report abuse

I dunno. I had to miss an ophthalmologist appointment for my regular glaucoma checkup. He didn't have another opening until next year. That means I will have gone approximately a year without getting my pressure checked, when it is supposed to be every 6 months.

If we're going to add 40 million new patients, that problem is going to get worse, not better.

Posted by: pj_camp | September 24, 2009 9:08 AM | Report abuse

Doctor salaries are much lower in areas with lots of doctors. Medical costs aren't lower, but doctor costs are. Incomes are lower for doctors what want the impermatur of a famous clinic or university. ( even when the big name is for the undergraduate college, not the medical school..)As you can imagine, the doctors who take these jobs are often of middling quality and dedication.

Many big cities have salary model clinics where salaries are low and productivity is even lower. Kaiser in Oregon comes to mind. Great place to have the sniffles, but not so good if you need a kidney transplant.

It is curious that we know that utilization goes up as we lower fees. A gallbladder operation is paid less in nominal dollars now than it was in 1985, for example. If lowering fees increases utilization, logically, raising fees might lower utilization. Nobody is going to propose that. Eventually though, if you really want lower utilization, that is what we will have to do. Or else you might have choas as hundreds of specialties go out of business when both fees and volume is reduced.

Or maybe that is the point.

Doctor income has been going down over the last ten years; it can't be the cause of rising healthcare spending.

Capitation is not even great in theory. It moves adverse selection down to the level of the individual practice. This will result in an even more skewed distribution of doctors, punishing doctors that care for the poor, and shifting care to those with the best outcomes, the worried well, because even the best medical care will not improve outcomes much for those truly in poverty.

Posted by: ChristopherGeorge | September 24, 2009 10:50 AM | Report abuse

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