Dick Morris (former Clinton Aide and author of “Catastrophe”) made the comment this morning that “There are only two ways to cut costs in the medical care system: you either reduce doctors’ salaries or you reduce the amount of medical care that patients receive.” In other words, Morris presents us with a fairly basic economic reality regarding cost control: it must take the form of either reducing the cost of inputs, or the cost of outputs. In Morris’ argument, doctors’ salaries represent the inputs, or the cost of goods sold, that force up the price of the final product , in this case healthcare. By reducing these salaries, and by therefore reducing the cost of producing healthcare, it would be possible to sustain our nation’s current level of aggregate output and still reduce the overall cost associated with those output levels.
But wage reductions simply are not feasible. As is, there is an insufficient supply of doctors, and specifically primary physicians, within the system. A reduction in salaries would only further push down the supply of health care providers, creating further market inefficiencies and a raise in the price of healthcare in order to bring the market back into relative equilibrium (i.e. as the supply of doctors reduces and the demand for their services remains constant or increases, the end result is an increase in price).
The other option, according to Morris, is the aggregate cost of the system is reduced by reducing aggregate output. Or, in other words, we reduce the total amount of healthcare being provided in order to reduce the overall cost of the system. This process, referred to by critics as “healthcare rationing”, would have a very real and direct impact on the doctor-patient relationship. It would dictate what and how many tests and procedures could be performed. The system would look to reduce overly expensive or excessive procedures, which, as Morris points out, would translate into a reduction in the level of healthcare provided to seniors, who contribute to nearly eighty percent of the total cost of healthcare.
In Morris’ opinion, the concept of healthcare rationing to seniors is the underlying reason why Obama’s plan wont work. Despite a sixty-vote majority in the senate, Morris argues that the disparate impact of Obama’s legislation on seniors will erode a significant base of political support for many congressional representatives, and therefore prevent the kind of widespread consensus necessary to pass healthcare reform.
For his part, President Obama has attempted to extend the possible sources of cost control outside of the aforementioned areas. He has argued that cost savings are imbedded within moving medical records to an online database (which has unfairly been characterized by some conservatives as a violation of privacy…which it really would not be), and he has hinted to other potential savings, although he has chosen not to specifically define those potential savings.
In the end, Morris’ definition of cost savings has been too limited, and the President’s too undefined. Although, and understandably so, any and everything that was attempted by former President George W. Bush has become political taboo, Bush had a take on healthcare related cost control that lacks the proper attention from both Morris and Obama. Medical liability reform offers a real potential to decrease the inputs associated with healthcare, and it should be a minimum pre-requisite before a broader debate of healthcare reform.
In the hyper-litigation society in which we live, medical malpractice suits have come to represent a significant challenge for the medical industry. According to the New York Time’s bestselling book “Better” by Atul Gawande, on average, a medical practitioner in a high-risk field of practice (such as obstetrics or oncology) is sued once every six years. Seventy percent of the time, the suit is dropped or the doctor wins in court, but the cost associated with the shear amount and size of these suits is significant. Depending upon their field of practice, surgeons pay anywhere from “thirty thousand to three hundred thousand dollars a year in malpractice-insurance premiums…neurosurgeons and obstetricians pay upward of fifty percent more”. With many of these suits requesting six-figure sum payouts, they represent real deterrents for doctors to enter the field. The costs must either be passed on to patients (raising the cost of healthcare), or most eat into the profit margins of the doctors (making the field less attractive, reducing the amount of practitioners, and inevitably raising the price of healthcare).
The system makes little sense. And what makes it worse? Some studies show that the likelihood of a doctor being sued has very little to do with fault or with medical knowledge.
Researcher Wendy Levinson reviewed several hundred conversations between physicians and their patients. Half of the physicians selected had never been sued, while the other half had been sued at least twice. What she found was that there was no disparity between the two groups in terms of medical knowledge or the level of care provided (i.e. tests requested, proper diagnoses made, etc.). What she did find was that the group that had not been sued, on average, spent three minutes more with their patients (18.3 minutes versus 15 minutes for those who had been sued). Second, she found that those who had not been sued were more likely to make orienting comments such as “First I’ll examine you, and then we will talk the problem over” or “I will leave time for your questions”.
Psychologist Nalini Ambady took Levinson’s study a step further and found that you could almost perfectly predict which surgeons would be sued based solely on analyzing the doctor’s tone over a forty second period of time. Ambady took their conversations and stripped the actual words being used, reducing them solely to a mumble that conveyed nothing beyond the doctor’s tone towards the patient. If the surgeon’s tone was dominant, then they almost always were in the group that had been sued, while those who had not been nearly always had a less-dominant and more concerned tone.
The Ambady and Levinson studies show us that our system of medical malpractice does not serve to punish bad doctors, but rather to provide an outlet against doctors with poor inter-personal skills. It raises the cost of care provided, reduces the amount of doctors available, and isn’t even effective in doing what it was designed to do, which is to protect patients.
Creating caps on punitive punishments (or even altogether eliminating them, absent an accompanying criminal conviction) against doctors would provide real cost savings, and it should be a precursor to any additional healthcare reform. It is a real and glaring problem within our system, and needs to be addressed because it is unfair, makes no sense, and is easily remedied.
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