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Are doctors overpaid or underpaid?

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Many times, patients may feel frustrated by the limited time they actually get with their physician.  It sometimes also appears that doctors are getting increasingly frustrated with their practices and the challenges of adapting to an entirely new health care system.  There is an underlying apprehension by physicians to “keep up.” The term “keep up” has a lot if implications in terms of both volume as well as reimbursement, and ultimately how much your doctor gets paid.

The over-arching resentment among most doctors is the continuous reduction in Medicare reimbursements for particular services and procedures.  Doctors who have been in practice for at least a couple of decades are now experiencing significant cuts to their reimbursement, especially under the new framework of the Affordable Care Act.

The obvious response by anyone, whether you’re a doctor or a business, is that when revenues or reimbursement drop, you have to make it up in volume.   It’s basic economics.  So when the reimbursement of an out-patient visit with your doctor goes down, the only way that he can continue to keep his practice solvent and still pay for his overhead costs is to increase volume.  

In a recent investigation, there was a suggestion that doctors’ income is distorted. If one were to calculate the number of hours it takes to perform a certain procedure based on the estimates established by the American Medical Association (AMA), and in order for the math to work, doctors would have to work more than 18 hours a day to substantiate the number of procedures they say they are doing.

There has often been the notion that if a doctor spends less time on a procedure he is, in fact, abusing the system by charging the same as others who may take more time.  Assume the example of an ophthalmologist who is able to perform a cataract surgery in 15 minutes as opposed to his colleague who takes 45 minutes to do the same procedure.   Should the doctor who takes 15 minutes be paid more or less than the doctor who takes 45 minutes?

The reality is that the determination of reimbursement by the AMA, and its recommendations to the federal government, are based on a subjective arbitrary assessment by a group of physicians which may be outdated.  What the system doesn’t factor in is the amount of skill required for that same ophthalmologist to perform the cataract surgery in 15 minutes, and the time and effort involved for the development of that skill.  

Under the construct of the Affordable Care Act, physicians will be paid, under some circumstances, a bundled payment for taking care of a single patient.  In that group of physicians, there could easily be a mix of both efficient and inefficient providers.   The problem with the current payment mechanism proposed through ObamaCare is that there is no means of adequately measuring the efficiency and the skill of physicians, as well as how they should be compensated.  Patient outcomes are clearly an important indicator of how the physician is doing, and a critical substantiation for how he should be paid. The proposed system, however, does not adequately address the fair compensation of doctors who are more skilled at advanced techniques and diagnostics and who are able to care for more complicated patients.  

In professional sports an athlete is compensated for his demonstrated skill and obviously his results, which is why on any given team, no two athletes are paid the same.  Suppose the owner of an NFL team were to suggest that the compensation for each athlete would be based on the entire team’s success?  Would there be an NFL season to talk about this fall?

The answer to the question of whether your doctor is underpaid or overpaid, in many respects, depends upon the physician’s skill and ability to effectively deliver care in a cost-effective manner that optimizes the outcomes and satisfaction of the patient.  Considering the number of years of training that are required for physicians to take on the responsibility of saving a person’s life, it may be time to use a different formula for accessing what this skill is worth, especially since society is willing to place a premium on other industries with no financial limits.

Dr. Sreedhar Potarazu is an acclaimed ophthalmologist and entrepreneur who has been recognized as an international visionary in the business of medicine and health information technology. He is the founder of VitalSpring Technologies Inc., a privately held enterprise software company focused on providing employers with applications to empower them to become more sophisticated purchasers of health care. Dr. Potarazu is the founder and chairman of WellZone, a social platform for driving consumer engagement in health.