The Business of Medicine

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Physician Payment Conditions

Most patients probably think of their personal physician in purely altruistic terms — as someone whose primary motivation is the provision of the highest quality care, where the only consideration is what is in the best interests of their patient. For many doctors, this is undoubtedly the case — after all, every one is required to take a Hippocratic oath that promises much the same thing (although I find it intriguing and somewhat disturbing that it’s always couched in negative terms, i.e. to “do no harm” to their patient).

However, the fact of the matter is that the average doctor graduates from medical school with over $150,000 in accumulated debt, and starts work as a lowly paid intern for only $40,000 per year. It doesn’t take much to imagine that this unbalanced situation weighs heavily on the minds of most doctors, and that they soon begin to contemplate how they can improve their predicament.

For many doctors, the answer is to enter some kind of specialty such as surgery or anesthesiology, where they can normally earn far more than that of a lowly family doctor. (According to the OECD, the United States has one of the lowest ratios of General Practitioners to Specialists amongst industrialized nations.) In other cases, as outlined in my last post, doctors have learned how to take advantage of higher fees to conduct more complicated procedures or tests, or to collaborate with drug companies in holding clinical trials and speaking engagements, to pad their wages.

Unfortunately, the direct payers of medical services in the United States, the private health insurers and government-run Medicare and Medicaid, have structured their payment plans in such a way that doctors are paid the least amount to actually see and consult with patients (in the initial examination and consultation), and the highest fees to conduct impersonal and invasive tests and procedures. Furthermore, these fees are structured to pay relatively less for longer patient consultations than for short ones (for instance, the fee for a thirty minute consultation is less than the price of two fifteen minute ones).

As a result, doctors have learned that it doesn’t pay as well to conduct a careful examination and thorough consultation as it does to perform a quick and perfunctory examination involving little discourse with their patient, then send them out the door with a shorthand prescription to treat their nominal symptoms, or book a repeat visit for more tests and procedures.

Make no mistake, doctors are in the business of providing health care, and most of them view it first and foremost as a business. And you’ve got to give it them: together with the pharmaceutical companies and health insurance companies (who are amongst the most profitable industries in America), they’ve done a pretty good job of it. As an overall profession, they represent the highest wage earners in America, and according to a recent survey by Forbes Magazine, thirteen physician specialties rank amongst the fifteen highest paying jobs — outranking even Chief Executives! For over a hundred years, the professional organization that represents physicians in the United States, the American Medical Association, has actively controlled attendance at medical schools in order to constrain the supply of doctors and thereby keep their salaries artificially high.

It’s no accident doctors usually live in the largest homes in the most exclusive areas, with the most expensive foreign automobiles parked in the driveway. Some people might argue that these health care professionals deserve their perks, given the critical and complex job they perform each and every day keeping us healthy and alive. And this would be true—if in fact American physicians did a superior job keeping us healthy and alive. But as I pointed out in my last blog, America has a sorry record of providing quality health care, at least when compared with other developed countries.

So the next time your doctor tries to rush you out the door with a quick prescription to treat your symptoms after poking and prodding you for a few minutes, barely giving you a chance to explain your problem or the special circumstances surrounding your condition, don’t automatically assume your doctor knows what’s best for you. Sometimes — perhaps too often — your doctor is acting (consciously or unconsciously) in their best interests, not yours.

By Reid Jenner

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