Why is Physician Pay Being Cut In a Crisis?

One of the craziest unforeseen consequences of the crisis is that many people are delaying medical care but in places without a lot of coronavirus cases that’s creating a big hit on revenues.

ProPublica: Most ER providers in the U.S. work for staffing companies that have contracts with hospitals. Those staffing companies are losing revenue as hospitals postpone elective procedures and non-coronavirus patients avoid emergency rooms. Health insurers are processing claims more slowly as they adapt to a remote workforce.

“Despite the risks our providers are facing, and the great work being done by our teams, the economic challenges brought forth by COVID-19 have not spared our industry,” Steve Holtzclaw, the CEO of Alteon Health, one of the largest staffing companies, wrote in a memo to employees on Monday.

The memo announced that the company would be reducing hours for clinicians, cutting pay for administrative employees by 20%, and suspending 401(k) matches, bonuses and paid time off. Holtzclaw indicated that the measures were temporary but didn’t know how long they would last.

…Tenet Healthcare, a Dallas-based publicly traded company that runs 65 hospitals, said it would postpone 401(k) matches and tighten spending on contractors and vendors. Emergency room doctors at Boston’s Beth Israel Deaconess Medical Center have been told some of their accrued pay is being held back, according to The Boston Globe. More than 1,100 staffers at Atrius Health in Massachusetts are facing reduced paychecks or unpaid furloughs, and raises for medical staff at South Shore Health, another health system in Massachusetts, are being delayed. Several other hospitals have also announced furloughs.

The CARES bill has billions for hospitals but there seems to be a gap between funding sources that hasn’t been bridged. It’s peculiar that ER physicians often don’t work for the hospitals where they work.

Special hat tip: the excellent Kevin Lewis.

Comments

The land of a truly exceptional health care system, one that will be in full public view for the next couple of months.

This is the free market, baby.

The US healthcare system is many things, free market is not one of them.

The federal government alone controls $1.5 Trillion spending in healthcare every year. Add another $600 billion in state spending.

Insurance policies are dictated by the Feds and states.

Care is mandated regardless of ability to pay.

None of these things have anything to do with “free market.”

But you know this of course and are trolling.

And it is in regards to Care is mandated regardless of ability to pay.

Currently, care in NYC is no longer mandated in this context, according to the Post. "In the chaos of New York City, where coronavirus deaths are mounting so quickly that freezer trucks have been set up as makeshift morgues, several hospitals have taken the unprecedented step of allowing doctors not to resuscitate people with covid-19 to avoid exposing health-care workers to the highly contagious virus."

Prior_approval, that has literally nothing to do with my comment.

Also your palpable physical arousal at the rising death rate in NYC is .... really something.

Something gross.

Some commenters here have been trying, for weeks, to point out what was going to happen to the U.S. Then there were the people mocking any efforts to contain covid19, such as misrepresenting anyone suggesting hand washing or 3d printing of masks would be helpful.
There is something beyond gross in a person that incessantly misrepresents what others write to match their own fantasies.

Please grow up, since you act like a 15 year old pretending to be a mature adult, and the act is wearing very, very thin.

Is that what this commenter has been doing? Or has he been snarkily delighting in the coming deaths in his forsaken native country, as a rich comeuppance for those he disagrees with politically?

"Also your palpable physical arousal at the rising death rate in NYC is .... really something."

Prior does seem to be taking obvious glee in America's misfortune. But that's not new for him, he has always delighted in presenting the US in the worst light.

Prior is less sauerkraut but more dour kraut.

Or there are several commentors here who have been attempting to point out that the U.S. needed to be preparing. The sort of commentor who noted the Indian pharmaceutical export ban on March 4, not two days ago, or the sort talking about hand washing back when the 'Wuhan flu' was being treated as a joke or just another symptom of TDS.

It is sad to realize how many commentors from a couple of weeks ago were simply dismissing what has now become obvious - the U.S. wasted weeks in pointless discussion about whether there was even a problem to be prepared for. A number of people in the tens and hundreds of thousands will now die in the U.S. from a pandedmic Do you honestly think anyone is gleeful at such a catastrophe?

"It is sad to realize how many commentors from a couple of weeks ago ..."

You are attempting to score gotcha points during a pandemic. That's nasty behavior and something your mother should have taught you not to do when you were in kindergarten.

It would be different if you had any constructive comment to make. Instead it's just a drum beat of criticism against the US, despite the fact that the US is better than a dozen European countries on a per capita basis.

"Care is mandated regardless of ability to pay."

Not really or honestly. People don't find you and treat you. You can't walk into any urgent care and find treatment.

What you're really saying is, if you're out of your brain with COVID-19 and you can navigate yourself to the right kind of hospital emergency room, they are required to treat you, and then send you a crushing bill later.

Perhaps you don't care about the crushing bill part, because you assume the poor are all bankrupt already and undeserving anyway?

Here's a news flash. They care and that's the reason they often avoid treatment. In a pandemic that's not exactly what you want.

Or just call 911 of course.

In a pandemic do you really want people to call 911 at "I just lost my sense of smell and don't know what to do?"

You would think that facing 100,000 to 200,000 deaths people would stop trying to pretend this is the best of all possible worlds.

And maybe think through why they have really been fighting better solutions all these years.

If you're OK enough that it's a loss of smell you can find an ER. If you're bad off and wander into an urgent care, given that they probably can't treat you anyways, they'll send you too one or call for transportation. If there were free clinics on every street corner you'd whine about that too.

I am not a doctor, but I believe what we want people with loss of smell and no worse symptoms to do is self-isolate immediately, and *not* go to the emergency room.

In this case, our not-a-system is particularly self-defeating.

"self-isolate immediately" So what are you complaining about urgent cares for then?

Slow down and think it through. How does a scared and uninsured person make the decision stay-or-go to emergency?

You just told me that in our not-a-system they can't get medical advice until they go to "emergency" for some of that can't-be-denied but will-be-billed-later treatment.

Going to either Urgent care or the ER is the opposite of "self-isolate immediately". You need to choose.

I'm not even saying you're wrong, in what I think you are getting at. I'd be for a expanded free clinic type system. I think it would save money in the long run. Maybe based on the CVS in store model or just free standing clinics. Allow for nurses there to offer basic prescriptions and maybe start a telemedicine session for more serious cases.

Is there a national "free clinic system?"

Is there a national 1-800 number to screen health concerns without a visit anywhere?

It looks like this study attempted to create a census of free clinics, and found 1007 (75.9% response rate) clinics serving "1.8 million individuals." As opposed to 27.9 million nonelderly individuals uninsured.)

Compare and contrast to South Korea, where they jumped on that drive-through testing, in part because they do have a national healthcare system tied to national ID.

"The South Korean healthcare system is run by the Ministry of Health and Welfare and is free to all citizens at the point of delivery."

Is there a national "free clinic system?" Not that I'm aware of. You added 'national' There certainly are free clinics.

But, no, I'm not interested in a national healthcare system. Public health is a public good, so I'd be for adding resources to that, after we redirect funding the current public health systems back to public health.

I added "national" because "free clinic" is very haphazard.

And, if you are going to think about "greater pandemic preparedness" without "national health care" you have to think of who is going to do last-mile delivery, as it were.

As recently as Feb 10, the government was talking about *cutting* Medicaid and ACA funding.

Anyone who quotes a White House budget proposal as something serious........needs a reality check.

The odds of it being adopted by Congress are lower than winning the lottery.

Also a cut to ACA might be a net benefit.

"Might" is a weak work.

Who’s gonna take one for the team and explain to anonymous that Medicaid exists?

Are you putting Medicaid up against the South Korean system of universal healthcare and rapid response and testing?

What are you even talking about?

Here’s you:

Perhaps you don't care about the crushing bill part, because you assume the poor are all bankrupt already and undeserving anyway?

The poor have Medicaid. Up to 138% of the poverty level receive completely free care through the Medicaid system.

So, you’re wrong. We spend over a trillion dollars a year to cover the poor. Which is why their test and treatment will be free of charge.

Your link is about surprise billing of non-network specialists for people who already have insurance.

You didn’t even skim the article I guess?

It has zero relevance for your proposition that the poor in the US will be not covered by Medicaid and thus become bankrupt.

Did you just google something and link the first result again....

We are in the midst of a pandemic. People will be harmed:

1) Directly by the disease.

2) By complications in the medical system, as patients, doctors, and hospitals weigh what concerns to defer.

3) By direct medical costs, insured or uninsured, but certainly not always affordable.

4) By economic fallout and indirect damage as businesses are shuttered and sometimes fail.

But your entire focus here today has been to wave away those tragedies, as they happen, and pretend everything is fine, because [insert program you've opposed for the last 5 years].

Shameful.

Almost as as shameful as calling these same concerns "attempting to score gotcha points during a pandemic."

Medical staffing company owned by private equity. So another set of expensive mouths to feed in the long chain of middle men in our healthcare system that add questionable value. As usual, someone here will take the other side and say this is a good thing but I think people are tired of the tortured contrarianism. We need to do the simplest thing that works. Not overly clever, technocratic explanations to explain away what is plainly broken to the average person. This is why populism wins even if its wrong.

“We need to do the simplest thing that works. Not overly clever, technocratic explanations to explain away what is plainly broken to the average person. ”

You’re in the completely wrong place for that.

I doubt if private equity owns many of the ER physician practices. What people are learning the hard way is how the average hospital works. The ER nurses work for the hospital while the physicians work for a practice that many times is a partnership. The same thing occurs in hospitals for radiologist and hospitalist.

More & more MDs are employed by either hospitals or large corporations owned by venture capitalists- the model of physician owned partnership is fading fast. Older physicians typically view the new model as either less efficient (hospital owned) or exists by extracting income from the physicians( for profit corporation). It is pretty clear the partnerships had less administrative overhead- but in the era of increasing concentration in healthcare it is disappearing- government regulations all favor larger entities. All models have problems but younger MDs are voting with their feet for the employed model.

Like already with pharmacies, corporations and investor groups are also slowly taking over optometry and dentistry. Partnerships and independent practitioners are losing to gun-slinging MBA excel jockeys.

About 80% of Hospitals in the U.S. are not-for-profit and the largest profit hospital chain in the U.S. employees few physicians but just contracts out or acts as a sevice providers for large practices. Until someone provides a cite, the idea that large number of MDs are working for privately owned, for profit corporations is suspect.

Also, the way insurance works is driving a lot of what is happening in healthcare. Private Insurance companies want to do business with large organizations to simplify the insurance providers work. Physicians want to be part of a large organization that insurance companies must do business with.

check out TeamHealth.com they are pretty bigly
https://en.wikipedia.org/wiki/TeamHealth

Doctors join these sorts of arrangement to give us control over our working conditions. The simple arrangement, where the people in charge of your care also own the facility providing your care, is basically illegal. Thanks to the ACA, it is basically impossible for the lot us physicians to open a hospital or even to expand the grandfathered ones that we own. Instead we are forced to use groups as de facto unions in order to retain some control over our practice (this has been a long process where the AHA has been legislating its competition out of practice).

Perhaps it would be better if we were all independent. Unfortunately, malpractice insurance is vastly more expensive if you go that route while the best groups can manage self-insurance. Likewise, going fulling independent means you have to make your own arrangements for coverage and locum is horrid at a single provider scale. Then, of course, there is billing, which again is written into law and regulation which makes it vastly harder to go solo.

Physician groups also make it easier to work as much as you want. If you want to go for 60 hours a week including weekend nights and then take off hunting season, that works. Maybe you pair with a physician who is the process of having her kids and she skimps the weekends and the summers, but works more during the fall when everyone is in school except the youngest. Maybe you want to wind down and work 20 hours a week before retirement. Again this is perfectly valid in a group. We can easily adjust your pay, trade hours, or all manner of compromises to make things work with how you like it.

Why not just become hospital employees? That has been tried as well. Thanks again to law and regulation it tends to be very hard for full employees to control their working situation. Likewise it heavily dilutes your ability to sanction the other physicians who increase your malpractice insurance costs. And of course, once you salary people, they tend to work fewer hours and be less conscious of returns. You can take the ever popular RVU bonus incentive structure, but that inevitably rewards whichever specialties are currently ahead of the curve for RVU inflation and risks having everyone say screw it and stop trying.

One of the local hospitals flipped the bird to one of the large multi-specialty groups and began rapidly hiring fresh attendings to move all of this in-house. Five years out, the numbers released when they were being acquired by a consortium showed that their expenses were $50,000 - $100,000 greater per physician.

Maybe you want to go full Beveridge. I direct you to the Indian Health Service a $5.7 billion healthcare system providing care to more people than many small European nations. The funding tends to be shambles. The docs are vastly more likely to burn out and quit. If you buy life expectancy as a valid measure of healthcare outcomes, they have 5 years less than US average. Compared to other health systems in Phoenix, for instance, the IHS is bottom of the pack.

What is simple and works is having the docs run the place. Historically physician owned hospitals have been more efficient, have better doctor/patient relations, and have had better measures of patient care. Of course they are now banned from even expanding bed capacity by law.

For the record, the production on physician ownership is driven by the bad apples who exploit opportunities for self-dealing. Recommending a particular hospital or clinic for your procedure because they own a piece of that one. Prescribing a stent or a cataract surgery that's not medically necessary because they get a cut from the procedure.

Certainly this is a small number of doctors, and there are tradeoffs against other considerations, as Sure describes. But that's what Congress was thinking.

Tom is indeed correct. A very small number of bad apples completely fleeced the system. Not so long ago there was a physician faking cancer diagnoses and giving fraudulent chemotherapy to healthy patients. It happens.

I am big believer in the False Claims Act (which brought down the aforementioned oncologist and rewarded the whistle blower with a lot of cash) and criminal prosecution. Congress thought otherwise (after massive lobbying from the AHA) and opted to shutter the whole ownership model. Independent groups contracting to hospitals is the logical response when you cannot own the place yourself and when (for a holy host of reasons) basic employees are treated terribly.

Pretty much everything dumb in medicine that people dislike is a direct result of something bad that happened and the legislators and regulators making rules that have additional consequences.

Just as clueless as ever here, and of course this is complicated, but why does this have to be about trade-offs between owning your own hospital or working in someone else's hospital as it affects working extra hours and getting hunting season off? Why don't we treat doctors like mechanics, who fix your motor, instead of like body-and-fender men who collect weirdly inflated insurance payments?

My personal physician grows wine grapes on the side and seems to be happy with supporting that by occasionally looking at un-well geezers. Of course he tends his grapes mostly on week-ends, and that may be why he told me on a Thursday to take two aspirin and call him on Monday if it really turned out to be shingles, so I spent the week-end barking like a dog and scaring the neighbors now and again. What is wrong with that model? It seems libertarian enough.

Oh, speaking of dentists I was living in France for a while and a crown fell out so I called a dentist, one of three or four in the phone book in Sète, a middle-sized city by French standards. He answered his own phone and later mixed up his own glue for the new crown and he didn't know how to bill me, just guessed a hundred euros and I gave it to him. I said, man, if you were in the USA there would have been two assistants mixing the mud and three more doing the billing. He got a faraway look in his eye and said yes, that would be paradise, but here we are under the thumb of socialism.

"why does this have to be about trade-offs between owning your own hospital or working in someone else's hospital as it affects working extra hours and getting hunting season off? Why don't we treat doctors like mechanics, who fix your motor, instead of like body-and-fender men who collect weirdly inflated insurance payments?"

The simple economic arrangements have all been banned or heavily disfavored by insurers and government regulators. We used to bill cost plus a small percentage. You come to me, I do some sort of work, you get a bill for my costs and around 2% profit. This is currently disfavored because people think that physicians are more prone to order expensive tests, procedures, and the like. Insurance refuses to pay me the way I pay my mechanic. There has been a small renaissance in this model with cash-pay, but insurers typically despise it.

Another simple option is capitation. Much like with a dealer, you play a flat fee for each patient (or warranty) and this covers all the needed work. Again insurers dislike this option. It really rewards physicians who can choose more compliant and healthier patients. It leads to massive losses for somebody (often the hospital) if you get unlucky and a few people end up requiring massive treatment costs. And people worry that physicians will not order needed tests and treatments in order to protect the bottom line.

We could go with a flat salary model (e.g. traditional Cleveland Clinic model). You pay your physician a flat rate and he does whatever work comes to him. This is popular in academic hospitals, but again people worry that physicians will find ways to do less work and treat fewer patients. For historical reasons, the typical MD in the US works over 50 hours a week and it becomes hard to sustain those hours without some marginal increases in incentives for the last few hours. There are even worries that physicians, being bright people, will be able to set up other paying gigs that can manage during their duty hours. This also tends to lead to empire building and less efficient use of resources as physicians have no incentives here to economize.

So the resulting kludges that exist are because society wants several conflicting things from physicians: they want docs to have no financial incentives that are at cross purposes to providing full care, they want docs to have financial incentives to be cost conscious, they want docs to work weekly hours that are 50% longer than national average, they want docs to work in risky environments like with Covid patients, and they want somebody making sure that their docs are all administering treatment "properly". Oh and a bunch of people want it to be cheap.

Well you are trying to impose constraints that are in direct tension with each other. So of course we get weird structures. Docs are paid a salary and a "bonus" based on RVUs. Docs join large groups so they can have negotiating power and still practice at hospitals that are allowed to charge more for the same service. CMS requires BS documentation and other silliness in order to prove that we are doing the right thing.

The beauty of docs owning the treatment facility is that they are incentivized to get the best outcome as that determines who comes to their facility. They are incentivized to be cost effective because they reap their remuneration from the bottom line. Unlike most of the other arrangements there is little diffusion of responsibility and you can track patient outcomes much more easily.

For every niche in medicine, the cheapest options have, and continue to be, physician owned. Almost as though having a more unfettered set of price signals leads to more innovation and better outcomes. We just are unwilling to trust our docs with our monies while we trust them with our lives. So we, by dint of regulation, tort law, and business practices, are literally banning the proven cheaper ways to deliver care and ensuring that complicated, less efficient remuneration schemes are more lucrative for all players except the ultimate payers (premium payers and taxpayers).

Frankly, I would love to be able to just charge like a mechanic. Yet when I have tried, powerful entities have objected.

Can’t we come up with some complicate rube-goldberg device based on tax credits and some kind of special bond issue to solve this problem?

I’m an anesthesiologist in Seattle and can confirm this reporting is accurate. It goes far beyond ER docs. The state of Washington is 2 weeks into a 7 week minimum ban on all elective procedures (surgical, endoscopies, interventional radiology, dental) essentially for the purpose of saving $1 masks and $5 gowns. This has dramatically reduced revenue for many physicians and a number of groups have been forced to lay off both office and operating room staff. For example, one ASC I work at has laid off all its operating room nurses and scrub techs and half of all the office medical assistants. I’ll also be curious to see if there are many dentists left standing after all this. None of us has absolutely any hope that any of this bailout money will trickle down to us.

Those elective procedures are money makers. A surge in flu testing won't replace that revenue. Laid off medical professionals should invest in PPE manufacturing so their occupation doesn't suffer in the next pandemic.

That this reporting from NYC is also accurate (the Birx quote from just last week is beyond dispute).

********************
In the chaos of New York City, where coronavirus deaths are mounting so quickly that freezer trucks have been set up as makeshift morgues, several hospitals have taken the unprecedented step of allowing doctors not to resuscitate people with covid-19 to avoid exposing health-care workers to the highly contagious virus.

The shift is part of a flurry of changes besieged hospitals are making almost daily, including canceling all but the most urgent surgeries, forgoing the use of isolation rooms, and requiring infected health workers who no longer have a fever to show up to work before the end of the previously recommended 14-day self-isolation period.

Last week, DNRs or do-not-resuscitate policies for coronavirus patients who stop breathing, or are in cardiac arrest, were being discussed as part of worst-case scenario planning — ideas dismissed late last week by Deborah Birx, the White House coronavirus coordinator, saying, “there is no situation in the United States right now that warrants that kind of discussion.”
*************************

Oh joy, another off-topic post from prior where he's gleeful about potential bad news for the US.

"...essentially for the purpose of saving $1 masks and $5 gowns."

It might be helpful to a lot of people here if you were to explain why you don't work for one particular hospital.

Transmission of disease might have a little to do with it as well.

I put my paragraphs in the wrong order.

How about a pandemic futures market for medical staff which helps to allocate doctors and nurses ahead of where a pandemic is going to strike.

According to the CARES Act, hospital and medical industries are to receive $130 billion. I think management is gaming the bailouts. This is the eternal problem when government writes big checks. Here's another case in OKC where a company lowered employee paychecks by exactly $1200 to transfer that fungible bailout money into their own pockets.

https://www.thelostogle.com/2020/03/29/imagenet-consulating-stimulus-payment/

Funny, a virus does not care about the price of $1 masks and $5 gowns.

If you produce less, you get paid less. This story is only surprising given the silly worship healthcare workers recently.

My girlfriend is a general surgery resident. For those you are unaware, medical residency programs are brutal on their residents (hours worked, stress, etc.). Thanks to COVID-19, she's never had an easier job. She's working 7 days on, 14 days off. The days she works, there's nothing to do because the bulk of their surgeries have been canceled to free up physical and human capital for a (as of now) nonexistent pandemic scenario.

Why shouldn't her pay be decreased?

It's surprising not because of hero worship but that the demand for medical services we keep hearing are up. That hospitals got over $100 billion in bailouts added to the confusion for Alex and others.

The demand for medical services is way down. The demand for a particular service, pandemiology, is way up.

First, she's not on a production-based contract and ACGME would probably shutter the program if they stop paying their residents their full salary. More importantly, unless your girlfriend is a PGY1 or possibly a PGY2 she's easily the most cost-effective resource in the hospital. She's probably making about the same as a nurse with 1-3 years experience and producing almost the same value of an early stage attending.

The people that should be worried about having their pay cut are those that are sitting on very bloated salaries at the moment. This means attendings in areas that aren't working to their value (Ortho, GI, Cards, etc.) and mid-level administrators. Delicate game to play with the doctors though. If you lay off or significantly reduce staff salary right now that reputation is going to stick with you for at least a generation. Beth Israel Deaconess can get away with it because of their Harvard affiliation but most places won't be able to cut pay and recruit in the future. The reality of the situation is COVID-19 will eventually go away and hospitals are going to need those high margin specialists again. Caveat emptor.

Responding to myself to also point out the fact that the ER pay reduction is actually withholding of production-based bonuses from earlier quarters. So the argument that "if you produce less, you get paid less" is inaccurate on its face.

Yeah, my hospital system is paying their employed subspecialists their prior salary and not giving them any work. In contrast, ER, hospital medicine, and critical care are facing the brunt of overwork. This is a fair outcome to specialists. They're doing far better than they would have in private practice and we're just retaining them on payroll to reactivate their services after the crisis is over.

In emergency we are working longer and harder, and by the books, generating more RVUs.

Nonetheless our pay is down. So do tell me another one.

High pay when demand is up, low pay when demand is down. Don't worry, demand will soon be up. (And what's the alternative; high pay for physicians when demand is high, high pay when it's low, just in case? In fact just pay them as high as you can, whenever you can, with everything you can afford? Literally chuck all your surplus at healthcare?)

And meanwhile insurers are making record profits, because they’re taking in the same premiums without having to pay for the surgeries and office visits that would normally happen.

Maybe they could find a way to get that money to the parts of the health system that needs it?

The only thing they're reaping is the interest on their cash reserves for not having to pay for the procedures. The procedures that have been canceled aren't going away. They're simply backlogged.

Clearly this is a rhetorical question regarding the U.S. - Literally chuck all your surplus at healthcare?

Boomers control the priorities of the country. They are old so they need the healthcare. They also vote and own the stock market.

People don't usually say that the problem with US healthcare is that we're not throwing enough money at it.

Indeed, usually the criticism is that the US gets very little back for lots of high cost marginal spending on slightly extending the lives of the very old... Or maybe that would not matter too much, if it were the government doing it.

It’s a hard question for multiple reasons. First physicians get paid too much in the USA and the 1997 cap on residencies certainly does not help. The labor market for physicians is manipulated in multiple ways. See here: https://www.politico.com/agenda/story/2017/10/25/doctors-salaries-pay-disparities-000557/

Second, there is going to be a dramatic need for doctors caring for Covid-19 patients so I do not understand why they the physicians cannot be transferred there. Maybe the demand is not sufficient?

Third, if it’s partly down to a lack of PPE, presumable the supply will restart soon both due to increased domestic production and greater availability from China. So should we care that much?

And fourth, I’m hoping that someone is calculating the cost in negative healthcare outcomes of delayed outpatient appointments. At some point could that not justify reopening some of the outpatient clinics. Maybe it is not a big deal if they are closed for 3 months. But if it is much longer, presumably there will be price in mortality. and that would justify reopening such services even with Covid-19.

And I’m also wondering if this is not perhaps a good impetus to adjust how providers get paid so that prices of services are more in line with their costs and so outpatient services are less of a money maker. Maybe there is a huge downside to this?

The legislatures and other de facto regulators have wrapped all aspects of physician care in a myriad of regulations. Like all such regulations, this ultimately ends up drastically increasing costs.

Transferring physicians is hard. First there is the question of how current they are outside of their specialties. This has, and will continue to be, done but mostly in adjacent specialties (e.g. GI docs going to the floor so Pulm docs can do close to exclusively Covid cases). It gets harder when you pull from further away. E.g. breast surgeons are "elective" in that you can likely wait two months before removing most tumors, but their patient population tends to be stable, not need intensive care, and tends to have few complications. Having them manage floor patients will be a bit dicey as they have less experience at things like managing oxygen or fluid balances. If we get to Italy levels, then yeah we will be just eating the patient deaths to do that.

But even if you want to go down that route you run into regulation. For instance we have a local M4 who failed to match this year. She's bright and I would trust her as an intern. She has offered to work as intern at her own cost. The ACGME bans this. We literally cannot open a residency slot for her even though she is better qualified than some of the people we currently have and she would cover her own costs.

Likewise, we have a local physician who was canned from the profession for abusing narcotics once too often. He never harmed a patient as far as anyone is aware. He has offered to take daily drug tests, never prescribe a narcotic, or anything else, and in spite of this being a crisis he is not allowed back thanks to regs. Yeah he is near the bottom of my choices for expanding physician coverage (below the M4 for instance), but we are likely going to be beggars and this guy is better than nothing.

If you want to have more efficient use of MDs in a crisis, you need to give more power back to MDs proper to determine their own abilities to be useful. After all, we routinely are entrusted with people's lives yet somehow you trust people who have not cared for a patient in decades (at best) to determine who can safely change duties rather than those of us on the frontlines?

As far as reducing the overall salaries. Please, that has been part of what has dropped our physician numbers to begin with. American healthcare was built off docs working 60 hour weeks and working until they could not. Salaries have not grown to maintain expectations that developed 40 years ago. So docs are cutting back their hours. They are retiring early. I cannot recall precisely, but decreases in physician salaries below previous trendline are thought to have induced thousands of physicians out of medicine or into early retirement.

As far as making out-patient less lucrative? Please. We want everything that can be outpatient to be outpatient. It is better for the patients - less infection risk, less time away from family, and less chance for accidental ramp-up in care (e.g. post-surgical patient complains that they cannot defecate, nurse reports that patient is obstipated, and a few expensive things like a KUB are ordered before seeing the patient).

Prices being in-line with costs is impossible. Society places too many constraints on how I provide care and what it is willing to pay. I may practice at a hospital that has few derm cases so I have to call in referral from outside, this is dramatically more expensive for me than for the hospital down the road where they have derm in-house. I may work at a safety net hospital were my patients have literally no one at home to change dressings, so I have to employ far more social workers for discharge planning. Likewise, doing a procedure on a diabetic patient is more expensive, but then doing it on a well controlled diabetic is vastly less than on somebody who is popping a 10 on their a1c.

Further, the simple way to price to costs has been highly discourage of late. Cost-plus does precisely this and has generally been panned by policy makers.

Again, I come back to the fact that US healthcare is expensive. The biggest drivers of that costs are the patients: who are less healthy than international comparisons, demand more, and use the healthcare system as a social safety net.

There is no pot of gold waiting to be found to make everything cheaper. All of the money shenanigans come down to the fact that things are expensive and there is not a way to do them cheaper that scales in this country. The VA, Tricare, Kaiser, the IHS ... all of them are stuck in the same boat. Healthcare is and will remain expensive.

"The biggest drivers of that costs are the patients: who are less healthy than international comparisons, demand more, and use the healthcare system as a social safety net."

Those same international comparisons ranked Spain and Italy as #1 and #2 for world's healthiest nations in 2019 which given today's date and circumstances looks like a grim April Fool's joke:

https://www.cbsnews.com/news/the-worlds-healthiest-countries-ranked/

Yeah I could see USians being a demanding bunch and this is a good point. Ordering extra procedures will make those billing rates climb.

Isn't universal healthcare in other countries also a social safety net since everybody gets it? Why are we uniquely expensive here?

I guess what I'm saying is that I think there's more to the cost picture. A private system has a profit-seeking managerial class that pay themselves quite well oftentimes multiples of what they pay their own doctors and that cost structure is mostly absent in other systems. There will be administrators but not CEOs checking the stock market.

Insurance is another sore point because it's a third party payment system where there isn't much skin in the game since everybody is spending somebody else's money and it's yet another expensive layer of bureaucracy with filled with managers and administrators again seeking maximum profit. Then there's pharmacy benefits managers. So a third party of a third party. The overhead of yet another wasteful bureaucracy begins another cycle...

When exactly has adding more layers and complexity to anything ever made it cheaper? It just adds just leaves situation ripe for corruption. Single payer has the structural advantage of doing away with all these wasteful layers and rent-seekers gaming the system. Now I'm not saying we should eliminate private insurance, it should be kept around because we like choice and many value it but making this the default choice for the average citizen (and then tying it to a job) doesn't make a lot of sense if the goal is to squeeze cost out of the system while maximizing public welfare.

"Isn't universal healthcare in other countries also a social safety net since everybody gets it? Why are we uniquely expensive here?"

Sure, but it is in this country as well. EMTALA, gives everybody emergency care. Medicaid covers the poor. What is different is that in the US all the other social safety nets (housing, food, etc.) often are initially managed via healthcare. In Europe it is far easier to get food aid. Very few people have their first point of contact be the hospital. That is routine here. Similarly, in Europe it is vastly less common for the homeless to seek emergency medical care merely to get out of the cold. Again this happens here.

And on it goes. Most notably a lot of European dumps medical training into an education line item while in the US we have folks pay up front for their RN or MD and then pay for it later through a healthcare line item. A lot of addiction services in Europe end up on non-healthcare line items, in the US we run them through healthcare.

US healthcare does a lot of stuff that is done under a different umbrella in Europe. That does not mean they are better or worse, just that the accounting is different because a lot of things go into different pots over there.

"When exactly has adding more layers and complexity to anything ever made it cheaper?"

Well for one, healthcare. The IHS is a full beveridge model with none of those layers. Their costs are far higher than comparable systems even in the same areas. You could chalk this up as being unique to the Native American population, but Kaiser has everything in-house and nonetheless is among the more expensive ways to deliver care.

It is one thing I never quite get, we have full beveridge systems in the US. We have ones with full self-insurance. We have pretty much every option on the healthcare system and the only ones that are consistently cheaper are cash practices. Arguing that structure is what raises these costs is pretty silly when have other structures like Tricare, the IHS, Kaiser, etc. that do not have them but are still costly.

I will buy that single payer is more cost effective the day that the IHS has signficantly better cost and outcome data than the private alternatives within the BIA. As is all the examples of single payer in this country (many larger than the national health services of entire European countries) are within spitting distance or worse of alternatives I see no likelihood of greater cost savings from these apples to apples comparisons.

Re: EMTALA, gives everybody emergency care.

This is poorly stated. The care is not "given" in the sense of being "free", It is provided but will still be billed.

But not collected

Sure, agree with everything but the salaries. I make $250k/yr for 35-40 hours a week, no call. That is absurd. Our numbers have gone done because of the AMA and residency slots, not from lack of demand. My academic center had 1000 applicants for our 10 pgy1 slots, and we had some 4000-5000 applicants for our 15 M1 slots. Even if only 1/3 of these are competitive it still points to an enormous demand/supply mismatch. It pains me to say, but we will be ran over the NPs and PAs; even specialties.

I would argue that the ACGME is the biggest hurdle out there. It is utterly bonkers to me that a NP can more easily practice medicine that the roughly 1,200 fully qualified US MDs/DOs who failed to match. It is even more crazy that when I tried to help an M4 pursue self-funding of internship and we were warned that trying to do exactly what the Saudi government does with a physician's own money could lead to sanction.

The LCME, the ACGME, the AHA, the Joint Commission. Those are the real villians. The AMA is a bit player in comparison.

I have long held that we can and should massively increase the number of residency slots. And we have done so to a small degree in the last 10 years.

In any event 250K/year is not all that much which consider, buy you own metric that you are looking at a thin skim on the top. Say everyone retires at age 65. US physicians spend 8 years without income and instead come out with around $250,000 in debt. Then we have 4 years or so residency where we make below minimum wage when you run numbers by the hour. Call it 50 grand a year. So in 12 years, a physician is at a net of -$150,000.

Total average lifetime earnings in the US is $2.7 million. Getting to 2.85 million in the 33 years left for a physician (assuming average start times) would require around $82,000 just to be on par with the average American.

But we are not talking about average Americans. Physician IQs, GPAs, etc. are all at least a standard deviation above the mean. The next best option for most medical students is going be at least one standard deviation above the mean for income. On the US income distribution, that is around $150,000.

Okay, let's grand that college is a sunk cost for most everyone up there. So the average bright, driven, etc. person will earn around 6.5 million from 22 to 65. How about a physician? Well again they start serious earnings later and that pegs them in around $200,000 per annum.

You are left with $50,000 per year, but we have not even begun to address the time-value of money. Having time and cash to spend in your 20s now should have a higher sticker price if you backload compensation.

Now we face choices. We could pay physicians less, screw over the people who dedicated a decade of their life to the profession and took major financial risks with certain assumptions built in ... and try to deskill the profession to attract less competent folks (e.g. folks in the 75th decile) and hope for the best. Or we might convert more folks to schedules like yours (10 or more hours less than the average) and hold the compensation steady. But the long run equilibrium will be for high costs.

My preferred approach would be to nuke the 8 years of formal training. Having done a lot of MSF, I have seen no advantage to waiting until your mid-20s to start medical training. I think you could manage the whole BS/MD shebang in about 5 or 5 and a half years. We could easily trim a full year from a lot of residencies (e.g. like how EM just did).

But I do not foresee physicians becoming all that much cheaper, particularly on an hourly basis, without a decline in quality. Maybe no one will notice that decline, but I doubt it.

Frankly it boggles my mind that around 1,200 MDs/DOs went unmatched this year and we are going to just basically screw them over instead of expanding residency opportunities (even with just some BS prelim PGY-1 only deal) to deal with a raging pandemic. This is not about maintaining salaries for physicians, increasing the residency numbers in the last 10 years has barely moved the needle. This is about parasitic bureaucracies being willing to let people die rather than let front line physicians vet their colleagues and take on all trained hands.

I agree that the residency is beyond absurd. I've investigated, and I'm not sure who is primarily responsible, if it's LCME, or ACGME, or the AHA...it seems that none of this would happen without the AMA's complete but tacit support. 250k for 35 hours a week is extreme, and if I work the 60 hours that smart college graduates do at big engineering firms, I'm at 450k. If most smart college graduates average 100k/year, that translates to 3.5-4.5 million lifetime earnings. 30 years at 250k/year is 7million. The time value of money is negligible for a smart college graduate, since they start out at 60k a year for the first few years out of college. Given the demand, supply mismatch, I'm not seeing why applicants would decrease if physician salaries went down 10-20%. This would indeed 'screw over' MDs who went into the field with certain assumption, but to be harsh, who cares. Healthcare is not first and foremost about the physician. It's about delivering high quality care at a reasonable price.

I think you underestimate how self serving our physician advocacy groups are. Cochrane repeatedly fails to find significant differences between board certified physicians in multiple specialties and skilled NPs and PAs. Myself, I would never go to an NP or PA for anything beyond sinusitis, but this is what the data show. I agree that we should do a BS/MD program in 5-6 years. And most residencies can be done in 4 years max.

10-20% is not a huge amount of savings in healthcare. If opening up the residencies resulted in those sorts of one-off losses, I would still be all for it. I just suspect that if you went draconian across the board for your cuts you would burn huge amounts of regulatory/political capital for very little gain. Further cutting salaries without changing the idiocy of residency is a recipe for a massive shortage of provider-hours in the short run.

I just do not see that much room to drop the pay. After all, PAs and NPs have grown massively in numbers and have, at best, reduced the rate of growth in primary care physicians' pay. After all, a lot of NPs are already getting up over half your pay and that will be a pretty hard floor on physician pay.

Claims that US MDs are overpaid by comparing to European MDs have multiple problems. Just a couple of examples-1st in Europe you typically do not pay for the cost of your education & that amounts to hundreds of thousands of dollars when you amortization that over a career. European MDs work less & have much lower malpractice burden than the US. Furthermore, US wages overall are higher than Europe- particularly the reward for advanced training (so by the same logic we should pay lawyers & CEOs less as well). Before you try to lower US compensation you have to address those issues

Supply and demand. You would think an economics website would know.

Indeed, it's fatuous for Alex to describe this as "unforeseen."

"It’s peculiar that ER physicians often don’t work for the hospitals where they work. "

That's how you get the surprise billing fiasco that states including Texas are outlawing. The doctor is now "out of network" so they run up the fee.

The easiest fix for the surprising billing is contractors in hospitals to accept the same insurance as the hospital accepts. The one most people find out about the hard way is anesthesiologist who do not accept the insurance that the surgeon accepts. Then the out of network problem occurs.

Do you work for an insurance company? Don’t you think they might take advantage of such situations to force down wages of physicians to enhance their margin? I’d love to be in a situation where people must accept what I want to pay!

"I’d love to be in a situation where people must accept what I want to pay!"

That's where we are headed when the US gets universal healthcare.

When the radiology,anaesthesiology, or ER practices bids on the contract with the hospital, part of the agreement should be that the contractors will accept the same insurance as the hospital. CMS could make this a requirement is the hospital accepts Medicare or the Joint commission could make it part of accrediation.

Creating a situation when a patient has to do business with a physician who refuses to accept their insurance and there is no alternative is the real use of force.

Consolidation in health care applies to physicians as well as hospitals. Big is beautiful, right? Collapsing revenues isn't limited to business, it applies to professions too, including physician practices. Many medical practices have either closed and dismissed staff or reduced hours and personnel. Outpatient clinics including outpatient surgery centers have closed by executive orders. In my state, Florida, the governor is considering commandeering outpatient surgery centers and converting them to hospital ICUs for Covid-19 patients. Don't forget that outpatient facilities were responsible for bending the cost curve (because they are so much more efficient than hospitals). This blog has predicted that Covid-19 will result in greater consolidation in business and fewer small businesses. In health care, that will mean more very large group practices, many owned by private equity, and a more impersonal approach to the delivery of health care. Indeed, I'm not so sure independent medical practices and medical facilities will survive Covid-19. Big is beautiful, right?

By and large, we no longer buy milk, shoes, or nails from mom-and-pop outlets. Similarly, I don't see a reason to romanticize a particular business model for doctors.

Historically that business model resulted in lower costs to the system and higher remuneration for the physicians. Not getting all romantic, but I for kindof like mutually beneficial arrangements where we all get more for the money.

"Historically" is carrying a lot of weight here. Tell us about the current economic considerations that are weighing against the small-practice model.

As mentioned above it is mostly regulation.

"Meaningful use" regulations require the use of EMR systems which prefer dealing with large groups and hence hit small practice in two directions. Medicare pays them less for the same care because they do not have an EMR and should they try to get an EMR, well, Epic and the lot charge a lot more per seat to a small practice. So we end up in a world where a smaller practice could deliver the same care, cheaper, but the government pays less just because Epic is not being used. So physicians migrate to a larger practice model so that they can spread Epic costs over multiple providers and charge more for Medicare. The new equilibrium is higher cost, but that is what the regulations dictate.

Malpractice insurance is another issue. State regulatory agencies are utterly unresponsive to bad apples (e.g. "Dr. Death" maimed and killed many patients, was thrown out of multiple hospitals, and the state medical board still had trouble getting off its ass) and the de facto oversight of providers has devolved to insurers. A single, unsuccessful, malpractice claim can tank an individual practice. Even if you win, you may need to devote days towards the legal process and each of those days will be thousands in lost revenue without reduction in expenses (e.g. rent and support salaries). Malpractice insurance might make you whole, but as a solo doc you have a hard time establishing that your risk is at or below average. So you get charged a premium because you might be a bad apple. Large groups tend to revert to the mean, and if well run, tend to go below it as they kick out risky physicians. Insurers will charge them less and more importantly the group can spread charges out among many people over a few years and built a nest egg that lets them effectively increase the deductible on their policy or eventually they can self insure. This whole mess would be massively less of an issue with a better "loser pays costs" sort of model. As is, a single provider closing up shop for 3 days of legal practice is more costly than the average BS settlement.

And on it goes. It is legal to charge more for the same procedure if you do it attached to a hospital than as a small independent doc, and Medicare will pay. We require BS recertification and continuing ed that again are much harder to do as a small independent practice. We limit training opportunities to large practices and even larger hospital systems so most docs face a learning curve to go independent after residency.

Basically it is easier to regulate a few behemoths so that is what the regulators push for. It is also easier for a few behemoths to lobby and capture regulators so we get more of that. It all works out well, except for the thing where it degrades care and increases costs (though only by billions of dollars).

"As mentioned above it is mostly regulation."

That's a significant burden on all small businesses and why they aren't as competitive as they once were.

Last crisis: AIG employees demand bonuses to stick around and unwind their toxic mortgage book (and we pay them).

This crisis: we are cutting pay to the people on the front lines of a pandemic

It's only peculiar if you live in an ivory bubble and don't understand how viciously companies have learned to externalize risk and cost.

All the actors involved, including the emergency room doctors who are incorporated businesses etc, were optimized for the previous status quo.

It is the difference between a medical system (which we don't have) and a medical marketplace (which we do have).

This despite some efforts to make our medical marketplace somewhat system-like.

See also the current failure to "open" Affordable Care Act enrollment. That strikes me as the bare minimum a "system" would do.

Of course a real "system" might treat everyone in a pandemic .. "deserving" or not.

We really don’t have a market for healthcare services. For a myriad of reasons.

Also don’t see the relevance of the ACA enrollment. Why would you force a fire insurance company to sell insurance to a homeowner when their house is already burning down? Makes no sense.

The fire trucks will be there regardless.

That comment really added nothing, as some doctors face reduced income, and other people avoid doctors to avoid costs.

And don't tell me they should "want" to go to an emergency room, for a crushing "uninsured" bill to be delivered later.

As I say that is not a medical system, certainly not one geared towards rapidly screening and/or treating everyone who is communicable in a pandemic.

Remember Medicaid already covers the poor or unemployed.

So what you’re saying is insurance companies should be forced to sell policies to people who refused to purchase insurance, so that they will be more willing to go to the emergency room for non-emergency medicine during a pandemic?

....what ? What are you even on about ?

Do you really not know, or are you seeking to confuse?

"Who is eligible for Medicaid?

You may qualify for free or low-cost care through Medicaid based on income and family size.

In all states, Medicaid provides health coverage for some low-income people, families and children, pregnant women, the elderly, and people with disabilities. In some states the program covers all low-income adults below a certain income level."

So in "some" states, you might be covered, if you can navigate everything.

I wonder how many people who actually fought Medicaid expansion also use it as the fall back for their arguments in discussions such as these?

By the way, a related bit on systems versus marketplaces:

"Hot take: if public schools are shifting to online classes, then internet is a basic service and everyone should have access." - @MechanteAnemone

I saw that tweet because it was liked by Richard Thaler. They have a point.

We will see a situation like Europe, where government mandates services to be degraded (note EU informing Netflix,YouTube, other streaming services to downgrade their serviceS) because infrastructure upkeep and expansion is not performed.

Obama's Net Neutrality would have been disastrous and led the US into a degraded infrastructure status.

Reducing medical capacity during a pandemic. This is nuts.

No it's not -- would you go into a hospital or clinic now for a an appointment or procedure that couldn't safely be delayed? I wouldn't.

Exactly, and it opens resources for those who need them, gloves and masks to be sure, but also nurses, beds, janitorial and even administrative personnel will be shifted.

Some commenters have suggested that hospitals are centers of infection. That would certainly seem to be the current case in the NYC area. "Nurses said they worried changes in self-isolation procedures for health-care workers may have accelerated the spread among staff and patients. A few weeks ago, any health-care worker suspected of exposure was sent home for 14 days. Then it changed to seven days, and now it’s 72 hours if you have a positive test but no longer have a fever or other symptoms. The change mirrors updates to Centers for Disease Control and Prevention guidance that allow hospitals to make decisions about recalling those workers “in the context of local circumstances.”

Will insurance premiums go down since

1) we can't get the full range of procedures anymore,
2) doctors and other medical labor are being paid less,
3) and they are getting free bailout money from the federal government?

I have a feeling the answer is no.

My companies premiums are based upon the previous periods cost to the insurance company. So yes, they would go down next period assuming that costs for this period aren't higher.

But given the pandemic, I'm doubtful if overall costs will actually be lower. They'll just be apportioned differently.

Even MAGA idiots are begging for more foreign doctors in the US:

https://sports.yahoo.com/us-now-starting-see-value-195741958.html

Our healthcare system is dominated by large corporate entities. Doctors are frontline producers employed by those organizations. Doctors’ income is a cost center. Downward pressure on these costs is inevitable. That’s how things work.

Is the idea that *everyone* employed in the healthcare sector in the US is or should be immune to the charge that so many others must live with, that they are "not essential"?

I am prepared to believe this is true; and my confusion on the point, admittedly, may lie in my almost medieval-primitivism on medical matters, the only medical treatment I have sought in the past ten years being a periodic updating of my vision prescription. And I would prefer for my optometrist to weather the crisis, as I dislike change of any kind: there is reason to hope - the same local prosperity that has given the zip code 15 cases of Snowskier's Lung/First-Class Flu also makes this a good place to sell designer eyewear.

Learn to floss.

"It’s peculiar that ER physicians often don’t work for the hospitals where they work."

Not really. It's standard practice in most situations to avoid violating laws prohibiting the "corporate practice of medicine." In theory, the arrangement allows for licensed physicians - not a business - to have the ultimate and independent authority to make their own medical decisions.

I will not be sad if this exposes more of the accounting and financial shenanigans that make our overall health care system so difficult to analyze and optimize.

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