Tuesday, November 09, 2010


More about the High Cost of American Medical Care

I may have written before about this subject.  My source is Dr. Atul Gawande, who has written several articles on the subject in the New Yorker magazine.  I have conservative friends who insist that the reason medical care in the United States costs more (at least twice that of the next most expensive country) than in any other country is (a) Americans live dangerous lives, with automobile accidents and gun fights injuring and killing people, or (b) The care provided in those countries is inferior and often too late to avert death.  I have liberal friens who insist that the reason is (c) The greedy insurance companies make exhorbitant profits and cancel policies on patients who develop a new and expensive condition.

They're all wrong, of course.  According to Dr. Gawande, the cost of good medical care varies greatly within the United States and depends on the model of medical care practiced by the doctors in each community.  The cheapest and best is provided by the Mayo Clinic in Minnesota.  Doctors work on salary.  Specialists and laboratory services are available for the asking.  The patient doesn't pay the doctor but rather the Clinic.  An expensive model is one in which doctors operate as intependent businesses and refer their patients to specialists and to laboratories as needed.  The patient pays the doctor, or primary care physician.  If the doctor refers him or her to a specialist, the patient pays the specialist - usually a big fee.  The patient pays for any laboratory work done.  The doctor, or primary care physicion, receives a kick-back from the specialist and perhaps from the laboratory.  In this model, specialists do not see any patients except those that have been sent or referred by a primary care physician.

When a doctor, whether primary care physician or specialist, operates as an independent business, usually a corporation, he or she has a strong incentive to maximize the income received from the practice.  A primary care physician may prescribe unnecessary laboratory tests or specialist referrals and enjoy the extra revenue from these referrals.

Dr. Gawande has discovered, by comparing Medicare per-patient payments, that the clinical model exemplified by the Mayo Clinic provides good care at substantially less cost than the private physician model.  It is clear to me that his results show that all three of the excuses listed above are incorrect.  It remains to be seen whether the new health care bill has incentives to persuade medical doctors to adopt the clinical care approach instead of the individual practice approach.

In Canada and England, where there are systems to provide universal health care, one can of course choose to be treated by a private physician, one who is not in the British National Health Service or who receives payment from the Canadian single-payer system.  This person can receive the same level of care as his neighbors and have the privilege of paying American prices for the care.

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