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Recently the Obama Administration announced the time has arrived to appoint an Independent Payment Advisory Board as part of its duties under the Affordable Care Act. The legislation gives the advisory board authority to change Medicare reimbursements for doctors and determine new ways to deliver quality health care.

An article about the 15 member board in the Washington Post [Experts not lining up to sit on health-care cost-cutting panel, 1-29-13] describes the difficulty finding qualified people to serve on the board. The salary will be $165,300 to each member for full time work on the board, but many quotations from concerned officials explain the salary is too low to find qualified people. These officials worry that qualified people have better opportunities, but I can already tell them changes to Medicare reimbursements to doctors will not control costs or help American Health Care.

The flaws in health care go much deeper than reimbursements.

One of the flaws the advisory board cannot address with reimbursements comes because physician services operate as a separate component of the health care industry. Some of America’s physicians work as salaried employees. However, almost 67 percent of physicians practice medicine at over 306 thousand offices of physicians, not including 123 thousand offices of dentists, and still more offices of chiropractors, podiatrists, and a few others. These offices function as independent small businesses where physicians double as doctors and entrepreneurs in a physician services industry.

Combining business and medicine not only diverts physician time and energy away from medicine, it generates many small establishments that need a steady volume of patients to cover overhead expenses for office space, equipment and supplies, to minimize costs and to keep their business financially solvent.

A separate and decentralized physician services industry negotiates billions of transactions, first to provide necessary services, and then to collect payment from patient health care plans. Patients have no incentive, or ability, to be consumers when patient charges will be small co-pays or deductibles. Physician entrepreneurs avoid quoting prices when so many payments come from billed charges to a health plan rather than patients. Physicians decide necessary services and patients generally go along, but suspicion runs high that questionable tests and procedures might be ordered to maintain steady revenues into the firm.

The 306 thousand offices of physicians had employment of 2.3 million in 2011 with almost 820 thousand jobs in office and administrative support. The 820 thousand are more office and administrative support jobs than those reported for the entire hospital industry that has 5.7 million jobs; the 820 thousand are more the 4 times the office and administrative support jobs for the entire nursing and residential health care industry that has 3.1 million jobs.

Offices of physicians have 35 percent of staffing in office and administration support occupations, higher than any other sector or sub sector in health care. By comparison, outpatient care centers have 18.8 percent in office staff. With 2.3 million jobs spread among 306 thousand offices the average office has 7 or 8 staff including physicians. Out of 534.6 thousand physicians working in the health care industry 355 thousand work in offices of physicians suggesting the typical office has a doctor and 6 or 7 support staff. Staffing data implies a sub sector bloated with office staff, much of it underutilized.

Physicians services and all the other disparate sectors could be merged into regional or metropolitan health care providers like we organize school districts. Combining the offices of physicians and dentists with medical laboratories, imaging centers, blood banks, dialysis centers, urgent care clinics, hospitals and other services would eliminate billions of unnecessary transactions between bureaucratic offices of strategizing adversaries.

Regional health care helps squeeze bloated overhead office staff and allows health care providers to concentrate on combining necessary services to fully utilize equipment and personal to minimize costs. Regional health care with salaried physicians and staff available to discuss medical options with other salaried physicians and staff helps reduce the incentive to over prescribe tests or treatment and makes second and third opinions readily available. Regional health care has the potential to introduce a measure of choice like public school choice as long as residents can compare annual or monthly premiums, co-pays and deductibles with neighboring districts.

Solving America’s health care problems will require significant changes in health care delivery such as medical school tuition at public expense, converting doctors to salaried employment and expanding regional health care into HMO style delivery systems.

Maybe it’s the “low” salary that keeps qualified people away as the article suggests. But then again, if these people are really experts, they know how hard and how frustrating the job will be.

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Comment Preferences

  •  in 1984, billing took perhaps 5 hours per (3+ / 0-)
    Recommended by:
    Gooserock, Tinfoil Hat, Catte Nappe

    week per doc; by 2007 each doc took a dedicated billing clerk to handle his claims, the resubmissions and the appeals, an increase of 8x.  Remember in 1984 few offices had computers and billing was done by hand with ledger cards while by 2007 most offices had computerized billing

    •  Any Time I'm In My Dr's Office I Never See any (3+ / 0-)
      Recommended by:
      VClib, Catte Nappe, Flying Goat

      idle staff. I'm sure the admin staff is bloated compared to what's needed to support medical care, but they don't look overstaffed for all the insurance support work they're doing.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Mon Feb 04, 2013 at 10:21:39 AM PST

      [ Parent ]

      •  as many as 30% of claims are either lost, (0+ / 0-)

        misprocessed or denied incorrectly, requiring resubmission.  Some claims require hours of work as companies demand pt records and then argue if the record does not either support the level of care billed or else did not fit the company's cookbook on what dx is needed for which procedure    

  •  It should not take a brain surgeon to figure out (1+ / 0-)
    Recommended by:
    Flying Goat

    that when a major industrialized country cannot produce a Health Care Industry that can even come close to producing the results that  third world countries get  despite spending twice as much, that the system is rigged and the riggers and the regulators are in the same bed.

    Socialized Medicine

    It was the right solution in 1948

    It is the right solution now

    Remember -- Bankers just rob people

    Doctors rob them and kill them.

  •  Actually, reimbursement change is half the battle. (4+ / 0-)

    In fact, the current Medicare 'system' of reimbursement based (when you pull the string and trace it all the way back) on 'usual and customary fees' has a great deal to do with what's wrong with medicine in America.

    It has cast into concrete an absurd bias in favor of invasive procedures and aggressive billable interventions rather than ongoing health maintenance activity. This is because 1960s reimbursement patterns (lots of money for relatively infrequent surgical procedures, nickels & dimes for primary care office work) have been perpetuated from the origin of Medicare to this very day.

    This is the major driver behind over-utilization and the excessive number of invasive procedures in America compared to (say) France. It's behind the collapse of America's primary care base. It's behind the explosion in health care costs. Heck, it's even behind the absurd disparity in costs and procedure rates between Florida/Texas on one hand and Minnesota on the other.

    •  Very true, (0+ / 0-)

      So, given the above information (I didn't realize that 2/3 of doctors were still employed within independent offices rather than in larger health systems) - how do we go about changing that?

      Change reimbursement rates to increase reimbursement for health maintenance and reduce it for specialized procedures? Or do we somehow try to change the system in a larger way to try to eliminate the fee for service type of structure and create more structured umbrella type health care systems rather than a disjointed series of independent offices? Ultimately that would be likely to improve outcomes and reduce costs but I'm not sure how you go about doing it.

      •  Follow the Mayo model rather than fee for service. (0+ / 0-)

        The Minnesota/Texas disparity is the key. Atul Gawande wrote a fabulous article in the New Yorker that spelled this out a couple of years ago.

        In Texas, doctors are predominately fee for service private practitioners. Many of the outpatient surgical centers and MRI scanners are privately owned by physicians. Not surprisingly, the well-insured (including Medicare) get a lot of scans and procedures done. When you own the operating room (and profit thereby) it's easy to decide the patient needs surgery. So rates of surgery/scans and per capita costs of medical care are far above the national average. (Medicaid/uninsured patients get almost no care; but that's another story).

        In Minnesota by comparison a large fraction of physicians are capitated employees of the Mayo clinic system. They are paid a salary or a flat rate per patient, and hence are not given an incentive to over-treat. To the contrary, since reimbursement is global, there is a strong incentive to keep the patient healthy, rather than treating the consequences of ill health. And per capita medical costs are well below the national average.

        Go figure.

        •  I agree, (0+ / 0-)

          But, how do you get that to happen? How do we get the independent FFS MDs to join a capitated system.

          •  This is America. You can't tell Americans (0+ / 0-)

            what to do. Especially not letting the government telling you what to do. Plus many of these independent or small practice groups are making pots of money of the system.

            Getting them off of it would be hard and with some it won't happen. "You are taking away MY FREEDOM" will be their cry. It may be better for patients but most doctors pay a great deal of attention to their own compensation, their status and their feelings of satisfaction.

            While the Mayo Clinic model of all providers being employees whose compensation does not depend on services is highly desirable there was another lesson in the Gawande article.

            El Paso had the same demographics as the district in McAllen, Texas with the highest expenditures but McAllen district  was costing more than twice as much per patient per year with no noticeable difference in health outcomes as those in El Paso.  El Paso doctors were not part of a salaried group or Clinic.

            There is a culture of money in McAllen.

            I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

            by samddobermann on Tue Feb 05, 2013 at 03:16:12 AM PST

            [ Parent ]

            •  You are free to do whatever you want. However, (0+ / 0-)

              ...that does not mean you will get paid for it.

              Medicare is the 800 lb. gorilla in the reimbursement room. If Medicare determined that capitated, systems-based, primary care driven care was cheaper and more effective (which of course it is) than doctor-drive, physician owned, for-profit fee for service care, then Medicare could choose to start ramping down on payment for fee for service care, and drive everyone into the systems model.

              As a doctor you'd be free to charge whatever you wanted. But no one would be willing to pay that, and soon enough you'd be out of business.

  •  Its nearly impossible (4+ / 0-)
    Recommended by:
    FG, annecros, Flying Goat, WheninRome

    for patients to get information from health care providers about prices or to competitively shop in their local health care market.  The industry has fought for decades efforts to bring transparency to health care pricing.

    ACA is supposed to bring an end to the problem, though the rules have become riddled with holes.

    Let's hope they find people to fill the board seats and get started on cleaning up the system.

    Democratic Leaders must be very clear they stand with the working class of our country. Democrats must hold the line in demanding that deficit reduction is done fairly -- not on the backs of the elderly, the sick, children and the poor.

    by Betty Pinson on Mon Feb 04, 2013 at 10:25:09 AM PST

    •  Betty - the only places that are transparent (2+ / 0-)
      Recommended by:
      Flying Goat, nextstep

      are those portions of the medical industry that are private pay, such as cosmetic and vision. In the areas of cosmetic surgery and laser eye surgery the outcomes have improved and prices have DECLINED because the patients actually pay the bill. Compare that to the rest of healthcare where transparency is no where to be found.

      "let's talk about that"

      by VClib on Mon Feb 04, 2013 at 10:51:10 AM PST

      [ Parent ]

      •  Those areas are simple procedures (0+ / 0-)

        They are not complex such as when someone comes in with a stomach pain. Or a problem with urination or even an ear ache.

        They are also discretionary. You can put it off or shop around or decide not to do it after all. Basically both of those are in essence luxury items. So what lured doctors in for the really good bucks quickly led to a crowded field which led to price cutting for what was in effect widgets. Same procedure done over and over....

        That said some transparency should be fought for. But do you want the doctor spending time discussing the cost of this type of scan versus that one or why the more expensive MRI would be better than the cheaper CAT scan.

        Or you go to the ER with chest pain. Do you want to chat about costs or just want the doctors to do what they think is best until the situation is stabilized.

        I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

        by samddobermann on Tue Feb 05, 2013 at 03:32:29 AM PST

        [ Parent ]

  •  Isn't it too early to proclaim failure? As you (0+ / 0-)

    said, the board hasn't even been appointed. Unless you're convinced that nothing will happen no matter what. Btw, to some extent these mergers are coming. Economy of scale and all that. And I don't see how anyone can force the physicians to merge.

  •  Fred - my primary care physician just joined (2+ / 0-)
    Recommended by:
    Catte Nappe, Flying Goat

    a very large regional provider. After 20 years as an independent small business owner, and with a stellar reputation, my primary care physician has joined a big group. As systems and other administrative burdens became more time consuming being part of a bigger group was appealing so he could focus on medicine. The clincher for him was six weeks of paid vacation (he had none as a private business owner) and a 20% reduction in the hours per week he would be at the office.

    "let's talk about that"

    by VClib on Mon Feb 04, 2013 at 10:56:16 AM PST

    •  I have been reading (1+ / 0-)
      Recommended by:
      Mr Robert

      that these groups operate as big profit-making enterprises, pressuring the doctors to make decisions that may not be in the patient's interest for financial reasons, in much the same way that insurance companies have.

      We know that the fee-for-service system has provided incentives for doctors to over-treat, but I certainly don't want to see it replaced by a system that creates financial conflicts of interest between the doctors and patients. I find that very scary.

      We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

      by denise b on Mon Feb 04, 2013 at 02:10:07 PM PST

      [ Parent ]

      •  denise - there are really only two models (1+ / 0-)
        Recommended by:
        nextstep

        In a private pay system there are only two models - fee for service or capitation. Under fee for service physicians make more if they perform more procedures. In a capitation system the provider group makes more money by performing fewer services or keeping you healthier.  

        "let's talk about that"

        by VClib on Mon Feb 04, 2013 at 04:38:15 PM PST

        [ Parent ]

        •  Wrong. There are other models (0+ / 0-)

          Mayo Clinic is not a capitation system; the operate for Medicare patients the same way all other doctors do. The same with all the other really great Medical Centers like Cleveland Clinic, Intermountain in UT and others.

          And Denise: too late —

          I certainly don't want to see it replaced by a system that creates financial conflicts of interest between the doctors and patients. I find that very scary.
          You already have that situation. Doctors (mainly specialists) are paid for what the do to you. If they make you have some totally unneeded blood tests or scans they get more money. If they do that PSA test they know it will throw enough positives (many false positives) that they can get rich by the then "required" procedures even if just for follow up. In fact it is sold to doctors for use in their offices as a money maker.

          Your primary care doctor may be ok but really, how would you know?

          I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

          by samddobermann on Tue Feb 05, 2013 at 03:44:54 AM PST

          [ Parent ]

  •  Would banning prescription drug advertising lower (1+ / 0-)
    Recommended by:
    WheninRome

    health care costs?

    Reason I ask is that I see an increasing number of commercials that claim that prescription testosterone is a fountain of youth for men starting at age 35. How many men are seeing their doctor about the following symptoms of "low-T":
    - lack of energy
    - being sad and/or grumpy
    - falling asleep after dinner
    - deteriorating ability to play sports
    - decreased enjoyment of life
    and asking for - or demanding - a prescription for testosterone?

    No doubt, testosterone levels decrease in both men and women over the years. It's called "aging," but the commercials make it sound like a disorder - and there's a pill for it!

    How about we prohibit advertising of prescription drugs on TV and radio and let doctors decide what's medically necessary? Wouldn't health care costs go down?

    I'm a Democrat - I believe that government has a positive role to play in the lives of ordinary people.

    by 1BQ on Mon Feb 04, 2013 at 11:03:22 AM PST

    •  Sure it would be better but this (0+ / 0-)

      is America. Freedom of speech and all that.

      And don't totally trust your doctors. Look up drugs you are prescribed on your own. Doctors over prescribe for a lot of reasons.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Tue Feb 05, 2013 at 03:52:38 AM PST

      [ Parent ]

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