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How Big Medicine Will Affect Patient Care

How Big Medicine will restrict doctors’ freedom to practice and patients’ ability to receive care.

Paul Hsieh


September 10, 2013 - 9:54 am
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This is the second part in a series of articles on the rollout of Obamacare and how the law will change our health care system. Each week, we will publish two articles — one on the changes in medicine and medical care and one on changes in the insurance industry. We hope this series of articles will help you make better decisions when it comes to your health care and how you buy insurance.


The first article of this series described how the ObamaCare law is fueling the rise of government-controlled Big Medicine. This second article will take a closer look at how Big Medicine will control how what medical care patients can receive.

During the ObamaCare debates of 2009 and 2010, the debate centered around the twin goals of achieving “coverage” for Americans and of cost control — often phrased in terms of “bending the cost curve” down.

Normally, the government doesn’t really care how much Americans spend in aggregate on privately purchased items such as smart phones or concert tickets. Bureaucrats don’t worry about “cost control” in that sense.

However, health care is different. Health care costs currently account for almost 25% of the federal budget. Furthermore, “in just a decade, health care will consume nearly one in three federal dollars, pressuring government spending in other areas, such as infrastructure and the military.” Under ObamaCare, government is expected to account for 66% of all health spending, which makes it their concern.

But to control health costs, the government must control the behavior of those providing medical services — namely doctors and hospitals. I wish to focus on two controls in particular: “bundled payments” and “pay for performance.”

With “bundled payments,” hospitals and physicians receive a fixed fee to take care of Medicare patients’ conditions (e.g., a stroke or a heart attack) regardless of how much the care actually costs. If they can treat the patient for less than the bundled payment, they keep the excess. If their costs exceed the payment, they must absorb the loss.

With Medicare “pay for performance” (or “P4P”), the government withholds a percentage of normal Medicare payments to doctors and hospitals. It then pays out that money at the end of year if doctors achieve certain “quality” benchmarks (e.g., percentage of heart attack patients who received a certain drug, or percentage of suspected pneumonia patients who received certain blood tests).

(Because providers can only earn up to the original full payment, it should probably be called “non-pay for non-performance.”)

These methods are typically justified as improving “value” and “quality.” But they can also compromise patient care.

Consider “bundled payments.” In theory, the fixed payment is supposed to encourage “efficient” and “integrated” care. But in practice, they create perverse incentives for doctors to skimp on care, especially for the sickest patients.

A hospital administrator might ask a doctor, “Do you really need to take Mrs. Smith to surgery now for her heart problems? Or can she get by with only medications for a little while longer? And does she really need the high-end antibiotic that kills 99% of bacteria? Or can we get away with the cheaper drug that works 85% of the time? We’ve already burned through her fee for this admission, so anything else you do for her comes out of our pockets!”

(Physicians employed directly by hospitals will have an especially hard time resisting such pressures from administrators with the power to terminate their employment contracts.)

Similarly, “pay for performance” (P4P) incentives can compromise patient care by pressuring hospitals and doctors to place the government’s priorities ahead of patients’ actual clinical needs. We see a similar phenomenon when government schools are rewarded for student performance on standardized tests. Schools can be tempted to “teach for the test” rather than teaching what’s actually important for their students’ future academic and life success.

For example one government P4P metric is, “Percent of patients who had their antibiotics stopped within 24 hours after surgery ended.” For most surgery patients this is appropriate care. But surgeon Jeffrey Parks has described numerous bureaucratic headaches when his patients had specific medical problems that required a longer course of antibiotics and he needed to order medications for longer than the approved protocols.

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All Comments   (5)
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It is frustrating that Obamacare won't fix in any way the big camel nose under the tent, Medicare. My elderly relatives cannot be convinced to conserve their Medicare benefits and continue to go to doctors about monthly for all manner of tests and treatment. The waiting rooms are full of other elderly. One relative is frail and very old, nothing any doctor can do will change that. The other is in his nineties and recently had a pace maker installed. I don't want to sound cruel but both are seeking the Fountain of Youth at the doctors' offices. So sad.
1 year ago
1 year ago Link To Comment

Doctors began to lose their professional independence with the advent of managed care in the 'nineties. True, many ran offices that were grossly inefficient and managed care helped wring that excess cost out of the system.

But now we are long past that point. Slowly the docs are being forced out of private practice and into some kind of employment relationship with a large health care business. A hospital chain, a larger clinic, an HMO, it doesn't matter.

Once so employed they are slowly but surely pressed into conformance with the institution's way of doing things, which is always - always - focused on making money.

1 year ago
1 year ago Link To Comment
We will soon imitate the health care system of Ukraine, whatever that is. Walking around the Ukraine, you see some elderly women and no elderly men. One can reach old age entirely without health care, if you are fortunate to avoid accidents, alcoholism, complicated pregnancies, cancer and heart disease. Thus, some people in the Ukraine go their whole lives without health care. For the party elite, the Emanuels, Pelosis, Jarretts and others will get superb health care if they get sick, but the average Joe will get very little.
1 year ago
1 year ago Link To Comment
My advice; study to become a doctor (not a terrific professional choice today), marry a doctor, give birth to or adopt a doctor. Otherwise, take a number and wait until your number is called. I'm alright, Jack. The rest of you will be SOL.
1 year ago
1 year ago Link To Comment
since no business can continue in business if costs are more than income, hospitals will have to become defacto death panels for patients.

If the government takes over the failing hospitals they can tax more, but eventually they to will run out of money and become defacto death panels.

And doctors who see time to become a doctor and dimished returns will not be promoting others to go into the health care profession and then we get less health care and more problems and the snow ball turns into an avalanche
1 year ago
1 year ago Link To Comment
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