Tuesday, June 23, 2009


The high cost of American Medicine

The other day I heard a prominent Senator intone "the American health care system is the best in the world." I admired the Senator. In spite of the fraction of Americans who do not have access to this best in the world health care system except in emergency rooms, he could make the statement without choking or blushing.

Is it really the best in the world? Other industrial countries have health care systems that cost less and produce results at least as good as ours. It's true that our medical providers have developed advanced techniques to deal with rare but spectacularly serious medical problems. Some of these techniques are not available in most other countries.

I used to ponder these facts and concluded that the answer lies in the existence or non-existence of a non-profit, government supported method of paying for health care. Countries in which there exists a government-supported health care system exhibit lower costs, in terms of care per patient, than our system.

Some articles that I've read recently have changed my mind. Our system is expensive because of the way the medical providers have organized to provide their services. Two articles in the New Yorker magazine by Dr. Atul Gawande have shown that the cost of health care per patient in the United States, as measured by Medicare payments, is very spotty. Some States exhibit high costs, others low costs. Extreme examples are Oregon (low cost) and Texas (high cost). What is going on?

Dr. Gawande points out that what is going on are two different models of providing health care to patients. One is the clinical model, as exemplified in the Mayo Clinic in Minnesota. The other is the fee for service model, practiced in most of the country. In the clinical model, several physicians of different specialties are paid salaries. If you, the patient, and your primary care physician decide that the advice of a specialist is needed, your doctor phones the specialist and he appears in ten minutes to assist in assessing your condition. There is no extra charge to you, the patient. Lab tests are performed in the clinic by salaried technicians.

In the fee for service model, your physician decides that you need to see a specialist. He arranges the appointment. You pay the specialist's fee when you see him. By medical courtesy, part of that fee is sent to your primary care physician. Your physician may decide you need tests S, T, Z, Y. He refers you to laboratories to perform those tests. You pay the fees demanded by the laboratories. The primary care physician may (I don't know for sure) get kick-backs from the laboratories. In some cases he has a financial interest in the laboratories.

His excellency the President needs to reduce the cost of medical care in this country. He must persuade medical providers to abandon the fee for service model and adopt the clinical model of providing health care. It doesn't matter whether or not he succeeds in persuading Congress to adopt the "public option" that he favors and the insurance agency hates and fears. He must change the way in which medical providers are paid so as to encourage them to adopt the clinical model rather than the fee for service model.

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