Reforming Not Only How We Pay Physicians, but How Much We Pay Them

Any sensible plan to reform the U.S. health care system must reform the way we pay physicians. Currently, we reward doctors for doing more “stuff” for their patients — for performing tests and procedures whether or not these interventions are necessary. Because of this strange reimbursement system, many primary care physicians receive more money performing a five-minute skin biopsy than they do conducting an hour-long history and physical.
Yet as important as it is to reform how we pay physicians, it is even more important for us to have an honest national discussion about how much we pay physicians. In the U.S., the median anesthesiologist makes more than $350,000 per year. That doesn’t mean these people feel overpaid, however, for on the other end of the operating table their neurosurgeon colleagues make more than $600,000 per year, while down the street in the outpatient clinic, their dermatology colleagues pull in close to $400,000 per year. According to data collected by the American Medical Group Association, over two dozen medical specialties earn a median income of more than $300,000 per year.
In part, these physicians make lots of money because they perform lots of procedures. That means that if we reform the way we pay doctors for procedures, we might chip away at these astronomical incomes. But if we plan to reform our payment system, to discourage doctors from performing questionable procedures, we still need to decide how much money we want doctors to make. Obama has spoken fondly of the Mayo model of health care, in which physicians receive salaries, thereby reducing their incentive to perform unnecessary procedures. But Obama hasn’t said what physicians’ salaries ought to be, should the government make efforts to encourage a salaried medical system.
Health care reform ought to be forcing us to take a hard look at just how wealthy U.S. physicians have become in the last few decades, far wealthier in fact in their colleagues in other developed countries. Yet this topic of doctors’ incomes has been largely ignored in the public debate that has surrounded health care reform.
Doctors need to take the lead in making this issue public, and developing a solution to the problem. Politicians certainly aren’t going to tackle the issue of physician salaries. Republicans have committed themselves, sadly, to fighting whatever health care plan the Democrats put together, in hopes of weakening the Obama administration. And the Democrats are too afraid of medical organizations, like the AMA, to honestly address the issue of physician incomes.
Leading medical organizations should work with Congress to broker a deal. Perhaps a 10% cut in physician income (with smaller cuts, perhaps, for specialties that bring in less than $300,000 per year), in exchange for rigorous reform of medical malpractice law.
Rising health care costs threaten U.S. industry, which cannot compete with foreign companies that face lower costs; rising costs also threaten federal and state budgets, which are buckling under the strain of Medicare and Medicaid expenditures. Doctors need to do their part to lower health-care costs, by giving back some of their very generous income. And politicians need to work more closely with doctors, to make such a loss of income worth their while.
Peter Ubel is a primary care physician at the University of Michigan, who does not make even close to $300,000 per year, but who’d gladly take a pay cut to help move this country toward a more sensible health care system. He is also author of Free Market Madness: Why Economics is at Odds with Human Nature — and Why it Matters. Read more about this overpaid doctor at https://www.peterubel.com/ .
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