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.