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.
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.
Labels: American medical practice, Clinical practice, Dr. Atul Gawande, Health insurance, Mayo Clinic, New Yorker Magazine, private practice
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.
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.
Labels: Atul Gawande, New Yorker Magazine, Senator McConnell
