In my last blog, I began the subject of liberating the doctors. We’re following the work of John C. Goodman of the Goodman Institute, who tells us we need to consider four principles if we want to take full advantage of the knowledge and experience of doctors in fixing our broken healthcare system.

In Part I of this series, Goodman told us we must:

• Give doctors the freedom to repackage and reprice their services
• Encourage supply-side innovation

Today, we will discuss his other two recommendations.

Start with private sector opportunities.

In an ideal world, doctors would be able to approach Medicare and make a deal. In return for being paid in a different way, they would guarantee lower costs and a higher quality of patient care. We shouldn’t give up on that idea, but the odds will be much better if the payer is a private entity. For example, DPC doctors initially refused to deal with any third-party payers. That has changed. One of the fastest-growing trends in private insurance is employer payment for direct primary care.

To my knowledge there is no public sector insurance plan that has taken advantage of this opportunity. Certainly not Medicare or Medicaid. That is not surprising. Medicare was the last insurer to cover prescription drugs. It has been way behind the private sector in many other ways – including adopting the opportunities created by telemedicine. Yet, there is an exception to this generalization. That is the Medicare Advantage program– where roughly half the beneficiaries are enrolled in private insurance plans. MA plans are allowed to specialize and become centers of excellence for specific types of care.

For example, there are special insurance plans for diabetes, for congestive heart failure, for lung disease, etc. These plans are becoming innovators in chronic disease management. Some doctor-run MA plans, for example, make insulin free—as well as consultations with an endocrinologist. By investing in these upfront costs, the plans avoid the greater costs of emergency room visits and hospitalization. One way to think of these special-needs plans is to see them as an extension of the DPC model applied to specialty care. There is no reason in principle why doctor-run centers could not provide specialist services to all private sector insurance plans.

Deregulate the medical marketplace.

Before seniors were allowed to talk to their doctors by phone, Medicare bureaucrats spent thousands of hours trying to decide what tasks were appropriate for phone consultations and what fee should be charged in each case. Now that the Covid medical emergency is officially over, they are at it again.

If a doctor calls a patient with the results of a blood test, should that count as a consultation? How much should be charged? Somehow, lawyers, accountants and other professionals manage to resolve issues like these without an army of bureaucrats looking over their shoulders.

The medical marketplace is by far the most regulated of any consumer market. That is unfortunate. Almost any good idea that really would lower costs, improve quality and expand access to care is likely to face regulatory barriers. Here are a few changes that would liberate doctors and patients for the benefit of both:

• Allow employers to put money in a Health Savings Account (HSA), from which employees could make a monthly payment to a DPC doctor of their choosing.
• Allow employers to provide free services to the chronically ill without making employees ineligible to have an HSA.
• Allow doctor-run specialty plans to have access to the (Obamacare) exchanges and to the employer market in the same way they are available in the Medicare Advantage program.
• Allow enrollees in traditional Medicare and in Medicaid to have access to DPC services and to doctor-run special- needs plans for the chronically ill.

There you have it; four principles to revolutionize our healthcare system and liberate the doctors! It’s about time we let those who deliver healthcare tell us how to manage the delivery system; not those who are only in it for the money.

Liberating the Doctors! What a catchy title, but who knew they needed liberation? The doctors, that’s who.

John C. Goodman is the founder of the Goodman Institute which specialize in public healthcare policy. Goodman is a healthcare economist who has written extensively on the problems in healthcare public policy and now he says it’s time to liberate the doctors.

Goodman says, “For almost half a century, this country has been seriously engaged in efforts to reform our health care system ­ to reduce costs, improve quality and expand access to care. Participants in the effort have included politicians representing all points of view in Congress and in state legislatures, bureaucrats of all stripes and varieties, business executives, labor leaders, insurance company reps, hospital execs, academic health economists and a slew of nonprofit foundations. The one group that has been noticeably absent from these discussions are the doctors who actually deliver care. That’s not an accident. Everyone else has decided that doctors are the problem, not the solution. They don’t practice medicine the right way; they don’t bill the right way; they don’t keep medical records the right way; etc., etc.”

Ironic, isn’t it. You wouldn’t consider asking a politician how to treat your diabetes or give you a hip replacement, but everyone thinks the politicians should know how best to deliver healthcare. Doctors are not necessarily the finest businessmen and women, but they do know better than most about healthcare delivery. It’s time they were included in the conversation!

Goodman goes on: “That’s why virtually every solution that has been tried involves people who don’t practice medicine telling the doctors who do practice medicine how to manage their affairs. And none of these solutions appears to work. Costs keep rising. Quality of care is not measurably improving. And, access to care (as measured, say, by per-capita doctor visits or the length of time needed to see a doctor) seems to be getting worse. So why not try something different? Why not allow the folks who practice medicine and who are in the best position to eliminate waste, improve quality and expand access to care to solve the very problems no one else seems able to solve?

He says for that effort to be successful, we need to follow four principles:

Give doctors the freedom to repackage and reprice their services.

Doctors are the only professionals in our society who do not have the freedom to repackage and reprice the services they offer in the marketplace. All the other professionals – lawyers, accountants, architects, engineers, etc. – are free to change the services they offer and the fees they charge whenever technology changes, whenever science changes or whenever there is a change in customer preferences.

Currently, there are 10,000 tasks that Medicare pays doctors to do. If there is a service that a patient needs that is not on the list, the doctor doesn’t get paid anything. If the service is on the list, the doctor only gets paid Medicare’s fixed price. There is no negotiation of these prices. The doctor has to take it or leave it. Large private insurance companies tend to pay the same way Medicare pays – using the same list. Their rates tend to be a percentage of what Medicare pays (e.g., 150 percent), and again there is no negotiation. It’s take it or leave it.

No other professional is paid this way, and for good reason. Imagine you were charged with a crime and an outside entity set the fees your lawyer gets for different tasks. Just to make up an example, suppose the lawyer gets paid $50 an hour for jury selection and $500 an hour for preparing a final summation of your case. You might get a really excellent summation at the end of your trial – one that would ordinarily get you off scott free – but (unfortunately for you) it’s delivered to the wrong jury!

Even worse than mispricing is the presumption that anyone could think of everything a professional might do to help a customer and then put it on a written list. Until the Covid pandemic, for example, consultations by phone, email, Zoom Skype, etc., were not even on the list of services Medicare paid for – except in rare circumstances.

Encourage supply-side innovation.

How do we know that practicing doctors could improve on the current system? Because that is what happens whenever they provide services outside the third-party payer system. In the fields of cosmetic and Lasik surgery, for example, we see transparent package prices that have declined in real terms over the last two decades – even as the cost of every other type of surgery kept on rising. Further, this happened even as there was a huge increase in demand and all manner of technological changes – which we are told raise costs everywhere else in medicine.

Direct Primary Care (DPC) is another example. DPC doctors provide all primary care for reasonable monthly fees (say, $50 a month for a mother and $10 for her child) and patients are usually able to reach their doctor by phone at nights and on weekends as an alternative to visiting the emergency room. There are endless possibilities here. Giving doctors freedom to offer different services to the market for different prices not only promises less expensive, higher quality care, it should be the goal of any responsible health reform.

Note: To learn the other two principles, stay tuned for my next blog post.

ObamaCare has been bad for doctors, and many patients who have to pay for their own premiums, but it’s been good for hospitals. New hospital construction is booming where I live and I suspect where you live, too. Hospitals are purchasing more and more physician practices as they bring these formerly independent medical practices under their own umbrella. That means more control over the way doctors practice medicine, which means more control over healthcare dollars.

This has led to consolidation of large hospitals and smaller hospitals into large hospital and health systems. In my town, what used to be called Florida Hospital is now called Advent Health. What used to be called Orlando Regional Medical Center is now called Orlando Health. Both hospital systems are growing by leaps and bounds and each seems determined to outgrow the other into more and more remote locations.

Grace-Marie Turner, writing for Galen.org, says this consolidation of large hospitals and health systems is on the political and policy radar screens of both Republicans and Democrats, offering a rare opportunity for action in a polarized Congress. Ninety percent of the nation’s hospital markets were considered “highly concentrated” in 2017, with many more mergers since then. This cuts costs for hospitals but the savings rarely are passed along to consumers.

Hospital prices go up 6 to 20 percent when one merges with or acquires another, according to Janet Trautwein, who heads the National Association of Benefits and Insurance Professionals. She says that leads to higher premiums but not a coincident increase in the quality of care.

The bureaucratization of medicine makes it extremely difficult and risky for physicians to remain in independent practice. Three out of four doctors now are employed by large hospital systems or health plans. They turn over scheduling, billing and negotiations with insurers to these conglomerates in exchange for a salary and some support staff.

Medical blogs show how this is decimating physician morale as they are forced to see eight or more patients an hour with the “system” recommending tests like vascular studies and abdominal ultrasounds they don’t necessarily believe are needed.  Instead of having a nurse on staff to answer patient calls, the calls may be rerouted to call centers overseas and to having patients directed to urgent care centers (which the systems also own).

I wrote of this dilemma in a series of earlier posts called Doctors Facing a Moral Crisis – Parts I-IV. This has significant ramifications for the practice of medicine as well as the quality of healthcare delivered in our system.

It is a monumental problem that will take the best minds and the work of politicians to solve. Grace-Marie Turner says, “There is no silver bullet solution to reform how $4.3 trillion in private and public money is spent on health care every year. But it is important to begin. Three key House committees have been working all summer to hash out details of an important health reform bill to be introduced today, the “Lower Cost, More Transparency Act.”

The House Energy and Commerce, Ways and Means, and Education and the Workforce committees have negotiated a package that focuses on health care price transparency, site-neutral payments, extending funding set to Community Health Centers, the graduate medical education program, and other health programs.

Fortunately, there are signs of agreement across the legislative aisle. The Third Way, for example, has a new report that explains: “Out-of-control hospital prices are part of a vicious cycle where hospital consolidation drives up prices and subverts the competition needed to keep costs in check. In turn, higher costs undermine the adequacy of Medicare payments to hospitals, which leads more hospitals to consolidate.”

And the Progressive Policy Institute also has launched a new center on Competition Policy to be headed by Dr. Diana Moss, an expert in anti-trust policy whose mission is “to advocate for strong competition enforcement and policy.” While we don’t always agree on solutions, agreeing that hospital consolidation is a major cost driver that is impacting the entire health system is an important start.

It’s time to remember healthcare should be all about delivering the best quality healthcare, not delivering the highest profits.