Mo’ Treatment, Mo’ Problems

A recent UCLA study revealed that higher-earning doctors get paid more for ordering more procedures per patient.
In other words, doctors aren’t earning their keep by improving health outcomes for patients, but by ordering potentially expensive tests, services, and treatments.  Those costs eventually trickle down to the entire system, contributing to America’s current healthcare crisis.
To further explain:
The United States for years has had the most expensive, least effective healthcare in the developed world.  The crisis can be attributed to a lot of messy, intertwined problems–perverse incentive structures, insurance gaps, neighborhood conditions, current work structure for professionals, and lack of hospital funding.
But the main problem is healthcare costs.  Ironically, the Affordable Care Act, for the most part, defines the problem as insurance coverage.  But, although coverage is very important, it’s only a piece of the puzzle.  How much does having insurance matter if your premium is so expensive as to make it a burden, or if you’re forced to foot more of your bill privately because your insurance covers less?
At worst, the issue of “insurance coverage” is a red herring.  It is the costs of certain procedures, tests, medicines, etc. that cause insurance premiums to soar and place disproportionate burden on individuals, employers and the government.
This problem of healthcare costs is exacerbated by the funding conundrum faced by hospitals and medical professionals.  Without being able to properly cover costs of operation, professionals often “overtreat”– order medically unnecessary treatments, services, and procedures in order to receive reimbursement from insurance.  And guess who is the biggest payer in the system?  Medicare.  That means you, taxpayer.
And, to be clear, research shows that ordering extra procedures and “overtreating” has no impact on health outcomes.  That extra X-Ray, CT scan, lab test, stent, prescription?  On aggregate, it doesn’t make people better.  It is purely a matter of money.  In fact, overuse and unnecessary care has been found to account for one-third to one-half of all health care costs.  (For more on this, read Shannon Brownlee’s Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer.)
This is what the research points to: More procedures, more money.  To be fair, this is not a case of greedy doctors gaming the system, and then rolling around in their convertibles with the wind in their hair.  There is a genuine financial burden and pressure on medical establishments which leads to this behavior (especially on under-funded public hospitals).
But, as the UCLA researchers suggest, we need different payment reimbursement mechanisms, so that reward is not placed on more procedures, but on healthier patients.
For sure, this is easier said than done.  And any evaluative measure creates incentive to game the system (for example, doctors cherry-picking healthy patients and refusing to treat sicker people who might affect their stats).  But the current “fee-for-service” structure isn’t cutting it, and is actively damaging the nation’s healthcare system.


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