Paying Doctors

Apropos of our current podcast series on health care, The Washington Monthly currently has health care author Shannon Brownlee guest-blogging. Today she talks about how doctors are paid, and suggests we replace the current reimbursement model:

All of which is just one more reason why fee-for-service has got to go. It’s a broken payment system, and it simply encourages bad quality care. Doctors need to be put on salaries.

Alan Sager, at Boston University, suggests that we take the portion of our national health care bill that already goes toward physician reimbursement — about $500 billion — and say to doctors, in effect, you can keep the money, but you have to take it in the form of a salary. Surgeons would no longer be paid separately for each surgery, and primary care physicians would no longer get a separate fee for each office visit.

We also could institute a form of merit pay, as the Prof has suggested on the show: doctors are paid based on improvements to the health of their patients, not the number of expensive procedures they order.

Doctors in the U.S. are paid a lot — almost twice what their counterparts in Europe make. And this isn’t driven primarily by malpractice fees. Read this WaPo op-ed, based on this thorough McKinsey study (free registration required), and you’ll see that doctor salaries, hospital costs, and drug costs are the three main factors driving America’s inflated health care costs.

And let me be clear: I don’t mind paying them that much, it’s just the incentives are all screwed up.