financial incentives

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Medical Conservatism and End-of-life Decisions

June 20, 2010 in Medicare, Supply of Medical Services | 3 comments

The New York Times Magazine discusses two pressing issues: 1) what type of treatment to the elderly really wish to receive at the end of their life and 2) how does economic incentives affect how physicians advise these patients.  Much of my own research has dealt with (2) [see here].  The following two excerpts are revealing.

“According to an analysis by the Dartmouth Atlas medical-research group, patients are far more likely than their doctors to reject aggressive treatments when fully informed of pros, cons and alternatives — information, one study suggests, that nearly half of patients say they don’t get. And although many doctors assume that people want to extend their lives, many do not. In a 1997 study in The Journal of the American Geriatrics Society, 30 percent of seriously ill people surveyed in a hospital said they would ‘rather die’ than live permanently in a nursing home. In a 2008 study in The Journal of the American College of Cardiology, 28 percent of patients with advanced heart failure said they would trade one day of excellent health for another two years in their current state.”

“It was a case study in what primary-care doctors have long bemoaned: that Medicare rewards doctors far better for doing procedures than for assessing whether they should be done at all. The incentives for overtreatment continue, said Dr. Ted Epperly, the board chairman of the American Academy of Family Physicians, because those who profit from them — specialists, hospitals, drug companies and the medical-device manufacturers — spend money lobbying Congress and the public to keep it that way.“

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Money Driven Medicine: A Review

February 4, 2010 in Reviews | 2 comments

I recently watched the movie Money Driven Medicine.  The movie documents many of the current ills of the American healthcare system.  The movie’s focus details how financial incentives drive both the quantity and quality of care.  Any health economist will of course say ‘duh’, but for those who believe that medicine is purely an altruistic endeavor, this may be an eye opening film.  Some of the problems they document include:

  • Doctors get paid to provide more services whether or not these services actually benefit the patient.
  • Doctors get paid for procedures.  Thus, procedure focused specialists get paid much more than primary care physicians.
  • Many doctors coming out of medical school that prefer to focus on primary care won’t do so because they are saddled with debt from their training.
  • According to the Dartmouth Atlas, regions that spend more on health care don’t have healthier residents.
  • America has the best specialized care, but likely not the best care overall.  The U.S. does not rank highly in the prevalence of preventable illness.
  • Hospitals don’t advertise to patients, but instead advertise to attract doctors.  When doctors have admitting privileges, they bring their well-insured customers as well.
  • Quality is suffering.  Despite this, politicians (especially Republicans) consistently claim that America has the best healthcare system in the world.  These politicians also receive significant funds from lobbyists who want to maintain the status quo.
  • The film claims that there is an inherent conflict between doctors (who are supposed to put patients first) and corporations (who are supposed to maximize profits).  In reality, however, doctors and corporations both care profits and both care about patient care.  Believing the corporations don’t care about patient health at all or that doctors don’t care about profits at all is naive.

One thing I found interesting, was that primary care doctors complained that they weren’t paid enough, but they also complained that they had short visits with patients.  Of course, these primary care docs choose to have shorter visits in order to make more money.

Another interesting point the film makes is that European use government-run insurance systems to  to ensure high quality care for all its citizens.  Then, this say person says the following:  ”After Medicare was passed in 1965, elderly patients were getting far more care than they were getting before then.  And that’s when our industrial medical complex I would say took off.”

Overall, if you read this blog regularly, you won’t find anything new in the film.  Further, the film does not offer many solutions to the problems it presents.  The one solution it offers is to have patients more involved in the decisionmaking process.  The true benefit of increase patient decisionmaking is dependent on the physician presenting the treatment choices honestly and in a thorough manner.  Financial incentives likely skew how the doctor will present these options.

Although it does not present any revolutionary material, if you want a film does a good job of explaining some of the many problems facing America’s healthcare system, Money Driven Medicine is worth a watch.

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Pittsburgh has more MRI Machines than Canada

February 11, 2008 in Medical Studies | 7 comments

There is an interesting article at Forbes describing that the housing boom is not the only bubble that may need to burst. Scans per thousand insured people went from 85 to 234 in the U.S. between 1999 and 2007. Author David Whelan describes what happened to one radiologist in Connecticut after Medicare and HMOs cut scan reimbursement rates this year:

Radiologist David Gruen used to spend millions of dollars to replace his General Electric MRI and CT scanners every three years. It was money well spent because the machines were always busy. But a year ago Medicare cut the price it pays for imaging, so Gruen gets paid 15% to 50% less for each order, depending on the type of scan. Health insurers got wise, too, and started imposing a 48-hour review on imaging orders. The doctor hired clerks to battle the HMOs, but his office volume was flat last year, down from 10% growth in prior years. Gruen was forced to take a 20% salary cut. Now his Norwalk, Conn. practice is holding off on buying new machines and stretching the old machines’ life span to five years. “We really do face a crisis,” he says.

In additional, General Electric’s (disclaimer: my former employer) medical division has seen declining profits for the first time in years.

Are Medicare and HMO cuts to imaging hurting patients? The New England Journal of Medicine thinks not. There are side-effects to these scans including increased levels of radiation exposure, especially dangerous for kids. As with any test, there is the probability of a false positive (i.e., that patient does not have the disease, but the test claims they do). “A study from the National Institutes of Health found that 17% of patients getting tested for cancer had at least one false positive chest X ray over a four-year period, and 8% of women had at least one false positive ultrasound for ovarian cancer.” These figures lend some more evidence that Americans may be Overtreated (see my post on Shannon Brownlee’s book of the same name).

Forbes also finds that “a doctor who owns his own machine is four times as likely to order a scan as a doctor who doesn’t.” Financial incentives do make a difference (for more information on how physician financial incentive affect surgery rates, see my working paper “Operating on Commission“).

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