June 17, 2009

Who's the Boss of Primary-Care Doctors?

Justin Katz

I've read the editorial several times, and it still isn't clear to me how or why the Projo writers avoided mentioning the problem of liability insurance for primary-care doctors.

Shortly after I moved to Tiverton and found a nice local doctor to visit, he packed up and left the state for sunnier climes. My understanding is that the cost of insurance and the threat of being sued in Rhode Island were motivating factors. (It worked out, though, because it got me on the list of the practice's senior doctor, who hadn't been accepting patients when I inquired.)

Primary-care physicians seem to mirror a small-business model more than specialists do. People will travel farther for specialists, and their work is more likely to come to them via the referrals of other professionals. I'm sure there are other distinctions (such as the closeness of relationships with hospitals), but I don't want to delve too deeply into guesswork. The point is that, as our society considers healthcare policy, we ought to think of primary-care providers in the same way that we think of other self-employed professionals.

Market and deregulatory incentives can encourage the occupation without bureaucracies meddling, as the Projo winds up suggesting:

Alan Sager, a health-policy expert at the Boston University School of Public Health, has suggested paying primary-care doctors $250,000 a year to work under a capitation system. The doctors would be earning considerably more than they do now. And because they would treat a set number of patients at a fixed yearly cost, adjusted for medical risks, the doctors would have no financial reason to offer more care than necessary.

Question number one is who will set and process the numbers of patients and income? By default, it would have to be the government, which means that doctors will no longer work for themselves, but for the folks who can give them raises and who can cut their pay or increase their work burden. I'd worry about the sorts of practitioners such an arrangement would attract, as well as the institutional focus that would shift to lobbying the authorities for more.

Question number two is what would provide incentive — given the rigid quota and salary deal — for doctors to resist the human urge to do as little as possible? If the five patients whom I have to see in an afternoon (hypothetically) don't pay me and their return is not really my problem, I might just take the opportunity of a sunny day like today to rush through my itinerary and get out of the office. (Of course, for a reality check, I get to be outside all day anyway... digging post holes and mixing concrete.)

As I said, the editors don't provide the "who," but what they propose amounts to another increment of socialization, and in that respect, it provides another instance of the plain inadvisability of such a system.

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If we are to be consistent in our logic, then just as the money should follow the child when it comes to education, so too should it follow the patient in a single payer health care system. For example, each individual could get a health condition adjusted voucher to cover the annual cost of a relationship with a GP. Unlike a capitation based system, GPs would then see patients as clients. If you want to see what the result might look like you need look no further than eye care or dental care, which are much closer to this model than the world of MDs (opthalmologists excepted). The best performing dentists and eye care providers have figured out how to maximize revenue by improving both their offering to patients (e.g., use of email, extended hours) and their systems and processes for delivering it (e.g., better use of technology, more highly trained hygenists, etc.). You are also beginning to see the same change underway in the UK, Canada and Australia on the health care side.

So let's not get too negative too quickly about what reform may bring...

Posted by: John at June 17, 2009 2:43 PM

Picking up on the eye care angle, visit the piece below that shows the 15 year history of the cost of LASIK surgery. Without any government beaurocrats, the cost of LASIK surgery is flat!!!!! Also, the procedure has improved and the professional service is spectacular. The entire cost is paid by the patient making it similar to other economic models that exist in the world of competition and free market principles. Why not follow Justin's advice and insert some free market principles into our healthcare system before we have government boards set prices ?

( http://images.google.com/imgres?imgurl=http://s.wsj.net/public/resources/images/ED-AE048_3lasik_20060309201822.gif&imgrefurl=http://online.wsj.com/article/SB114195744716494410.html&usg=__42AN7J15tacfJVDdpFEJCLy5kuQ=&h=244&w=329&sz=9&hl=en&start=17&tbnid=PO8_ToQQL1Gp4M:&tbnh=88&tbnw=119&prev=/images%3Fq%3Dlasik%2Bsurgery%2Bwsj%26gbv%3D2%26hl%3Den )

Posted by: SeanO at June 17, 2009 3:49 PM

"Who will set and process the numbers of patients and income?"

I realize that you view everything through rose colored glasses (easier to spot the socialism!), but capitation isn't new. The answer to your question is the payers will, as they do now.

Posted by: Russ at June 17, 2009 5:09 PM

Justin -

2 things.

1. specialists are more often sued for medical negligence than primary care physicians and common sense tells you why.

2. the Fall 2005 issue of Regulation, a publication of the CATO Institute, featured an article by Dartmouth economist Katherine Baicker and Harvard economist Amitabh Chandra which found no evidence linking INCREASES in medical malpractice insurance premiums to medical malpractice lawsuits.

Rather, they found that
“other factors (such as the underwriting cycle, competitiveness in insurance markets, or insurer losses on other investments) play a larger role in driving changes in premiums than malpractice payments.”

Posted by: Matt Jerzyk at June 17, 2009 5:16 PM
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