A lawyer's thoughts about physician compensation

This roundtable discussion got me wondering whether some of my complaints about the way lawyers are compensated might also apply to doctors.  For example, some of the most valuable time I devote to a client consists of nothing more than thinking about the case, perhaps while gazing out a window or taking a shower (I do some of my best work in the shower.)  But if a client sees "Thinking about the case while taking a shower" on the bill, I'm not going to get paid for that time -- particularly if I'm working for a large corporate client with bean counters paid to flyspeck my bills.  I will only get paid for time that can be described with vigorous action verbs regarding specific deliverables (like a legal brief) or approved actions (like appearing in court).  This is unhelpful, because briefs and court appearances that aren't preceded by thinking will inevitably turn out badly.

Many clients similarly resist being charged for conferences with other lawyers.  They consider this wasteful.  That is stupid, because the second most valuable thing I can do for a client is sound out another lawyer on a thorny issue, particularly if the lawyer has experience on that issue.  Such time can obviate hours of research (which clients also don't want to pay for -- apparently believing that lawyers acquire detailed knowledge of all of the countless potentially applicable statutes, regulations, cases, and other legal sources through some osmotic process).

In a perfect world this would have no effect on the way lawyers practice, but we don't live in a perfect world.  If you believe (as I do) that we'd all be better off if lawyers spent more time thinking, then you ought to oppose a system that refuses to pay them for it.  If the system pays for ill-considered motions but not for thinking, you'll get less thinking and more ill-considered motions.

It appears to me that something similar is happening in the medical practice.  Doctors get paid for office visits, but they don't get paid if they talk to us on the phone.  (This leads to office visits that could have been resolved with a phone call.)  Any time they spend contemplating our care outside an office visit they do for free.  They may refer us to another doctor for specialized care, but they don't get reimbursed for time they spend consulting with one another to improve our care.  If they wish to make real money doctors must spend all their time doing procedures, and the primary care docs who ought to be doing most of the heavy lifting make very little in comparison to the specialists.  These financial incentives shape the care we receive.  This roundtable comment makes that point:

In a recent New Yorker article, Atul Gawande vividly illustrated one of the greatest fiscal threats to American health care: over-utilization. Dr. Gawande and others, including President Obama, have blamed this practice of over-utilization of medical services on physicians and their traditional “fee-for-service” compensation model, which is thought to create a perverse incentive for physicians to do more than is actually needed, since the more care they provide, the more money they get.

In this, they are half right: over-utilization is a driver of cost, and it is in part driven by doctors’ economic incentives. The underlying cause, however, is a bias within the physician compensation system that extravagantly rewards surgical procedures performed compared to “cognitive” services like diagnosis and medical management.

In the E.R., for example, sewing a facial laceration pays far better than accurately diagnosing a heart attack. The same principle applies to any procedure — from angiograms to colonoscopies.

The predictable consequence is that physicians gravitate toward lucrative procedural specialties. They perform more and more procedures, using expensive new technologies, driving costs ever higher.

Meanwhile, office-based primary care doctors struggle. The compensation for an office visit is a tiny fraction of that for the simplest procedures. The family physician must rush from patient to patient just to keep pace with static or diminishing reimbursement. Fewer and fewer medical students are going into primary care.

If we changed the way that lawyers and doctors get paid, lawyers and doctors might end up  being happier, and we could all be better off.

Comments

[Woodburn]

Blame the insurers and their unholy minions, the accountants. They stopped trusting lawyers and doctors to treat them fairly during the 1980s. As systems analysts moved from mainframes to minis to PC-based networks, coding tasks to determine was billable, what was not, and what was excessive seemed all the rage. Meanwhile, those pesky CPAs and their consultant arms did not impose the same model on themselves. Annual audits and consulting projects continued to be quoted on a flat fee basis and staffed with a highly leveraged pyramid of professionals.

Today's middle-aged lawyers have grown up in a world where they have no comprehension at all of how to quote a flat fee or round out a month's pile of services to something appropriate to the result. We trudge on like lemmings to the see. Those who can command the "Cadillac" work, ratchet the hourly charges higher each year. Those who can't continue to discount and underbid on rates but make it up on volume of tasks. The result is distrust by clients, resentment by professionals, and general malaise.

The obvious solution? The European model. Everyone should take the month of August and vacation in the south of France. No questions asked.

Tres bon!