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.
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.