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Doctors Suggest Cutting Their Own Pay To Save Healthcare

Aug 18, 2007
In the midst of an exploding national healthcare crisis, there's much talk about slashing drug prices and cutting health insurance company profits. While these are valid debates, many physicians are actually offering an equally controversial solution: cut their pay.

Hearing a physician suggest a pay cut for him or herself is a bit like witnessing a politician opting out of a kickback. Sure, it happens but most of us will never see it, and tend to believe such a thing a dangling, idealistic myth too elusive to pull down into reality. Many healthcare economists and physicians, however, are suggesting just that. Dr. Alan Garber, a practicing internist and director of the Center For Health Policy at Stanford University, thinks offering medical doctors a lower, fixed salary, accompanied by bonuses for healthy patients, may be a crucial step to working out of the crisis.

"The problem is the way (physicians) earn their money. They have to do stuff. They have to do procedures," said Dr. Peter Bach, pulmonary physician at Memorial Sloan-Kettering Cancer Center in New York City and former senior advisor to Medicare and Medicaid. In other words, doctors are paid by the procedure, not by whether the procedures go well, if their patients actually need them, or if their health improves.

In contrast, doctors are not financially rewarded for routine exams or "cognitive services," such as researching different treatment options, or giving patients advice on how to improve their health without medical visits, tests, or prescription drugs. This, despite the fact that healthy eating, exercise, and the end of tobacco use would "significantly" cut cancer deaths, according to the American Cancer Society -- up to 66%. Primary care physicians and pediatricians provide more of this routine care and rarely perform complicated procedures, so, in general, they're paid a lot less.

The pay-by-procedure method, which offers little financial incentive to enter family practices or pediatrics, is fostering a shortage of qualified physicians. Twenty percent of people in the U.S. have "inadequate or no access to primary care physicians" because of this shortage, according to reports released in March. In 2004, 75% of counties in Texas lacked an adequate number of primary care physicians to meet their needs. Twenty-four counties didn't have one at all. For cities like Dallas, Houston, and Austin -- which handle an almost unimaginable caseload and are already experiencing deficiencies in the number of most types of healthcare providers -- any further deficiencies could cause serious problems.

And while the fact that prescription drugs in this country cost patients between thirty and fifty percent more than in Europe is an issue warranting attention, the equally important fact that doctors' pay is also dramatically inflating healthcare costs is rarely discussed. American physicians make between two and three times more than their counterparts in other industrialized nations. The average doctor here earns between $200,000 and $300,00 a year. Primary care physicians earn less -- usually between $125,000 and $200,000 annually -- and specialists earn more. Making $400,000 a year and above is not unheard of for radiologists and other doctors with additional years of training.

No one is debating the respect doctors should be given for their years of intensive education and, in most cases, enormous talent. Medical schools run around $30,000 a year now, putting most graduating medical students in considerable debt. They should be compensated, and allowed to earn what is necessary to lead comfortable lives and clear their credit reports. But European doctors only earned $60,000 to $120,000 a year in 2002, according to a survey sponsored by the British government. This, in turn, means much lower medical costs are transferred to the public.

Europeans pay less, overall, for their healthcare partly because they pay their doctors a comfortable, but far lower, salary. The discrepancy between nurses' and doctors' pay, as well, is simply unacceptable to many when nurses often work just as many hours, and provide just as intensive -- albeit different -- care as physicians.

The idea of paying doctors a fixed salary, possibly with bonuses for healthy patients, is not without its problems, however. Such a system may encourage physicians to only see those patients they believe can be easily treated, for example. It may also do the opposite of encouraging rigorous and thorough testing, as doctors would theoretically be paid the same for twenty minutes of evaluation as for twenty hours.

The additional pressure to meet the demanding needs of a growing population during a time when physicians are in short supply may further increase this tendency. It's clear, however, that something has to be done. As usual, most of the solutions will be hashed out in Congress and through the media, but it's up to those of us actually receiving the care that may, or may not, save our lives to push for those decisions.

Being aware of issues affecting the accessibility and quality of healthcare is an important part of minding your health. How you take care of yourself will certainly affect you as you age, and eventually your wallet, as well.
About the Author
Pat Carpenter writes for Precedent Insurance Company. Precedent puts a new spin on health insurance. Learn more at Precedent.com
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