Unbiased Analysis of Today's Healthcare Issues

Doctors’ Pay: A Key to Health Care Reform

Written By: Jason Shafrin - Jun• 20•09

There is an interesting debate at the N.Y. Times discussing how to reform physician payment to increase quality and decrease cost.  Below is an excerpt from a Seattle emergency room doctor.

In this, they are half right: over-utilization is a driver of cost, and it is in part driven by doctors’ economic incentives. The underlying cause, however, is a bias within the physician compensation system that extravagantly rewards surgical procedures performed compared to “cognitive” services like diagnosis and medical management.
In the E.R., for example, sewing a facial laceration pays far better than accurately diagnosing a heart attack. The same principle applies to any procedure — from angiograms to colonoscopies.
The predictable consequence is that physicians gravitate toward lucrative procedural specialties. They perform more and more procedures, using expensive new technologies, driving costs ever higher.

In this, they are half right: over-utilization is a driver of cost, and it is in part driven by doctors’ economic incentives. The underlying cause, however, is a bias within the physician compensation system that extravagantly rewards surgical procedures performed compared to “cognitive” services like diagnosis and medical management.

In the E.R., for example, sewing a facial laceration pays far better than accurately diagnosing a heart attack. The same principle applies to any procedure — from angiograms to colonoscopies.

The predictable consequence is that physicians gravitate toward lucrative procedural specialties. They perform more and more procedures, using expensive new technologies, driving costs ever higher.

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2 Comments

  1. […] about NY Times as of June 20, 2009 June 20, 2009 NY Times No Comments Doctors’ Pay: A Key to Health Care Reform – healthcare-economist.com 06/20/2009 There is an interesting debate at the N.Y. Times discussing […]

  2. 潇湘渌水 says:

    yes, I’m working on the health sector reform in one province of China, I also found that the better outcome of the reform resulted from the improved solution of the incentives structure and physician compensation system.

    As you know, eight dollars in ten of health expenditure is controlled by doctors.

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