Christopher Tozzo recently articulated a troubling thought about the perverse incentives involved in a one payor, government-administered health care finance system:

A key premise in any call for socialized medicine is that physicians (and nurses and dentists and physical therapists and orderlies and equipment technicians and pharmacists and …) will continue to do what they do now, as much as they do it now (and where they do it now and as well as they do it now and for as long as they do it now and …) despite the efforts by government to enslave them. Like a battered spouse, the health care professional will, the bureaucrats presume, simply put up with it forever. [. . .]
If you’re smart enough to become a doctor, then you are smart enough to become a lawyer, accountant, investment banker or a dozen other ultra-skilled occupations that are not price capped. The laws of economics are not subject to repeal by any legislature. An artificial price ceiling creates a shortage, regardless of what “noble goals” underlie it. Doctors, especially future doctors, will not be turned into indentured servants without limit.

Tozzo’s point is a good one, and reminded me of the following note that I recently from one of my old friends, Dr. Jim Bob Baker. Jim Bob is a first-rate internist who was one of my late father’s best and brightest medical students. Jim Bob wrote about a new regulation that is creating similarly-skewed incentives for doctors under the current American health care finance system:

I wanted to let you know about the next new development in the mess that is the U.S. health care finance system. The newest wrinkle is what is being called “P4P”, or “Pay for Performance.” Ostensibly, the program purports to be a budget-neutral process whereby doctors and hospitals who meet certain guidelines in the provision of healthcare in specific illnesses will be given higher reimbursement, while those who fall below the benchmark will see their payments cut even further.
What we expect will happen has more of an Orwellian flavor. Hospitals and private practitioners are already preparing for the first installment of a scheduled 40% cut in Medicare payments to them that will occur over the next several years. In all likelihood, we will see an across-the-board cut to all providers. Then, if you want to see an “increase” in payment to get a portion of that cut reinstated, you have to jump through the particular hoops mandated by CMS. Those who fall below the standard will see their payments cut even further.
Pay for Performance is a noble idea. The doctors and hospitals treating patients most correctly get a higher payment for that treatment. However, as with most governmental programs, implementation of the noble idea falls woefully short of intended result.

One of the benchmarks for outpatient treatment is for patients with Diabetes. The goal for chronic therapy is to keep the Hemoglobin A1c level below 7% — this is a measurement of the amount of glucose bound to hemoglobin, which provides a correlation to a patient’s average blood glucose level over the past three months. A HgbA1c of 7% implies and average glucose of 150-180. However, it is an imperfect measurement, as 7% would also correlate to glucoses ranging from 50-540, which obviously is not ideal control, but we’ll ignore that fact for the time being.
The P4P benchmark for a doctor treating diabetics would be set as a certain percentage of his patients (90% for the sake of argument) with HgbA1c’s under 7%. Meet this artificial standard and your payment from Medicare is “increased” as discussed above. Fall below this standard and payment for treating these patients falls further.
Imagine two physicians. Dr. A is a family physician who works in an affluent suburb with educated and motivated diabetics. Dr. B is a diabetes specialist who sees complex and less informed diabetics at an inner city medical center.
Which physician will be more likely to meet the P4P benchmark?
Add to this the likelihood that Dr. A will refer many of his difficult-to-treat patients to Dr. B, because he is the “specialist,” further improving Dr. A’s statistics and driving down Dr. B’s. And this does not take into account the percentage of Dr. B’s patients who willfully choose not to follow his recommendations about medications, diet, exercise, etc, which also worsen Dr. B’s “performance.”
There are many other benchmarks being proposed by the feds for both outpatient and inpatient care, with similar unintended consequences. The worst of these influences from my perspective is the intentional “cherry picking” of patients by physicians with more superficial training or by smaller community hospitals, with the subsequent “turfing” of the more difficult patients (along with the lower reimbursement for taking care of them) to the specialists and medical centers.
Another factor about P4P that is not readily apparent is the expense of producing the data necessary to determine if a doctor or hospital is meeting the benchmarks. Already inundated with regulatory paperwork, providers wanting to continue to feed at the Medicare trough will have to commit even more overhead resources to the process of documenting and transmitting to federal regulators the information necessary to show that they are meeting the guidelines.
This process is already in effect for the hospitals, at least partially so. To maintain eligibility for Medicare dollars, hospitals have to submit to reviews by JCAHO — the Joint Commission of Accreditation of Healthcare Organizations. The hospital must invite this federal agency to come on site every 2 to 3 years to survey their operation and tell them what they are doing wrong.
Imagine the medical equivalent of boot camp inspection of footlockers by a drill sargeant with a bad attitude. And the hospital has to pay JCAHO for this enjoyment. Failure to do so means loss of accreditation, and with it, loss of Medicare dollars.
With these decreasing payments and increasing regulation, I think that there will be an increasing number of physicians opting out of Medicare in the next several years. Indeed, it would not surprise me if it becomes difficult to find a decent physician who will be willing to accept any Medicare-eligible patient, even with the world’s most generous secondary insurance. This is a difficult process to imagine for the Internist — the vast proportion of patients we care for are on Medicare. But if it costs more to provide the care than we can get reimbursed, then there is no future in seeing these folks. Kinda like the guy who said that even though he lost money on every business transaction, he would try to make up the difference by increasing his volume.
In closing, I think that your rather Walter would be very disappointed with where the practice of medicine is headed today. It is becoming less and less of the art that he practiced and taught. As I reflect on the recent changes I have made in my work situation, I am reminded of a line from the movie, “War Games,” the Matthew Broderick film where he plays a teenage computer geek who hacks his way into the national nuclear defense computer network. After getting the super computer to play tic-tac-toe multiple times to a draw, the computer says, speaking about thermonuclear war, that “the only way to win is not to play.” I kinda feel the same way about medicine these days.
And that’s bad. Because who’s going to be left in medicine to take care of you and me when we are in our 70’s and 80’s?