Sending Back the Doctor’s Bill

New York Times: By ALEX BERENSON

“I always find it ironic that when I go to doctor groups and such, they always talk about the cost of prescription drugs,” said Dana Goldman, director of health economics at the RAND Corporation, a nonprofit research institute in Santa Monica, Calif.In the United States, nearly all doctors are paid piecemeal, for each test or procedure they perform, rather than a flat salary. As a result, physicians have financial incentives to perform procedures that further drive up overall health care spending.

Prescription drugs cost, on average, 30 percent to 50 percent more in the United States than in Europe. But the difference in doctors’ salaries is far larger, Dr. Goldman said.

Doctors in the United States earn two to three times as much as they do in other industrialized countries. Surveys by medical-practice management groups show that American doctors make an average of $200,000 to $300,000 a year. Primary care doctors and pediatricians make less, between $125,000 and $200,000, but in specialties like radiology, physicians can take home $400,000 or more.

In Europe, however, doctors made $60,000 to $120,000 in 2002, according to a survey sponsored by the British government in 2004....[T]he lower salaries are a significant part of the reason that European countries spend less on health care than the United States does — a fact liberals avoid mentioning when they preach the advantages of a European-style single-payer system. ...

Doctors are paid little for routine examinations and very little for “cognitive services,” such as researching different treatment options or offering advice to help patients get better without treatment.

“I don’t have a view on whether doctors take home too much money or not enough money,” Dr. Bach said. “The problem is the way they earn their money. They have to do stuff. They have to do procedures.”

Primary care doctors and pediatricians, who rarely perform complex procedures, make less than specialists. They are attracting a declining percentage of medical students, and some states are facing a shortage of primary care doctors. ...

Medicare, especially, does not like to second-guess doctors’ clinical decisions, said Dr. Stephen Zuckerman, a health economist at the Urban Institute. “There’s not a lot of utilization review or prior authorization in Medicare,” he said. “If you’re doing the work, you can expect to get paid.”

As a result, doctors have steadily increased the number of procedures they perform on Medicare beneficiaries — and thus have increased their income from Medicare, Dr. Zuckerman said. But the extra procedures have not helped patients’ health much, he said. “I don’t think there’s any real strong evidence of improvements in health status.”