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Monday, November 2, 2009

What does the fee actually cover?

Yes I am going to bash the payment system yet again. I can't help it. The more I think about this the more that I realize that undesirable outcomes can be directly attributable to how doctors are paid.

When I see a patient, I am paid for the specific encounter, that is the actual face to face time I spend with the patient. However, there is a series of post visit obligations which which I encumber as well. There are four characteristics of these post visit obligations that are worth noting. First, the actual obligations are poorly defined. Second these obligations are essentially uncompensated. Third, delegation of these obligations, even to those with little or no training generally has little downside to physicians. Lastly, the extent of these post visit obligations can be managed most efficiently by selecting a subspecialty whose workflow generates few and well defined post encounter obligations.

Historically the practice of most specialties and subspecialties of medicine generated sufficient revenues from the encounter to support the activities which were not directly compensated. However, as the margins decreased, physicians responded by focusing more and more on activities that generated direct payments. For activities which generated few downstream unfunded obligations, the higher throughput created few problems. When you were done with the face to face encounter your were done. For specialties like primary care, each encounter predictably created an additional post encounter unfunded obligation. Ramping up billable activity in this context created an unsustainable workload to support non-compensated activities. One approach was simply to stint on what is not paid for. For the most part this approach had positive financial outcomes at the cost of practicing medicine in such a way that was more in the physician's best interest than the patients.

The current approach to the presence of perverse incentives is to mount a campaign which aims to influence physician practice behavior by appealing to their professionalism. Such an approach, appealing to physician conscience based upon the assumption that physicians can be durably influenced to respond to incentives other than those directed at self interest, may sound appealing. We should feel obligated to do what is right if we were correctly socialized. However there is little in history to suggest that it is at all functional. It is more likely an exercise in wishful thinking. The product of lecturing medical student on professionalism will quickly wither in the face of real life economics in a world which financially punishes those who model the desired but not rewarded behavior. Bad incentives trump good intentions in the long run.

Humans are driven by self interest. To deny this is a non-starter as an entry point into any social problem solving activity. In creating a system in which lack of rewards for specific activities is baked in, we basically guarantee these activities will go away. We lament that physicians fail to engage in activities where they receive no compensation, but this should come as no surprise. In order to treat a patient with a given disease, you need a correct diagnosis. To fix a pathological health care system, we also need the correct diagnosis. What is broke? It is the payment system stupid!

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