Saturday, July 25, 2009


One of the stated goals of Heath Care Reform is reducing costs. There are many areas where this can occur including efficiency of operation. However, more likely this will be at the expense of those who provide the care and the institutions responsible.

I hope that I can address this issue in the next few entries. I am going to begin with an over view of physicians.

Even though I am retired and have been for over 20 years. I still have a deep interest in how physicians work and how they are compensated. Up until the 70s almost 100% of physician's practiced on a fee-for-service basis. With the development of clinics, franchised ER services and highly specialized in hospital practices such as critical/ intensive care etc, hospitals developed contractual arrangements with doctors. Some were straight salary, others allowed physicians to earn on a fee for service basis up to a certain level beyond which all extra money went to the institution. Obviously, the latter reduced incentive to do more then needed.

Still, most physicians in private practice were reimbursed by fee-for-service. Most were very ethical in their relationship to patients. The services they provide were simple what was needed in the patients care. Often there were unnecessary tests and procedures simply to protect the physician in the litigious society.

Unfortunately, there were so some that had "all the moneymakers" and use them for financial advantage. This minority also were able to find ways to game the system.

Physician practices mostly consisted of a single person or at most a two man group.However larger groups began to develop. In most groups In these groups reimbursement was based on productivity a practice that is common in the legal profession. A few groups like the Mayo Clinic, for example did reimburse their physicians with a salary commensurate with the income level. common to that specialty. The attraction to joint such groups was the benefit of security and retirement plans. There was also the freedom from financial worry and the ability to concentrate on the patient's care.

The change from "private fee for service practice" was accelerated by the emergence of walk-in clinics and the Emergency Room staffing which was commonly franchised to a group with salaried doctors. A new breed of doctors, many of foreign training, was emerging. They relished the definitive hours of work and the freedom to go home without a worry in the world. Gradually hospitals increased the number of staff physicians on salary in even the common specialties..

A recent report suggested that nowadays nearly 40% of physicians today are salary. The day of the individual or small private practice is disappearing. Therefore, I am convinced
that any Health Care program that comes out of Washington requiring set reimbursements for all doctors receiving federal funds will not be resisted by the Medical profession.

The problem will depend on the reimbursement. If it is too low the incentive for highly qualified individuals to enter the medical profession will be gone. There will be other fields that offer a greater financial inducement to these individuals and ultimately the public will suffer. This has already taken place in the past few decades where there has been a brain drain into the space and electronics fields as well as facets of the financial industry.

The danger is real. Under Medicare there is already exists a disproportionate difference between the fees allowed a primary care [family] physician and a specialist. The result is a tendency for medical school graduates to train for specific specialties Unless the family doctor or group can have a lifestyle equal to that of the specialist there is a danger in any new federal program to accelerated is this trend.

Any program that Washington it produces should make sure that our brightest youngsters are not discourage from going into medicine . My great fear is that the economies desired will be at the expense of all medical personnel, while monies will be wasted in bureaucratic personnel.

This issue of medical reimbursement is one of the prime stumbling blocks slowing the creation of a workable Health Care plan.

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