Network News

X My Profile
View More Activity

Your surgery may hinge on your doctor's paycheck

One of the problems we had in health-care reform this year is that it's easy to say that insurers are motivated by money, and you can even say that about pharmaceutical companies, but you have to be very, very careful when saying it about doctors. People don't want to believe their doctors are motivated by money, and doctors don't believe they're motivated by money, but money is clearly playing a role in what sort of treatments doctors prescribe:

When doctors become invested in an outpatient surgery center, they perform on average twice as many surgeries as doctors with no such financial stake, according to a new study from the University of Michigan Health System.

"Our data suggest that physician behavior changes after investment in an outpatient facility. Through what some have labeled the 'triple dip,' physician owners of surgery centers not only collect a professional fee for the services provided, but also share in their facility's profits and the increased value of their investment. This creates a potential conflict of interest," says study author John Hollingsworth, M.D., M.S., a Robert Wood Johnson Clinical Scholar at the U-M Medical School.

More than that, other doctors are being motivated by the money they see their colleagues making. The report goes on to note that "the number of surgery centers has increased nearly 50 percent over the last decade, largely driven by the investment of physicians, who had a stake in 83 percent of these facilities."

Now, as I said at the top, you have to be careful when talking about this. I'm not saying doctors cackle maniacally when scheduling people for unnecessary surgeries. But the evidence suggests that when doctors have a financial stake in seeing more surgeries conducted, they start seeing the need for their patients to undergo more surgical treatments. And that drives costs up for everyone.

By Ezra Klein  |  April 9, 2010; 11:02 AM ET
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Can we close the budget deficit by taxing the rich?
Next: The red state ripoff


Thus, to control costs, care has to be rationed. Not every surgery is necessary, thus not every surgery should be performed. Thus, rationed care.

Posted by: Kevin_Willis | April 9, 2010 11:28 AM | Report abuse


while I don't believe they schedule surgeries that are unnecessary (remember they fear lawsuits) they absolutely profit greatly off of this.

The one point you don't mention that I see DAILY is doctors purposefully join insurance networks to gain new patients. Its a simple fact when they get out of medical school. Insurers are good enough to build their practice but then when they feel they're not needed doctors spread the hate against insurers for making their lives difficult, raising their costs, telling them what they can do and prescribe (even though no one mentions that these guidelines are put forth by such heretics like the FDA).

When these doctors join insurance networks they then set up their own surgery centers and purposefully don't have their centers join the networks. Thus they get patients in one door and stick the consumer in the other all while increasing their profits tenfold.

You want to control costs. Don't let docs refer to their own surgery centers. That'll cut costs dramatically. I don't care if they refer to others they have no financial gain in but letting them do what they're doing is absolutely unethical because most every time they NEVER tell the consumer this. Then either the consumer gets a bill or the bill is tacked onto their insurance company who then is forced to raise rates due to the increased costs.

I had a client who had this happen to them. They got billed an extra $3500 because a doctor did this and the insurance company paid $190,000 on a 4 day hospital stay as opposed to a contracted rate that would have paid a per diem rate of a total of $6000 ($1500 per day).

And you wonder why costs are so high.

Posted by: visionbrkr | April 9, 2010 11:36 AM | Report abuse

Who are all these supposed people who don't believe their doctors are motivated by money? Everybody is at least in part motivated by money.

Posted by: redwards95 | April 9, 2010 11:41 AM | Report abuse

Or they start scheduling more surgeries because they are more aggressive in attracting new patients and are more willing to sacrifice time on the golf course for time performing surgeries... if work is more lucrative compared to leisure, they may choose to do more work. That doesn't necessarily mean that the surgeries are unnecessary or wouldn't have been performed otherwise. This rise in surgeries may reflect that these centers are gaining in market share at the expense of other surgery sites.

Posted by: qkanga | April 9, 2010 11:45 AM | Report abuse

Why to you have to be "careful" about this? Those of us who have had to pay our own substantial medical expenses, and have therefore carefully scrutinized and argued over every bill know this is true in almost every case. Doctor's do a lot of stuff, and hospitals much more, just to make extra money. My favorite is the doctor who leaned into the doorway of my wife's hospital room to cheerily ask how she was feeling, only to bill us for the 30-second visit. I refused to pay. I suspect he probably routinely patrolled the halls of the hospital looking for folks he knew so he could bill them for his "visits."

Posted by: AuthorEditor | April 9, 2010 11:47 AM | Report abuse

I don't understand how the country could have gotten so cynical about so many things, yet remained so naive about the relationship between doctors and money.

Posted by: MosBen | April 9, 2010 11:54 AM | Report abuse

part of the problem is that doctors can send patients to collections but patients have very little recourse against doctors. Ethics boards? Medical Review boards? Good luck with that one.

I've seen many times doctors that send patients to collections only to have claims paid by an insurer and if you ask the doctor for your money back it takes 6-8 weeks for reimbursement with no recourse for having to wait that long. Maybe they should be charged interest.

Posted by: visionbrkr | April 9, 2010 12:02 PM | Report abuse

This is true not only for ambulatory surgery centers, but for imaging and physician-owned hospitals as well.

Plugging more Stark Law exceptions would go a long way to control this. [Stark is the federal law prohibiting physician "self-referral" in the Medicare program.] Yet there's little political appetite to do this. Even the Stark Law amendment in the PPACA on the whole-hospital exception is prospective and keeps existing arrangements intact. (Check out Sections 6001 - 6003 of the PPACA for this and other Stark amendments.) Expect a throng of docs to start up these investments and/or expand existing arrangements before the amendments go into effect in 2011.

I wonder whether those who vehemently argue that no one in health care should make a profit include doctors and hospitals in that blanket statement? Doubtful.

Posted by: Policywonk14 | April 9, 2010 12:54 PM | Report abuse

Health care is rationed NOW, primarily by ability to pay. So your point is what, exactly?

Posted by: TomServo | April 9, 2010 1:02 PM | Report abuse

There's an interview in Reader's Digest with Devi Prasad Shetty, the Indian heart surgeon. The whole interview is pretty interesting, here are the bits about doctor pay:

"Q. But there’s the perception that doctors have become materialistic.
DS. You have to blame the medical education system for that, not the individuals. Under our program, called Udayer Pathey, we’re trying to help children from Bengal’s villages become doctors. Today, most children from poor families, irrespective of how bright or how passionate they are, can never get into medicine. But the world over, some of the brightest doctors, who radically transformed healthcare, came from deprived backgrounds—they are the ones who have the fire in their belly and can work twenty hours a day. You cannot expect a person who’s paid Rs1 crore [$250,000] to get an MD seat to be passionate about caring for the poor

Q. What is the one medical reform you are rooting for?
DS. Medical education should be made inclusive. Any young doctor who wants to become a heart surgeon or neurosurgeon should be able to become one. What he makes of it is left to him. If we create the infrastructure, we can train ten thousand heart surgeons a year. Why put an artificial barrier? It is exactly like a licence raj, when we only had Ambassador cars. Once we liberalized, we got the world’s best cars. Why not do the same with medical education?"

Posted by: roublen | April 9, 2010 1:09 PM | Report abuse

That's the major benefit of an integrated health service like Kaiser Permanente. There is no incentive for doctors, who are on salary, to prescribe unnecessary surgeries, treatments, tests, or medicine. Moreover, Kaiser saves money by providing good preventative care. (And, by the way, Kaiser is already fully on line.)

Posted by: KatherineCalkin | April 9, 2010 1:32 PM | Report abuse


You didn't want to say it, so I will. TONS of doctors are motivated by money, not just a little but primarily.

I'm part of a Taiwanese immigrant family. Both of my parents came to the U.S. as medical residents in 1977 during that decade's U.S. doctor shortage and their reason was clear -- to get rich in the United States.

Not only they, but all of their Taiwanese friends whose children I grew up with in Orange County came here for that reason.

From the time we could talk, every one of us 2nd generation kids was taught that medicine was the only profession to enter, and many of us did enter it, although not necessarily for the reason my parents espoused.

My dream upon graduating from med school 11 years ago was to join Doctors without Borders. As a graduate of a "top 10" med school, I easily could have. Indeed, several of my closest friends from medical school ended up spending several years working either full-timer or regularly part-time in various countries of Africa and Caribbean for private and state aid agencies.

I too spent a total of perhaps 4 months in Dominican Republican, but it was always a fight, and ultimately I came back to southern California to join my mom's urology practice because she and my father were so convinced that serving poor people was "wasting my education" that they would, for instance, threaten to stop helping me to pay my (significant) medical school loans during those several years when I worked abroad a little and desired to work abroad even more.

I don't know how many dinners I have sat through in recent years in which, say, my parents' friends who are cardiologists enter into mild arguments with friends who are radiologists about who should get paid (and how much) for certain procedures which both now regularly perform. These are people whose salaries exceed $550k, not counting many other stipends and benefits -- arguing about income. One regularly attends medical association meetings in DC the main purpose of which is to lobby Congress for increased Medicare rates. For what it's worth, all of them dues paying Republicans (lobbying for increased Medicare funding).

I could go on, but you get the point.

Of course, it is emphatically true that there are many good doctors out there. I don't just say that to balance the above -- believe me, I know many of them. (Many, by the way, tend to be in primary care, not the specialties.) At best, however, I would aver that the do-gooders constitute less than half of the total, and that at least half of the doctors I know are in medicing -- almost exclusively -- for the money.

Posted by: paul65 | April 9, 2010 1:36 PM | Report abuse

*****You want to control costs. Don't let docs refer to their own surgery centers.*****

I believe there already are rules that prohibit this.

But what happens when your doctor refers you to a specialist surgeon for a consultation, and said surgeon happens to own equity in the facility where he performs his surgery?

I think what really needs to happen is MUCH more aggressive regulations against entrepreneurial medicine, period.

Won't be easy, though. Even most primary care physicians, as far as I know, possess an equity interest in the partnerships they work for.

Posted by: Jasper999 | April 9, 2010 1:41 PM | Report abuse

Policywonk14, well, I guess it depends on what you mean by "profit" in reference to doctors, but I take your point to be that people arguing that there should be no profit motive in medicine don't think there should be any restrictions on doctor pay. I'd like to know what has led you to this conclusion.

Posted by: MosBen | April 9, 2010 1:56 PM | Report abuse

*other doctors are being motivated by the money they see their colleagues making. *

So true. Every single darn doctor can explain to you in exquisite detail the amount of money doctors in other specialties make and his opinion of whether he believes their pay is warranted or not.

There are limits to what we can do to "stop" this, if you believe it should be stopped: first of all, doctors have to worry about money from the moment they sign their loan applications for med school. It affects every decision they're going to make. Next, being a doctor makes you a licensed professional who is effectively a businessman, just like a barber, a lawyer, or an accountant: you have a set of skills that only a limited number people are allowed to do, and you get paid for using those skills. The question is how to support yourself with them. Most of them are going to use the opportunity to work for themselves, rather than put their lives in the hands of a faceless employer (as they should).

One of the problems, I think, is the mere existence of for-profit outpatient surgery centers. It's fine if doctors want to work for or independently contract with a surgery center as a place for which they can perform their services, but when they have a financial interest on both ends of the equation, that's a formula for trouble.

Posted by: constans | April 9, 2010 2:05 PM | Report abuse

Another anecdote, which I know doesn't mean anything. Our family doctor spends a lot of time examining and talking to patients, and often takes a wait and see attitude rather than prescribing something or going for a test. We have had other doctors express to us their concern that they can't understand how he makes enough money--they think he spends too much time with his patients.

Posted by: AuthorEditor | April 9, 2010 3:22 PM | Report abuse

Ezra, Please also note that in pre-paid care models (such as Kaiser Permanente) the provider, hospital, and insurer have every incentive to give you nothing.

Here's a well-researched example of how Kaiser was caught red-handed cheating someone out of their coverage:

Posted by: johnincalifornia | April 9, 2010 6:40 PM | Report abuse

Hmmmm, interesting way to interpret that data....

Funny, those studies weren't carried out by anyone who knows anything about surgery.

Let me help. Average room turnover (time to get one pt out and the next one in) in a privately owned center-13 minutes. In average university (damn union employees) 40 minutes.

Let's see, an OR costs.... you will cringe... 18$/min with the lights OFF... thats just insurance, lease, maintenance of anesthetic machines/instruments... Once you put a doctor or two (surgeon and anesthesiologist) you're into the 100$/min range.

Oh, so surgi-centers save ooodles of money, and get more surgeries done in a shorter amount of time... FACTS

The ingenuity of private citizens who OWN their own destinies has pushed the limits of efficiency such that everyone saves... and some of the reward SHOULD go to the doctors.

Posted by: docwhocuts | April 9, 2010 6:50 PM | Report abuse

I’m a surgeon who has spent half my career in a fee-for-service practice and the other half now in a salaried position, and there is no doubt that many doctors are influenced in some way by salary. Virtually every e-mail I get from various professional organizations deals first and foremost with proposed reductions in doctors’ salaries (usually Medicare cuts). My interpretation is that no ethical physician would let profits guide his or her medical decision-making, but no honest physician would deny that it has an effect on his or her practice.

The underlying problem is how do you reward physician productivity? In a fee-for-service model, doctors are eager to see new referrals and to provide as good a service as possible. If not, their patients will go elsewhere. But there also is an incentive to overtreat. In a salary-based environment you don’t have those misplaced incentives, but you have to rely on the physician’s own standards to run an efficient practice.

I for one like the salary model better. I don’t have to worry about reimbursement or answer to any insurance company in managing my patients; the business department for my medical center worries about those things. But a salaried physician has to be employed by someone, and most physicians in this country are in small private-practice groups, essentially self-employed.

Posted by: rlplant | April 9, 2010 7:59 PM | Report abuse

Of course doctors are influenced by money. Doctors are humans, not gods. EVERYBODY is influenced by money. Nobody becomes a lawyer, or an accountant, or an engineer because they just happen to like the field regardless of pay. They all do it for the money. Why are doctors supposed to be different?

This is also illustrative of one truth that Ezra and others on this board continue to ignore. The USA has TOO MANY doctors, not too few. In a world of doctor shortages, unnecessary surgeries dont happen because all the surgeons are too busy just keeping up with the really sick people who actually need surgery to survive. When you start adding surgeons, they start branching out into "borderline" patients who may or may not really need the surgery. Decreasing the number of subspecialists and surgeons would go a long way towards reducing medical costs.

Reducing cardiologists would cut down a great deal on the number of unnecessary cardiac caths. This way, a cardiologist would be so busy just cathing the guys with 99% stenosis of their vessels that they wouldnt have time to try to drum up "business" by doing a cath in a patient with stable chest pain with only a 50% stenosis.

USA has too many doctors, not too few. The sooner you realize that, the better. The Dartmouth data is clear on this point.

My plan would be to make all doctors salaried employees of the federal government. No incentive to drum up business by starting outpatient surgical centers and taking out the appendix of every single person with abdominal pain. Pay primary care docs 100k and specialists 200k flat salary. Overall healthcare costs would plummet and mortality would go up becuase there would be a lot less complications occuring from invasive procedures. The docs will stop doing cardiac caths for a 50% stenosis if they are paid a flat salary instead of a per-procedure model. The doctors will be happier too -- now the primary care docs can see 10 patients per day in clinic and give each patient the time they need, instead of trying to cram in 50 patients per day to increase their revenues.

Posted by: platon201 | April 9, 2010 9:56 PM | Report abuse


i'll bypass the fact that you don't even know how many states are in the country (from another post you made).

I've got one question for you though. Why don't surgery centers participate with insurance plans? A handful do but the overwhelming majority don't. Why do docs join insurance networks when its convenient for them but don't have their surgery centers participate thus costing the system MILLIONS while profiting greatly. Why don't docs clearly tell their patients when they generously (snark) offer to write off their deductible and in effect cost the system greatly. This system then is forced to raise insurance prices because of this deceptive practice.

You'll never convince me its anything but old fashioned greed. People used to trust their doctors to have their best interest at heart. In other countries they still do. Here, sadly, they're starting to realize otherwise thanks to the likes of you. Sadly ones like rlplant get it and you're ruining his or her reputation by how you act.

Its so bad in my state BCBS has had to enact the following changes because they lost $50 million in the first 6 months of 2009. Well, they didn't lose it, they had to raise prices dramatically to account for increased cost.

Posted by: visionbrkr | April 10, 2010 8:15 AM | Report abuse

Of course most doctors in this country are motivated by money; most are in a for-profit business. In other, more advanced countries, medical education is public, and doctor-grads don't have debt; doctors and other health professionals earn decent, upper-middle-class pay, but are not treated like/expect to be paid like gods! (See T.R. Reid's "Healing of America" for a quick & clever survey of other systems.) I always resist testing and referrals to ancillary services since I suspect the facility is at least partly owned by the referring doctor. This should be regulated (as commenter wrote above) and prescription drug ads should be banned.Take the profit out of health care; make it a public service like public education. Does my health care suffer because of this; yes, it does. I don't know who to trust and it certainly isn't going to be the person making half a million a year in an assembly-line office!

Posted by: nancycadet | April 10, 2010 9:36 AM | Report abuse

I disagree that doctors should be salaried employees, either of hospitals or the government. I believe that it is better for the country if more people, including doctors, were able to make their way in life as independent small businessmen. I don't like seeing independent shops and cafès with independent small business owners get driven out of business and replaced with corporate chains in my neighborhood, so I should at least have the care to want doctors to stay independent, too.

Posted by: tyromania | April 10, 2010 9:49 AM | Report abuse

The comments to this entry are closed.

RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company