Paying doctors to be more than clinicians

When I think of American physicians, I'm often reminded of an oddball scene from the film "The Right Stuff." President Eisenhower, having been presented with jugglers, race car drivers and people shot out of cannons as potential astronaut candidates, testily declares he wants to use test pilots.

"Test pilots! No! You can't work with them!" shouts an exasperated voice off camera. Eisenhower is undeterred, and as in both the film and Tom Wolfe's book, the astronauts leveraged the situation to their advantage.

Doctors work extraordinarily hard and are dedicated to the practice of medicine, but they also hold virtually all of the cards in how the healthcare system will fare over the next few decades. They seem as fiercely dedicated to ensuring the flow of healthcare dollars and authority does not fundamentally change as they are to their work.

From an anecdotal standpoint the numbers don't look promising: The country spends billions of dollars more on drugs than it did 20 years ago in part due to the innumerable pizza lunches held in physician offices on the dime of pharmaceutical companies and the coupon programs on the dime of insurers and policyholders. Billions in additional co-payments and deductibles are paid by patients every year because of testing ordered by physicians in borderline situations.

And, as the Wall Street Journal recently reported, orthopedic surgeons are performing hundreds of spinal fusion procedures a year, even though it's a money-loser for hospitals and patient outcomes are in question. It's the type of scenario that can make any hospital CFO shiver, particularly since a longtime court order stemming from physician litigation prohibits connecting specific doctors to the volume of these procedures.

Meanwhile, the American Medical Association's Congressional lobbying has all but bottled up the implementation of the sustainable growth rate formula for Medicare payments for the foreseeable future.

The solutions are limited. Most doctors work on a contract basis and their profession is always short of hands. As a result, they can't be fired or shut out for financial inefficiency. It seems that like the astronauts--who parlayed their position into lucrative contracts with LIFE magazine--the only feasible way out is to pay them more money.

Indeed, physician incentive programs are all the rage these days. Co-management programs, where doctors are paid to manage a specific hospital program, are gaining in traction. And some payers are dedicating a significant amount of money toward performance improvement. SCAN Health Plan, a small Medicare Advantage plan, set aside $5 million to help its medical groups in California emulate the five-star rating system CMS recently put into place for providers. That doesn't sound like a lot of money, but it's nearly $40 per SCAN enrollee.

"We've gotten a lot of traction from our (medical) groups so far," Timothy Schwab, SCAN's chief medical officer, told FierceHealthFinance. "They're interested not so much in the dollars, but in the way the Medicare program will be paying Medicare Advantage plans to deliver care in the future."

However, if such incentives are truly to work, physicians are going to also have to be paid to take the financial concerns of their patients under consideration. Paul Krugman of the New York Times recently expressed horror at the notion that patients are consumers, but given the thousands of dollars that come out of their own pockets on average to pay for coverage each year, that is an entirely correct term. Yet, most physicians still provide treatment orders to their patients without considering the cost burden to them, and dismiss any notion they should. That is anathema to how every other financial transaction in this country is conducted.

Therefore, that means physicians should automatically inform their patients of less expensive generic options whenever they fill a prescription, understanding that they should be far more worried about their patients' ability to pay for the medicine--and thereby comply with medication regimens--than making big pharma happy. It means weighing the costs of ordering ultrasounds and biopsies whenever a patient has a borderline breast exam result. Another office visit and exam 45 days later costs a fraction of undertaking such a procedure, with similar outcomes.

Eventually, these incentive payment and ratings systems should compile and report the average out-of-pocket cost for each doctor to treat each patient. Publication of such data would drive more patients to cost-efficient care than just about any other proposal currently on the table, and would no doubt get the rest of the financially inefficient physicians quickly in line.

Whether such things happen remains to be seen. Many physicians are still grumbling about ratings systems: Illustrative of the fact that in many ways, they haven't even been fitted for their proverbial space suits. That means we're still a long way from determining if the independent spirit and supreme confidence that grips much of the medical community is the same thing as the "Right Stuff"--or just stuff that's getting in the way. - Ron