Last week, after a workout, a physician pulled me aside and asked “is there another profession like medicine where the provider of the service has no control about what they’re paid for what they do?”
And over the weekend, in a meeting with several physicians, I was asked if I was aware of another profession as highly regulated as medicine.
These questions are legitimate but not so easily answered. It’s hard to think of another profession in our economy like medicine. The academic training is more rigorous than any other. It attracts our best and brightest. It’s arguably our highest profile profession: for six decades, we’ve watched Marcus Welby, Patch Adams, Ben Casey, Doogie Howser, Dr. Quinn Medicine Woman, House and observed the drama in Grey’s Anatomy, Nip Tuck, Northern Exposure, ER, Chicago Hope, St. Elsewhere and others. Everyone knows one or more physicians, some based on frequent use and others on word of mouth. And everyone has an impression of the profession, most positive but some with caveats.
Physicians are trusted and well compensated—that hasn’t changed for years nor is it likely to change any time soon. But they’re not happy. As I get questions like these two, here’s what I am hearing from physicians ranging from the freshly minted to seasoned pro’s: they’re wondering if anyone’s listening.
I signed on to medicine to help my patients. But outsiders are interfering and making it hard to practice. Physicians believe regulators are forcing changes that harm patient care. They think insurers are solely concerned about reducing cost and care little about anything else. They think hospitals are competing with their ability to make a living and likely to protect their own business interests at their expense. They don’t like to be called providers; they’re physicians. And they don’t like references to enrollees, members, consumers, or policyholders: they’re patients, and they’re MY patients and no one else.
I do the best I can. I am willing to change, but with tools, not rules. The combination of increased administrative hassles and regulatory “crap” is driving physicians crazy. EMRs, new ICD-10 codes, 2,167 new quality metrics, limits on what they can own and how they practice and report cards about their performance are forcing physicians to rethink their career choice. Almost half are burned out, and a fourth are depressed.
Fixes to the health system are impossible unless physicians drive the needed repairs. Physicians think politicians in DC and in state legislatures are clueless about healthcare. Their peers who run for elective office don’t get a pass either: physicians believe these quickly forget what it was like to practice and become politicians. Ditto the “suits”—administrators and bean counters across the system who cost too much and deliver too little. There’s consensus among physicians that if given the opportunity, they could solve the problems facing the health system by spending less money on regulations and administration and more on patient care they alone deem necessary.
It’s about more than money but money’s important. Physicians are paid well but the majority think they’re underpaid. The United States pays more than twice as much per person for health care as other wealthy countries (Melissa Etehad and Kyle Kim “The U.S. spends more on healthcare than any other country — but not with better health outcomes” Los Angeles Times July 18, 2017). We tend to blame the high prices on things like drugs and medical equipment, in part because the price tag for many life-saving drugs is less than half the U.S. price in Canada or Europe. But an unavoidable part of the high cost of U.S. health care is how much we pay doctors — twice as much on average as physicians in other wealthy countries. Because our doctors are paid, on average, more than $250,000 a year (even after malpractice insurance and other expenses), and more than 900,000 doctors in the country, that means we pay an extra $100 billion a year in doctor salaries. That works out to more than $700 per U.S. household per year. We can think of this as a kind of doctors’ tax..” (Dean Baker “The problem of doctors’ salaries” Politico November 7, 2017).
So, physicians are asking tough questions but, to be fair, their voice is muted by self-inflicted wounds. Physicians’ primary loyalty is to their specialty or subspecialty society: there is no single voice that speaks for the entire profession. Case in point: Membership among practicing physicians in the American Medical Association (AMA) is less than half the membership in specialty societies. Also, surveys show physicians are prone to attitudes and behaviors that patients find disconcerting. Simple things, like shorter waiting times for scheduled appointments, making lab results and appointment scheduling accessible via online tools, corresponding to a patient’s queries are still the exception, not the rule, in medicine. And price transparency looms as a major challenge to physicians: every clinician will need to answer the questions “what are my treatment options and how much will they cost me?” For sure, a new breed of players like CVS-Aetna and others sees huge opportunity to address patient (consumer) concerns like these offering more value at a lower cost. The voice of the profession is growing louder. It has legitimate complaints and wonder if anyone’s listening.
P.S. The big news today will be the CVS acquisition of Aetna for $69 billion ($207/share)—a deal expected to close in the second half of 2018. Speculation about what the deal means runs the gamut from the alignment of the pharmacy benefits management sector with major insurers (Optum with Catamaran, Anthem with its own PBM start-up, and others) to a re-orientation of the entire industry toward a consumer-facing retail marketplace in response to Amazon. “The CVS-Aetna deal would be just another of the many recent mergers across business lines in health care. Insurers are buying or partnering with health care providers. Health systems are offering insurance. Hospitals are employing physicians. Even Amazon is jumping into the pharmacy business in some states. This may be part of the motivation for CVS to buy Aetna — defensive jockeying to maintain access to a large customer base that might otherwise begin to fill drug prescriptions online.” (Austin Frakt “Why a CVS-Aetna Merger Could Benefit Consumers” New York Times December 3, 2017). My take: Vertical integration deals like this are certain to face intense regulatory scrutiny so it will be several months before the impact is felt. Both companies claim their combination spells a new future for healthcare that’s community-based, consumer friendly and more affordable. At a minimum, it means every incumbent organization in healthcare needs to refresh their strategies to model its possible impact. And for all, it means the competitive landscape in healthcare will be more complicated, if not challenging.
Physician supply: Based on data from the Federation of State Medical Boards, at the end of 2016, there were 953,695 actively licensed allopathic and osteopathic physicians serving the U.S. population of 323 million people–a net increase of 12% from the 2010 census. From 2010 to 2016, the actively licensed U.S. physician-to-population ratio increased from 277 physicians per 100,000-population to 295 physicians per 100,000-population. “A Census of Actively Licensed Physicians in the United States, 2016” Aaron Young, PhD; Humayun J. Chaudhry, DO, MS; Xiaomei Pei, PhD; Katie Arnhart, PhD; Michael Dugan, MBA; and Gregory B. Snyder, MD Journal of Medical Regulation (2017) Volume 103, No.2.
Supply of Physician Assistants/Nurse Practitioners: From 2010 to 2016, the number of certified physician assistants (PAs) increased 44%,7 and is expected to increase by 30% between 2014 and 2024 to 244,000. U.S. Department of Labor: Bureau of Labor Statistics, “Occupational Outlook Handbook, 2016-17, Physician Assistants,” 2015; Auerbach DI. “Will the NP Workforce Grow in the Future? New Forecasts and Implications for Healthcare Delivery,” Med Care, Vol. 50, No. 7: 606-610, 2012.
Medical school enrollment: United States first-year medical school enrollment increased 7.8% to 88,304 in 2016 from 81,934 medical students in 2012 Association of American Medical Colleges, “Table B-1.2: Total Enrollment by U.S. Medical School and Sex, 20122013 through 2016-2017,” 2016.
Degrees and Certification: The 953,695 actively licensed physicians in 2016 graduated from 2,023 medical schools in 167 countries from around the world. 76% graduated from a U.S.-based programs; 24% were international medical graduates (IMGs)—virtually unchanged since 2010. 23% of IMGs were graduates from India, followed by 17% from the Caribbean Islands. 91.3% graduated as M.D.s (Doctors of Medicine), down from 92.9% in 2010. 8.5% as D.O.’s (Doctors of Osteopathic Medicine), up from 6.9% in 2010. In 2016, 79% are board certified in their particular specialty today vs. 75% in 2010. Association of American Medical Colleges, “Table B-2.2: Total Graduates by U.S. Medical School and Sex, 2011-2012 through 2015-2016.”
Demography: 23.8% of practitioners are under 40 years of age vs. 23.6% in 2010; 29.3% are over 60 vs. 25.2% in 2010. The male-female split in 2016 is 65%-35% vs. 69%-31% in 2010. 2016 FSMB Census of Licensed Physicians.
Physician income: Physician income has increased 3% annually since 2011, from a median of $206K to $294K (after malpractice, includes of salary, bonuses, but not outside income from ownership interests). Median income ($317K) for specialists is 46% higher than primary care ($206K) in 2017—unchanged since 2015. Three procedural specialties earned the most in 2017: orthopedics ($489,000), plastic surgery ($440,000), and cardiology ($410,000). Two primary care specialties were at the bottom: pediatrics ($202,000) and family medicine ($209,000). After endocrinology ($220,000), internal medicine is fourth lowest ($225,000). Seven specialties saw double-digit growth in 2017 vs. 2016: plastic surgery (24%), allergy & immunology (15%), otolaryngology (13%), ophthalmology (12%), pulmonology (11%), orthopedics (10%), and pathology (10%). Some exceptions to the increases were cardiology and oncology, which each saw no pay growth due to reimbursement changes by the Centers for Medicare & Medicaid Services (CMS). Internal medicine, pediatrics and family medicine had the same income from the prior year– a reversal from the 2016 report when internists were up 12%, pediatricians up 7%, and family physicians (FPs) up 6%. In 2017, median income for male physicians was 16% above females, a decrease from 19% in 2012. Physicians in private practice make 28% slightly more than employed practitioners—unchanged from 2016, and highest-earning states in 2017 were North Dakota ($361,000 median), South Dakota ($354,000 median), Nebraska ($346,000 median), New Hampshire ($337,000 median), and Alaska ($259,000 median)” Medscape 7th Annual Physician Compensation Report based on analysis of data from 400,000 in 27 major specialties; “Doctors’ Incomes Are on the Rise — Is Yours? Medscape Physician” April 4, 2017 Compensation Report 2017.
Physician attitude about their compensation: “… 53% of family physicians, 52% of pediatricians, and 49% of internists felt that they were fairly compensated…. Satisfaction rates for orthopedists (47%) and plastic surgeons (52%) were about the same, even though they are seeing double-digit increases this year and earn much more money than PCPs….those most likely to feel fairly compensated are emergency physicians (68%), dermatologists (65%), and psychiatrists (64%), while physicians in the least-likely-to-be-satisfied category were nephrologists (41%), endocrinologists (44%), and urologists (47%)….For physicians unsatisfied with their compensation, Medscape asked how much they felt they deserved to earn. “Fully 79% of primary care physicians felt that they should be earning from 11% to 50% more than they currently do, with 5% believing that they should be earning double their income. Among specialists, 74% feel that they should be earning from 11% to 50% more, and 7% believe that their income should be more than twice as much.” Page L.” Employed Doctors Report 2016: Who’s happier – employed or self-employed doctors?” Medscape Business of Medicine. June 15, 2016.
Medical Society Membership: According the 2016 Survey of America’s Physicians “younger physicians appear to join the AMA and AOA in greater numbers than do older physicians. Nevertheless, the AMA is not the monolithic organization it used to be. In the early 1950s, about 75% of physicians were members of the AMA. Now the number is much smaller, underscoring the fact that today’s physicians are organizationally fragmented.” (2016 Survey of America’s Physicians, The Physicians Foundation).
Physician Burnout: Across all specialties, the incidence of burnout impacts 40-55% of all physicians. Root causes are too many bureaucratic tasks, spending too many hours at work, and increasing computerization in the practice. Doctors are 15 times more likely to burn out than professionals in any other line of work, have a rate of depression that’s 15- 30% higher than the general population by a significant margin, have a 10- 20% higher divorce rate than the general population and 300-400 physicians commit suicide each year.. “Medscape Lifestyle Report 2016: Bias and Burnout,” Mayo Clinic Proceedings December 2014.
Public Trust: Gallup has compared the public’s rating of the honesty and integrity of 22 occupations since the 1970’s. Healthcare professions have routinely topped their list, especially nursing.
Not only do we spend more in total on healthcare in the United States, the government spending on healthcare in the United States is the second highest in the world behind Norway (an small nation with a favorable balance of payments due to exportation of oil). So, more government spending is clearly NOT the answer.
The answer is competition on price and quality. It works every time it is tried. This will mean a much more efficient system which means much more de-regulation. Here is a radical idea: end CMS price fixing. If a quality (in the eyes of its patients) healthcare provider can offer seniors healthcare less costly than a competing provider it should be allowed to charge less. Why not?
Second, let’s take a look at the real costs of good intention programs like MU (now MACRA) and ACOs, and find out what the bottom-line impact is. In my research I have yet to find a single provider participating in an ACO that did not spend more to participate (all in) than it got in it’s share savings bonus — if it got one. Who picks up the difference? The patients.
I would like to ask the physician who complained about his/her lack of control over payments how he or she would propose to devise a price list in a truly free, unregulated market. One factor that physician fails to realize is that he or she has the power to create demand by recommending to patients that certain services are "needed." Consumers would not be in any position to question those recommendations, especially when they are under duress due to the urgency of the situation.
Along these same lines, I’d like to ask Mr. Tholemeier how consumers would judge quality in an unregulated market. It’s difficult enough these days with quite a bit of data available, much of it the result government regulation. Maybe Mr. Tholemeier would propose a money-back guarantee in lieu of quality standards – it’s free if you’re not cured (or worse).
I might ask that physician if he or she would consider returning to a far less regulated, freer market (though not completely free), before Medicare and widespread private health insurance. Back then, physicians’ services were often compensated by a bushel of peaches or a few dozen eggs. In those days, physicians were more successful in controlling the supply of physicians (together with quotas on certain characteristics of those physicians), so they were able to exert substantial control over both sides of the supply/demand equation.
There is certainly plenty of room for improvement in the current health care system, but an unregulated, truly competitive market is not the solution.
Shelley J. Aronson
Shelley, First, I am not, of course, suggesting no minimum standards. And I am not suggesting deregulation from the perspective of safety. Just pricing and to a very large extent venue and some aspects of service level.
This is what I mean by quality. I have a friend who said she would never let a nurse practitioner touch her. Fine. But for many things a nurse practitioner is just as competent as a doctor. If she insists on seeing an MD for everything (her subjective quality metric) she should pay more, because doctors have higher labor costs than nurse practitioners.
The problem is we spend billions of dollars every year on "quality" reporting that is not suitable to consumer decision making, our anything else useful as far as I can tell.
I don’t understand why people fear greater competition in healthcare. It works every time it is tried, even in healthcare.