| Free Medicine Works
by John Goodman
Issue 117 - October 8, 2008
 There are two schools of thought about what's wrong with modern medicine:
- The doctors are at fault.
- The payment system is at fault.
Strangely, the first camp includes almost all researchers (read: other doctors) who write for medical journals as well as almost everyone in the health policy community. On this view, doctors (unlike lawyers, accountants, engineers, architects, etc.) are creatures of habit, stuck in their own (imperfect) ways of doing things. The public policy problem: how to get doctors to adopt the best practices, learn to use computers, work in teams, adopt safety protocols, etc. in the face of psychological resistance.
The opposing camp consists of yours truly and a handful of others. Our view is that doctors are just like other professionals. They respond to economic incentives. The policy problem: how to change the incentives in the perverse way doctors are paid.
So who is right?
New evidence that it's the payment system, not the doctors, is at fault comes from the field of dermatology. Large numbers of dermatologists are practicing two completely different styles of medicine - one for patients under the traditional payment system and another for cosmetic patients, who pay with their own money in a free-wheeling laissez faire marketplace. The same doctors have different appointment systems, different waiting rooms, different treatment rooms, etc. - depending on who is paying the bill.
According to a New York Times investigative piece, patients who are seeking treatment for acne or psoriasis go straight into voice mail at one doctor's office. But a full-time staffer fields calls on a dedicated line for patients seeking Botox treatments. The waiting room for cosmetic patients is "luxurious, with soft music and flowers." For medical patients, the facility is more spartan. A cosmetic patient may find the examination table covered with a sheet, rather than a paper liner. Cosmetic patients are more likely to find valet parking. They are more likely to get a follow up call from a nurse. And, they are more likely to see a real doctor. Increasingly, dermatologists are hiring nurse practitioners and physician assistants to see their medical patients.
One survey of practices in 11 cities found that patients waited significantly more days for an appointment for a mole examination than for Botox treatment. In some cases, medical patients waited as much as 3 or 4 times as long.
So, what's going on?
In one payment system, third-party-payer bureaucracies decide what activities they will pay for, what they will not pay for, and how much they will pay. In this system, doctors have no freedom to repackage and reprice their services. In the other system, doctors are free to repackage and reprice continuously - making patient-pleasing adjustments and profiting from those adjustments.
Returning to the two schools of thought, both want to change the payment system. But the approaches are radically different. One wants to control doctors. The other wants to liberate them.
- People in the first camp want to figure out how medicine should be practiced and then pay doctors only if they do it the right way.
- People in the second camp want to free doctors to make continuous improvements and financially benefit from those improvements.
John Goodman is President of the National Center for Policy Analysis
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