In the previous diary (Part 8) we examined the efficiency model from a free-markert perspective, noting that this model assumes that competiton will force price declines that benefit consumers, no matter what they are buying. And since a decline in the purchase price of any item leaves consumers with money to spend on other things, competition leads to greater economic growth as more items are bought and sold.
How does this model apply to the delivery and purchase of health care? Conservatives will tell you that this is exactly what will happen when health care is completely driven by free market forces. Liberals will tell you that health care is a service, not a commodity, so the free-market model doesn't apply at all. Let's examine some of the evidence.
Most consumers who enter the health care market first come into contact with a generalist, who used be known as a GP or General Practitioner, but is now called a Primary Care or Family Practice Physician, with several sub-specialties, chief among them being Pediatricians. On an annual basis, patients visit a generalist 4 or 5 times more often than they visit a specialist; i.e., surgeon, internist, etc. The cost of visiting a generalist is also considerbly lower than visiting a specialist, upwards of 20% less cost per office visit. For these reasons, most health care policy experts believe that the key to more efficient health care is an expansion in the number of primary care physicians.
The biggest single difference in terms of efficiency is found in the salaries of generalists versus specialists. You may recall that in an earlier diary I noted that the main driver of health care costs was salaries for everyone involved in the delivery of health care. I did not list the salaries of the various physician categories, but here they are now, courtesy of Becker's Hospital Review:
Cardiologists $422,000
Family Medicine $208,000
OBY-GYN $302,000
Pediatricians: $213,000
Orthopedic Surgeons $500,000
Get it? The specialists make 50 to 150 percent more than the generalists. Meanwhile, it's the generalists who are treating all the patients. And it's the total revenue of the generalists that comprises the lion's share of the overall revenue for health care providers, since as we said above, the generalists see 4 to 5 timesw as many patients as the specialists. So, as Bill Clintion said at the DNC, do the arithmetic.
But let's say you are the owner of a for-profit health center and you're looking at these numbers. You want to find a way to deliver the product more efficiently which means giving the co sumer a price break, but you don't want to cut your margin. How do ou pull off that one?
Enter the PA, otherwise known as the Physician's Assistant. The PA is a peculirly American phnomenon and is clearly a response to the effort by the health care industry to become more efficient. PAs are licensed to deliver health care services under the watchfulness of a licensed MD, but in most clinical situations they operate independent of any direct physician supervision. Although many PAs end up in specialty practices, more than 30,000 are providing primary care.
Then there'w also the Nurse Practitioner, another American health care innovation. Like PAs, NPs are also basically absorbing the overflow from the 250,000 primary care physicians. There are currently 55,000 NPs delivering primary care, and their average salary is about the same as the 85K racked up by PAs. Incidentally, most of the data for this diary comes from the Agency for Healthcare Research and Quality, a division of HHS. Check out the AHSQ website.
But here's the bottom line: If you run a primary care practice the PA or the NP gets paid less than half what the MD gets paid. Yet they do basically the same thing. How could anyone chasing the buck in the health care industry pass this one up? Isn't that the point of the free market? Find a way to deliver the same product at a more competitive price?
But is it the same product? With all due respect to the many talented and dedicated PAs and NPs who usually believe that their skills and experience are equal to that of a physician, the fact is that this is simply not the case. PAs and NPs usually earn a Master's Degree and pass a certification exam. There are no additional education or work experience requirements, although many NPs are moving towards earning a Doctorate in Nursing. On the other hand, primary care physicians do four years of medical school followed by a three-year residency at a teaching hospital, and then must pass a certification exam in order to practice their specialty. In other words, the primary care MD has seven years of medical education and clinical training; the PA or the NP has two years of additional education that may or may not include clinical experience.
Of course the advocates of replacing MDs with NPs or PAs will tell you that 95% of the people who are seen by any primary care provider don't really need the skills and experience of a genuine MD because the nature of their problems can be just as readily addressed by a PA or a NP. And this may be true, but try and convince the patient - the consumer - that he or she is in just as capable hands when the door to the examining room opens up and in walks a Nurse Practitioner instead of the expected MD.
So the real challenge for the promoters of free-market health care turns out not to be figuring out a way to make the delivery of health care more competitive by hiring cheaper help. The real challenge is convincing the consumer - the patient - that the NP or the PA can meet the expectations of care that the patient has as regards consulting with the higher-priced MD. Because as we will show in diaries to come, the issue is not simply that the demand for health care is outpacing the supply. The real issue is that the demand is being driven by the consumer's absolute conviction that whatever the problem, whatever the symptom, whatever the ache or the pain, it's only a physician who has the knowledge and experience to make the patient well. So the whole issue of health care gets back to my conclusion of Part 4, namely, understanding the health care consumers; who they are, what they want, how they behave in the health care market. That will be the subject of our next several diaries.