Doctor Earnings - and Why They Matter

President Obama and the Democrats may salvage something of health reforms using reconciliation to get past recalcitrant colleagues and a united Republican opposition. It's a far cry from what could have been achieved through a better, more proactive approach in the past year, yet a third of a loaf is better than none.

Administrative lapses have heavily contributed to the political stumbles. The Obama administration has failed to compile readily available data and publicize findings that undermine claims by special interests and their political allies who oppose reform. Reforms aimed at drastically curbing costs are bound to hurt some or most industry players, so they are all pointing elsewhere in the race to pin blame for health costs.

While the focus has been overly on insurers, a Feb. 25 study in Health Affairs by authors from a non partisan research group shows how hospitals and doctors bear much responsibility. The negotiating power lies with consolidated hospital chains facing little competition, and physicians increasingly banding together to command yearly double digit payment increases. (The study is limited to California, so it does not touch upon the national scarcity of doctors that contributes to their leverage.)

So how can Obama's administration including the HHS help simply by putting the facts out? One example is making widely available Medicare's true rates data, as described in my Nov. 21, '09 post. Another is shedding light on "true" doctor earnings.

Doctor and clinical services make up 21% of all US health care expenses, or half a trillion dollars annually. And this does not include the significant chunk going to salaried doctors directly employed by hospitals that account for an even larger 31% of total expenses. It is common knowledge that US doctors make much more than their counterparts elsewhere. According to available statistics it is twice or thrice as much as in other industrial countries. There are plenty of surveys on US physician earnings, but even these understate reality as elaborated subsequently.

This information is important for many reasons:

• It helps justify what are reasonable payments under the existing system, by Medicare as well as other payers who often use Medicare rates as a basis for their own negotiations. Medicare payment cuts to physicians under the Sustainable Growth Rate (SGR) legislation have been threatened since 2002 and amount to over 21% for 2010. Facing doctor protests, Congress has always suspended any cuts after 2002 and the whole formula will likely be scrapped under pending new legislation. Any new system should factor in reliably ascertained doctor earnings.
• It enables comparison of doctor earnings across specialties within the US, as well as across countries, particularly the first world peer economies. This tells us where the health dollars are going, and high salaries as a group are likely to indicate scarcity in specialties, needing policy corrections.
• It helps to determine if the problem is one of egregious waste or of egregious overpayment, and to consequently identify appropriate solutions. For example, a diagnostic radiologist drew in revenues averaging $1.46 million while earning "only" $438,000. Where does the remaining $1 million go? (It's not towards equipment and its usage as that is billed separately.) If it's mostly waste then a different model (say of radiologists employed on fixed monthly salary with reasonable performance bonus) can save a lot. On the other hand, the real earnings may simply be much higher than even the reported numbers. That strengthens the case for bringing them down through cutting payments, increasing radiologist supply domestically, and trade options.

While the reported earnings of US doctors have attracted some attention for quite a while, even these figures likely heavily underestimate true earnings for the following reasons:

• Almost all estimations are based on optional surveys with no penalties or safeguards against incorrect answers by doctors or other respondents. Doctors are acutely aware of public sensitivities about their earnings, and how this can impact Medicare payment rates that largely underpin their entire compensation structure. So they have every reason to under-report earnings.
• The studies most relied upon like the Occupational Employment Statistics and AMGA survey only include salaried physicians. According to BLS, self-employed physicians overall earn more than salaried ones, thus skewing the results downwards. Even including the self-employed may not help, given the greater propensity and leeway in this category to understate earnings.
• The response rate in these surveys is very low (e.g., under 9% according to p. 10 and p. 18 of the AMGA 2009 Executive Summary.) If the higher earning practices are reluctant to disclose "inconvenient truths" and shy away from participating, this again skews numbers downwards.

For all these reasons the Obama administration should compile the true doctor earnings statistics and make them public without further delay. This is a purely administrative task needing no legislative clearance and can even be done entirely under the political radar.

What's more, there's a ridiculously simple, quick and cheap way to accomplish this. How? By tapping into the already available sea of past IRS audited data on physician tax returns. Physicians as a higher earning group would have a higher proportion of returns subjected to audit. These audited returns will yield a much better representative, "non-optional" sample, not just for correct earnings but also to study expense patterns to identify waste and scope for reforms.

CDC Can Do More on Swine Flu

Looking up the CDC website on swine flu guidance reminded me of an old joke about a balloonist who was swept away by the winds and got lost.

He lowered himself next to a tall office building. He wrote "Where Am I?" on a placard and held it up for the people inside the building windows to see. Those people responded with their own placard that said "You Are in a Balloon 100 Feet Up in the Air." That answer was however enough for the balloonist to know that he was at the Microsoft headquarters in the Seattle suburb of Redmond. For going by its help feature in its products only Microsoft could provide an answer that was completely correct and yet so irrelevant and useless.

How's this related to swine flu? About two weeks ago I briefly came down with the sniffles and a mild fever that lasted less than a day. Then over this Labor Day weekend we drove to Pittsburgh where Anita's nephew had similar symptoms. We isolated the affected person (me and our nephew) and considered the obvious question of whether to seek testing, and if yes, where.

Testing would help the authorities to compile statistics and monitor the spread of the disease. Patients testing positive would know what to watch out for and be extra careful about exposing others. Recovered patients presumably acquire immunity, and needn't worry about subsequent exposure, or getting inoculated when the swine flu vaccine becomes available.

On the other hand, patients arriving in large numbers in medical facilities could put providers and other patients at risk, and strain scarce resources. Also, uninfected patients can acquire the H1N1 virus from others in the very clinic that they visit.

Weighing these pros and cons we looked at the CDC and other official websites for guidance. Despite all the other information crammed in there, we found nothing addressing these obvious questions. Countless other patients and American families may be similarly confused and frustrated.

The closest answer I got after clicking through links and menus was an indirect one, under "Home Care Guidance: Physician Directions to Patient / Parent." It said that you should see a doctor or seek medical help if you develop certain serious symptoms, presumably meaning that you shouldn't if these don't occur. It needs to be a lot more explicit and easy to find.

The new health care and CDC leadership under the Obama administration has been in place for quite some time, with Director Thomas Friedan confirmed in May 2009. They should have personally scrutinized their agency's website and confirmed there are no glaring omissions. They don't seem to have adequately done so, but this is fixable. Having worked in government these are the obvious added steps I would take in regard to swine flu were I directing CDC or the HHS in regard to the flu:

1) Prominently feature in the Frequently Questions (FAQs) and other parts of their website, as well as in briefs to the media

• Advice to persons with typical symptoms and parents on whether and when to get tested for swine flu, and when not to
• Similar advice on when to seek medical help or visit a doctor, and when to hold off out of concerns of spreading or contracting infection
• Some information about the cost of testing, the best places to go to (doctor's office, clinic or hospital emergency room?) and the reliability of the tests. Add more "layman" information about the benefits - and the downside or risks - of anti-viral treatments like Tamiflu and Relenza.

2) Have an interactive feature on the website where users can enter their address or zip code. They then get a listing with addresses and contact information of nearby medical facilities that have special swine flu treatment arrangements and / or accept patient samples for testing. To keep pricing transparent and competitive, such facilities should disclose their prices for standard testing and treatment, and this information should also be displayed. If an interactive feature is beyond CDC's scope they can at least provide links to state and local government resources that provide this information. It will specially help the uninsured, and many insured patients as well.

3) Engage and coordinate efforts with large providers and test labs to expand capabilities to handle swine flu patients. The CDC can also issue standard guidelines and practices (e.g., separate windows and rapid turnover waiting areas for flu patients in emergency rooms with proper signage, to limit cross-infections) that help providers and patients alike. The CDC can even use its power to disseminate information to have "suggested prices" for testing and treatment. Coupled with inviting providers to include their prices in the links on the CDC website as at (2) above, this will encourage lower prices.

4) Orchestrate a system to enable healthy family members to get sterile vials or containers from labs, collect patients' samples like nasal swabs, and submit these for testing. This way patients being tested get to stay at home and again limits inconvenience and the spread of infection.

5) Encourage or help set up a system of home visits to patients by health workers. Such workers should have either already contracted and recovered from H1N1 infections, or have been vaccinated after this treatment becomes available, so that they are immune.

Similar steps can be taken to disseminate detailed information about the swine flu vaccine which is expected to be widely available very soon. The CDC and the HHS are large organization with multiple responsibilities. So ideas like these may not have been considered. I hope they are responsive once they see them. Since H1N1 flu has now spread worldwide, other countries can also adopt similar practices.

Build Upon Or Rebuild Our Health System?

This article by Dr. Atul Gawande on healthcare policy in the Jan 26, 2009 edition of the The Yorker has created quite a buzz in the US. Prof. Jagdish Bhagwati drew my attention to it last week, as did my brother Viranjit and his friends through email exchanges. Atul (bio here) is remarkable in that he's a prominent cancer surgeon in Boston, as well as a celebrated writer and a Macarthur (or "Genius") award winner. His longish article (that you can read first to compare your impressions with the comments below) contains vivid analogies and knowledgeable references to developments far beyond medical matters.

Atul's main theme in "Getting There From Here" is that it's far better to build on (or modify) the healthcare system that we have, rather than create a new one from scratch. He argues that good European healthcare systems like those in France, Britain and Switzerland are different from each other and evolved from some existing structures. He also draws lessons from technology advancement in phone service to stay with the tried and the tested. He blames debacles like China's Mao-era Great Leap Forward, Rumsfeld's Iraq war strategy and Bush's prescription-drug plan for seniors on the mistake of introducing something completely new. He cites the Massachusett's universal coverage plan as an example of successful incremental reform.

I partly agree with Atul and have the following comments:

• Borrowing from hi-tech terminology we certainly need a proper and well thought out migration path to smoothly shift to an improved system.


• There can also be "path dependance" in the system we end up with, as Atul points out. Snopes reports on the widely circulated email about vital design features of our booster space rockets (claimed to be) "determined over two thousand years ago by the width of a horse's ass."


• However, it doesn't follow that the final healthcare solution has to look anything like the inadequate and expensive mess that we have today. (How much do the space rockets resemble a horse's ass?) Talking practical policy, John Edwards at the beginning of the last primary season introduced healthcare reform proposals that addressed transition issues well. Hillary and Obama borrowed a lot of his ideas, and all three outlined sound migration plans.


• The major healthcare problems aren't confined to the people without coverage. Even "the hundreds of millions who depend on it" as Atul says of those who're insured incur criminally high costs. They at least indirectly pay for it through lower take-home pay (since employers look at the total cost of their employees), through higher taxes, and/or lack of international economic competitiveness. So a Massachusetts type plan that doesn't address costs is very inadequate.


• Atul does not offer solutions that address the high prices (double of those in Europe) of healthcare, and ways to reduce the scarcity of doctors.


• International trade (exporting patients and importing doctors) that Prof. Bhagwati and I have advocated isn't mentioned here. It can enormously help in savings and coverage while transitioning to the new system over say, a ten year period.


• The article has been selective in picking examples and laying out facts where others can lead to different conclusions. Some takeaways (as from the problems with the prescription drug plan) seem to be fallacious. See quoted text below.

I'll close by reproducing a detailed note from my brother Viranjit's friend Jonathan that's interesting and seems to make a lot of sense.

COMMENTS ON ATUL'S ARTICLE BY JONATHAN STARR:

My reactions to the article are mixed. Some things that I think are done well are:
1) It gives an interesting and helpful presentation of some of the history of a few (but just a few) existing national healthcare systems.
2) It nicely introduces the concept of "path-dependence" in the development of present systems of various types.
3) It gives some evidence that in some ways the Massachusetts statewide coverage program might be working well. (If so, then it is the first of several such state-based attempts to succeed, or even survive, in a meaningful way. The others have failed to expand coverage on a sustained basis, and have become so expensive as to become politically unsustainable. I had previously read that the Massachusetts program was becoming financially untenable as well, but perhaps I should look into this further.)

Some things that I think are poorly done, or are very misleading, in the article:

1) The author is extremely selective, for failure, in his choice of large-scale, centrally-planned systems to describe. Instead, he might have described the Taiwan health-care experience. Here, government health-planners chose specifically to overhaul the entire existing system, studied various other national healthcare systems (and pointedly rejected the U.S. model), created a comprehensive new plan, and implemented the plan nationwide. The implementation went smoothly and the results are very good and popular. Closer to home, the national introduction of the U.S. Medicare system in 1965 also went very smoothly, even in the absence of modern information technology and other present advantages. And, as the author of this article notes himself, the Medicare program is extremely popular with beneficiaries and with medical personnel.
2) The choice of the recent introduction of the Medicare prescription-drug benefit as a cautionary example of ineffectiveness of central planning is very misdirected. The difficulties in the introduction and administration of that program were and are direct consequences of the success of the Bush Administration (and its associated insurance and drug industry lobbyists and Congressional fellow-travelers) in PREVENTING centralization of this program. Had this benefit simply been incorporated into the existing Medicare program, it could have gone very smoothly. But instead, Bush and company wanted to assure that private insurers got the most financial benefit out it, and that the pharmaceutical companies would not face a purchaser with large negotiating leverage. Consequently, they consciously pushed for and implemented the decentralized, disjointed, and confusing system that we got. (Furthermore, they introduced no new funding source, other than more federal borrowing, to pay for this new benefit.) So, this example should serve as support in favor of a more centralized approach, not as an example against it.
3) The author admits that present public programs are more successful than private insurance at improving quality of care. (The paper by Professor Hacker at Berkeley, which I have mentioned in previous emails, documents this as well.) The author also admits that the Massachusetts program does not control costs well, and he does not make any other meaningful suggestion for controlling costs through any other "path-dependent" evolutionary program. Meanwhile, Medicare has been shown to limit administrative overhead and to contain costs better than private insurance (see again the Hacker paper).

The author, Atul Gawande, clearly is well-intentioned and concerned about assuring quality medical care for all. In this, he is joined by other high-minded medical professionals (including Ezekiel Emanuel, the brother of the new administration's Chief of Staff) who have written sincere and thoughtful articles and books recommending methods to improve care and expand coverage without resorting to a single-payer system. But, while they often have very good suggestions for improving care (some of which are being actively pursued by the Daschle team), their ideas often seem extremely weak, naive, and poorly-examined on the financing side. (I plan to write a new little review of some of these publications to share with the single-payer-advocacy crowd, among others, and will share it with you.)

The various "middle-ground" and public-private-hybrid approaches that have been proposed might nominally (or just theoretically) make some level of healthcare insurance available to most or all, but they retain many of the problems of the present system: high administrative and insurance-company overhead costs, care-denial by profit-minded insurance companies, deflection of care-provider efforts and time to dealing with insurance-related matters, poor payer-based impact on care-quality improvements, anti-competitive burdens on American businesses, etc.

Medicare for All would expand an existing and popular program to cover everyone. The administrative structure is already in place. There would be enormous cost-savings from reducing administrative costs, eliminating insurance industry salaries and profits, increasing consumer negotiating leverage on fees and prices, and even from improving the identification and dissemination of information on the most effective approaches to care of particular conditions. The potential for improving health-care outcomes is enormous, and documentable from existing experience. Employers would be spared the financial and administrative burdens of providing healthcare insurance to employees (while simultaneously paying taxes to support existing public programs). Physicians, nurses, and other healthcare professionals could spend more time providing care and less time battling (often futilely) with innumerable insurance companies, and would be paid more predictably and reliably as well. Choice of medical-care providers would be maintained, and even increased compared to a lot of private programs which limit such choices to participating providers. And, supplemental insurance plans still could be offered privately (just as they already are now) to cover things not covered by Medicare.

Leadership is the key, just as it was when LBJ got Medicare (and numerous other publicly-beneficial programs) approved, and just as it was (to contrary effect) when George W. got his badly-conceived prescription-drug benefit (and even more badly-conceived tax-cuts for the wealthy) approved. What impact will our present leadership choose to have?

A Common Doctor Blind Spot

Patient alert: Many doctors seem to have a blindspot while treating infections. This can subject patients to needless agony or worse. I have personally observed this at least half a dozen times in India and the US, and some cases ended very badly. In all of these the patients were intensively treated with all kinds of strong antibiotics, to no avail. Here they are in chronological order:

1. Over forty years ago my father's uncle suffered a slow and agonizing death from virtual starvation after being hospitalized and then released. He refused to eat anything, and by the time they figured out why, it was too late.
2. My brother Kaku as an infant was afflicted with this infection and suffered for weeks after a hernia operation. It even transferred to my mother who was breast-feeding him. Finally, a very good and experienced doctor diagnosed the problem and it disappeared quickly.
3. Vivek from my college and subsequently my IAS batchmate in HP had a severe illness in the late 70's that landed him in one hospital in India and then another for several weeks. He had high fever, loss of appetite, yellow eyes and other symptoms of hepatitis that had doctors stumped since he did not respond to conventional treatments. Starting from a healthy body weight he lost about forty pounds in that time before doctors in India's famed AIIMS hospital correctly identified the infection. They then quickly (and easily) treated him, bringing him back from the brink.
4. In the late 80's my friend Raj was hospitalised in LA for several days with high fever and other symptoms that defied any treatment. Finally, a doctor of Indian origin happened upon his case, asked him one very relevant question, then ordered a test that confirmed that doctor's suspicions and prescribed medication that rapidly cured Raj.
5. About 10 years ago my young cousin Pavan in the US who was a medical student had a tonsillectomy. A few days later the pain in his throat was so acute despite all the medicines he received that he couldn't eat. Based on her experience (and high intelligence) my mother who has no medical background guessed at the problem and asked Pavan's family to bring it up with his doctor. The doctor after needless delay finally listened and Pavan was treated, but his prolonged suffering caused him to miss his medical board exams that year.
6. Just last month my father-in-law (Daddy) was recovering from two major surgeries at Inlaks hospital in Pune, including complications of pneumonia and hospital acquired infections. His lungs cleared and surgical wounds healed after a strong regimen of antibiotics, but he continued suffer from cough and persistent throat irritation. He couldn't sleep, asked to gargle every 15 - 30 minutes even at night. The Inlaks doctors ordered more antibiotics and tests and thought the irritation was due to residual infection in the breathing passages, as well as the feeding tube that was subsequently inserted because Daddy wouldn't eat or drink. But the problems was as bad or worse for several days after the feeding tube was removed and he was taken back home. Then I had Dr. I examine Daddy at home. Dr. I is very intelligent and sought after though he doesn't have quite the fancy qualifications of the Inlaks doctors. He had Daddy open his mouth wide, depressed his tongue and peered at the back of his throat with a flashlight. That was enough to provide the answer and clearing the condition in two days, though this was after two weeks of avoidable suffering and debilitation.

There is a common thread in all these cases. The doctors did not consider anything beyond bacteria and viruses as the cause of the infections, or simply ascribed the problem to "weakness" or irritation.

But in four of these cases at 1, 2, 5 and 6 above involving my great-uncle, brother Kaku, cousin Pavan and Daddy respectively the culprit was oral fungus, commonly known as thrush. The "good" bacteria in the oral cavity normally keeps this fungus in check, but antibiotics can kill this good bacteria. Then this very painful fungus infects the delicate lining of the oral cavity and typically shows up as white spots (though these may not be visible in the esophagus.) Once diagnosed, thrush is easily and rapidly treated. But if doctors who don't catch on and simply give more antibiotics can make the problem worse instead of better.

In case 3 involving my colleague Vivek, the culprit was amoebiasis where it was the amoeba that had invaded the liver. Again, while antibiotics don't work at all, anti-amoebic medications rapidly clear the condition - provided the doctors make the correct call.

Wanna guess what Raj had come down with in case 4? Well, it was malaria. The American doctors did not have this on their radar as it rarely occurs in the US. But the Indian doctor asked Raj if he had been abroad recently, and when Raj mentioned his recent trip to India, the doctor asked for his blood to be tested for the malarial parasite, and viola!

The takeaway: it seems to be a fairly common doctors' blind spot. If conventional treatment isn't working ask your doctor early on if he / she has considered and ruled out non-bacterial and non-viral infections like those caused by fungi, amoeba and parasites.

Murder On The Healthcare Express

In Agatha Christie's classic "Murder On The Orient Express" the famous detective Hercule Poirot is unable to solve a murder because the clues point to twelve people on the train. So he cannot identify the killer among them. Turns out that all twelve were involved.

This helps us understand the state of US healthcare. Okay, so it's not really murder of healthcare. Just a trillion dollars of annual extra spend (or half the US total) compared to say, France or Germany for same or worse care. As my article implies, roughly a third of the trillion dollars go to extra profits or earnings above "free market rates" to providers - drug companies, doctors, hospitals. The remaining two thirds of a trillion dollars is the inefficiency or "lose-lose" costs of keeping the current system in place.

How does this relate to the novel? If the high US healthcare prices were due to one factor unfairly enriching just one player, then that factor would have quickly been singled out and eliminated amidst the full glare of media and political spotlight. Instead we have multiple factors at play that enable each industry player to blame others and thus all can get away with "reasonable doubt."

Then of course with about $300 billion in excess rents at stake it is a no-brainer for the industry players to collectively plunk, say, a mere billion dollars annually to buy off (or "influence") policy makers. This helps to maintain the status quo or even alter it to further benefit the players. It's no accident that the drug benefit for seniors (Medicare Part D) costing about $43 billion annually are largely a giveaway to drug companies and private insurers with far less value to the seniors who are the professed beneficiaries. And Paul Krugman in one of his several articles describes how positive government involvement such as a VA (veteran's) health system built up in the Clinton era is stymied by business interests and their Conservative allies.

Lest all this is too general, let me recap some activities by industry players contributing to high US healthcare prices:

• Trial lawyers and the ABA styming tort law reforms and capping of malpractice damages.
• Drug companies overcharging for drugs by mislabelling government negotiations as "price controls" and taking advantage of a system where patients pays a fixed deductible. So patients don't care about prices, even when drugs have only marginal extra benefit.
• Doctor bodies controlling the physician pipeline to ensure that there's a shortage of doctors, instead of letting free market forces determine the supply.
• Hospitals consolidating to gain monopoly pricing power, and refusing to provide transparent pricing. In the process they often charge outrageously ($10 for an ibuprufen or aspirin pill or $75 for a box of tissues.)
• Private insurers opposing a competing public plan. I'm all for private insurance, but why not allow competition without unfair subsidies by a government institution? (P. 4 of 7 of John Edwards' plan envisages this.)

That's only five activities and players. Apparently you don't need twelve like in the novel to get away with it.

Doctor Shortages - A Few Benefit At The Expense Of Many

The current doctor shortage is artificially created but very real in the hardships it imposes on patients and payers. http://www.usatoday.com/news/health/2005-03-02-doctor-shortage_x.htm

The only group that benefits from this scarcity are doctors themselves for obvious reasons. But now even some (though few) of the doctors talk of expanding the pipeline. http://www.medscape.com/viewarticle/532152

The case being made out is for Medicare and Medicaid to massively increase the allocations so as to expand the pool of residents. That will of course be money well spent, helping patients and saving money in the long term. But even this may not be necessary.

Most hospitals value their residents. Anyone who has been to a hospital (or even watched shows like Grey's Anatomy or ER) can see how much of the work and care is handled by medical residents. They are after all skilled (particularly past the first year of residency) and cheap labor drawing $40-$50K a year for working 80 hour weeks. Some of those hours may go into classroom-like training or learning by watching, but most of them directly and considerably benefit the hospital.

So why not allow hospitals who want extra residents (outside of caps imposed by the ACGME or RRCs) without subsidies from Medicare to simply take them on? Many experienced foreign doctors also can be brought in this way, who can more than earn their keep as residents from day one. Then there are US medical students who are currently excluded from residency (or residency in their preferred specialization) because of the caps on such residencies. They may be required to pay their way or forgo a part or all of their stipends to the extent that hospitals consider them worth taking in without receiving subsidies. Or they may be required to execute a bond that commits them to work for a certain period at that hospital after graduating, or else to refund their cost of training. Whatever the arrangement I predict there will be no dearth of deserving takers for such offers.

Ignoring any special interests that benefit from the shortage and launching a concerted effort to vastly expand the physician supply should be a top priority for the government.