Who Pays Your Doctor? You Should Know

 It has taken three-quarters of a century, but our indirect healthcare payment system has developed into an impersonal factory style of care at an outrageous price, with our doctors working for corporate entities and NOT for us. How did this happen?
    During W.W.II to attract more workers into war equipment factories with wage controls that excluded benefits, employers offered pre-tax healthcare insurance modeled after Blue Cross that existed since 1929 (Ref.1). It was truly insurance, as it was for major costly events NOT for routine care. Without today’s financial services where one could have a charge card specific for healthcare, the employers paid brokers to buy insurance packages for their employees, thus removing the employee from concern of even knowing the cost of care. Over the years this benefit would morph into pre-paid healthcare that would claim to cover routine and expensive care costing over $20,000/year for a family of four. This amount represents salary NOT paid to the individual.
    The next major step came in 1965 with the passage of Medicare and Medicaid after years of political infighting of (Ref.2). These plans also cover routine and costly care while removing the individual from any financial control. The expenses of these two programs have reached budget-breaking amounts (Ref.3). These programs are excessively bureaucratic and with middlemen who consume a significant fraction of expenditures (Ref.4). As would be predicted, offering a service with the individual devoid of any concern about cost incentivizes gross overspending.
    To control these spiraling costs Medicare/Medicaid adopted an artificial, pseudo-scientific pay schedule for physicians and hospitals that underpays for many services and overpays for others (Ref.5,6). These payments have no relationship to market value eliminating price signaling. This has led to doctors and hospitals gaming the system, adopting an impersonal factory style of medicine to maximize dollars. As a result of these reimbursement changes and overwhelming administrative burdens most physicians (74%) are now no longer paid by the patient, but are employees of hospitals, large groups, or corporate entities, many owned by venture capitalists (Ref.7). These new arrangements focus on generating income for their owners and have created a conflict of interest. “This change in ownership does, however, create a new operating reality where the previous central tenet of healthcare delivery – doing what is best for the patient – now has a competing imperative: doing what is best for shareholders and investors” (Ref.8).
    With these profound changes in the practice of medicine, every patient should know who is paying the doctor. Is the doctor being told to prioritize income by limiting time per patient to maximize numbers/day and ordering as many paying tests as possible?  Most patients want their doctor doing what is best for them rather than corporate concerns. Therefore, patients should know who owns their doctor’s practice and that should that be public knowledge.

1. Leading the Way in Health Insurance, Blue Cross/Blue Shield, available at: https://www.bcbs.com/about-us/industry-pioneer (accessed June 9, 2022)
2. Edward Berkowitz, Medicare and Medicaid: The Past as Prologue, Health Care Financ Rev., 2005, available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4194925/ (accessed June 9, 2022)
3. Mark P. Cussen, How Much Medicaid and Medicare Cost Americans: Every taxpayer Contributes, Investopedia, March 11, 2022, available at: https://www.investopedia.com/articles/personal-finance/082015/how-much-medicaid-and-medicare-cost-americans.asp (accessed June 10, 2022)
4. Ed Burmila, The Middlemen Behemoths of Health Care Bureaucracy, World Press, December 10, 2019, available at: http://blog.riskmanagers.us/the-middlemen-behemoths-of-health-care-bureaucracy/ (accessed June 9, 2022)
5. Underpayment By Medicare And Medicaid Fact Sheet, American Hospital Association, February 2022, available at: https://www.aha.org/system/files/media/file/2020/01/2020-Medicare-Medicaid-Underpayment-Fact-Sheet.pdf#:~:text=Payment%20rates%20for%20Medicar (accessed June 9, 2022)
6. Tim Halliday and Ge Bai, The High Cost of Constant Covid Testing, WSJ, June 7, 2022, available at: https://www.wsj.com/articles/the-high-cost-of-constant-covid-testing-hawaii-insurance-taxpayers-pcr-antigen-11654540426?st=arq15xullxf608o&reflink=d   (accessed June 8, 2022)
7. Report: Supermajority of U.S. physicians are employed by health systems or corporate entities: Pandemic greatly accelerated consolidation, threatening the independent practice of medicine, Primary Care Collaborative, April 25, 2022, available at: https://www.pcpcc.org/2022/04/25/report-supermajority-us-physicians-are-employed-health-systems-or-corporate-entities (accessed June 2, 2022)
8. Sachin H. Jain,  Practicing Medicine In The Era Of Private Equity, Venture Capital And Public Markets, Forbes Healthcare, July 27, 2020, available at: https://www.forbes.com/sites/sachinjain/2020/07/27/practicing-medicine-in-the-era-of-private-equity-venture-capital-and-public-markets/?sh=447ec79d51ac (accessed May 26, 2022)

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