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Health Care: Salary vs Fee for Service

April 10th, 2008
By PAUL SILVER


The New York Times has an editorial on Quality Care at Bargain Prices that noticed the wide range of cost for end of life treatment cross the nation.

Few will be surprised to discover that doctors in high-expenditure institutions are typically paid on a fee-for-service basis, which means they earn more if they do more. Mayo Clinic doctors, by contrast, are on salary and have no financial incentive to do anything more than the patient clearly needs.



This entry was posted on Thursday, April 10th, 2008 at 7:37 am and is filed under Health Care. You can leave a response, or trackback from your own site.

Viewing 22 Comments

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    My father died last December after a 9-day stay in intensive care. There was, really, nothing they could do for him. My family accepted this. But there was always another test, or series of tests, just in case.

    They could have kept my father alive on a ventilator for a long time. When they asked us about pulling the plug, we agreed unanimously. We weren't sure why they hadn't asked earlier. My father had insurance, so costs were never discussed.

    Cost: $34,000.

    Without insurance it would have been $76,000.

    Even at the time, it seemed like a waste. In retrospect, it seems insane.
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    GeorgeSorwell...

    I don't mean to pry, but this is an issue that I care very much about (my mother having died last October).

    You said the cost was $34,000, yet w/o insurance $76,000. The insurance was limited?

    I fully agree with you that this is insane. Full disclosure: My mother lived in a country with a decent state-supported medical system.

    She spent 1 month in intensive care, and 5 in a longer-term palliative care.

    I had to fly back home repeatedly to take care of things all last year. The costs of that plus time off work were very high. But if it had occurred in the US...you can imagine.

    This is the reason I support HRC (even tho I am conservative). I do not understand why more Americans are not upset about their health care system.

    I have written a great deal about its economic inefficiency over the years. But the human cost to families!!!!

    Kudos to Paul Silver. I hope he and others here at TMV keep frontpaging this issue!
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    Marlowe--

    My father was on Medicare. He also had a Medicare supplemental policy from his job. The way that originally worked, I think, was that Medicare would pay 80% and the supplemental would pay the remaining 20%.

    A few years ago, Medicare set limits on how much it would pay for given treatments. Medicare would pay 80% of the price it set, the supplemental insurance would pay the rest.

    However, as time has passed, hospitals and other healthcare providers raised prices for non-Medicare patients. But, if they wanted to remain in business with Medicare, they continued to charge Medicare patients the lower rates acceptable to Medicare.

    If the Medicare patient didn't also have the supplemental insurance, he might have to pay the remaining 20% out of pocket. Or--he might have to pay the entire difference between the Medicare payout and the full price charged by the hospital.

    I hope you can follow what I'm describing. I don't have any of his bills close to hand, so I'm going to make up an example that won't challenge my mathematical abilities.

    Hospital rate........................................................................$100

    Medicare rate.......................................................................$50

    Medicare pays.....................................................................$40 (80% of $50)

    If you have Medicare and the supplemental, you pay....Nothing.

    If you only have Medicare, you might pay.........................$10 (20% of $50)

    --OR--the remainder of the Hospital rate.........................$60 ($100 - $40)

    If you have no insurance, you pay......................................$100

    Of course, if you don't qualify for Medicare, you'd pay the deductible for your own insurance policy.

    My father had both Medicare and the supplemental, so he paid nothing. The hospital was satisfied with the $34,000.

    Who knows what somebody else would have had to pay for the same treatment?
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    I'm sorry the formatting of my previous comment isn't perfect, but I appreciate having had the ability to go back and try to fix it. It's much easier to read now, at least on my computer.
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    Medical care in the US is insane in so many ways.

    After a series of strokes and heart attacks had left my husband critically debilitated both physically and mentally, he was hospitalized for his latest (and last) episode. He was denied the tiniest sip of water for fear he would choke, while tortured by an endless series of tests administered without my okay .
    I fought the hospital and his doctors to aciheve a change in his care, but I shudder to think what happens when there is no one there to do the fighting.

    To the end, more tests were offered, expensive and state-of-the-art tests, none of which could lead to possible treatments that would ease my husband's existence. I ended up hiring a medical consultant to help me understand which tests could possibly be useful and which not, an out of pocket expnese of $750.

    Well insured patients are definitely a gold mine for both hospitals and doctors, and patients are often just the spades to dig up the gold. Then, all of us pay for the costs incurred by insurance companies via increased premiums and other profit enhancing, cost decreasing methods.

    That's what happens when profits, not patient care, comprise the engine that drives the system.
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    GeorgeSorwell...

    Thank you. The variations on insurance seem extraordinary.

    And this was for 9 days?!! (I hope I am reading your comment wrong...it's the end of the day...and that you didn't have to pay the $34,000).

    "Who knows what somebody else would have had to pay for the same treatment?"

    I am very sorry for your loss, GeorgeSorwell.

    But you make a very important point about other families here.
    What happens to familes without comprehensive insurance?

    Sen. Obama tells a rather moving story about his mother dying from cancer, and all the time she was worried about the bills.

    I hope this election brings positive change on this issue, at least.
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    Runasim...

    Your account brought tears to my eyes. Truly.

    "I fought the hospital and his doctors to aciheve a change in his care, but I shudder to think what happens when there is no one there to do the fighting."

    I deeply relate. While Mum had a brother back home, I was the only person capable of running interference for her. Even though it was state-funded, it was bureaucratic.

    Thus, instead of costly tests and meds, like you Yanks...fewer meds.
    They actually took Mom off a necessary med w/o my approval at one point (when they knew I was safely away).
    Fortunately, a friendly hospital official called me...I freaked and flew back...big confrontation, and she was placed back on the medication.

    I had to use lawyers and every connection I could. The palliative centre where she ended up being placed was actually "hidden" within another centre, and one needed pull to access it. Again bureaucracy. No system is perfect.

    Runasim said: "I ended up hiring a medical consultant to help me understand which tests could possibly be useful and which not, an out of pocket expnese of $750."

    Is this not one of the most bizarre parts of the present system? To need a specialist to take care of one's interests with the medical establishment.

    I actually have that covered...on a credit card insurance, of all things...a doctor to run interference with other doctors (at least I was covered...there have been a few updates since...I should look into that).

    Incredible. GeorgeSorwell...Runasim...your accounts are simply outrageous.

    How many more such stories are out there?
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    Marlowe--

    Medicare and the supplemental paid the bill for $34,000. My family has not had to pay for anything because my father was covered by Medicare and the supplemental insurance.

    Other people's families probably have little idea what happens when this type of catastrophe strikes.

    And thank you for your kind words. I am sorry for your own loss, Marlowe.
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    Thanks for the reformat, George Sorwell. Clearer now.

    Man, this thread has me...sad, sympathetic, furious...something truly must change.
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    GeorgeSorwell...

    I am relieved that you were fully covered. Yes, you are right when you say "Other people's families probably have little idea what happens when this type of catastrophe strikes. "

    Yes, "catastrophe" is exactly the word. One's emotional base is shattered, one struggles with hospital officials (as with Runasim) . . . and then is presented with a bill.

    This is actually the issue I care more about in this election. I think...empirically...it is the one that affects more people than any other issue.

    I wish the candidates had more comprehensive plans, but . . . .

    Thank you again, GeorgeSorwell and Runasim.
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    Runasim--

    I am sorry for your loss as well.

    When I read stories like yours and Marlowe's I am reminded how easy I had it, all things considered.
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    Marlowecan brought up another terror of medical care: the bureucratic mind.

    I've witnessed an incredible waste of time and money in hospitals due to filling out forms and encouraging comments and recommendations by staff - all of which lack followup and selfom lead to any measures on behalf of the patient.
    There is incredible emphisis on setting up procedures, but then the procedures become ends (dead-ends, often) in themselves.
    Fill out the right form: check
    See what is. happening with the patient: no time for that.
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    Marlowecan and George Srowell,

    Thank you for your sympathy.

    I didn't bring up my persoma;l experoemces to gain sympthy. It was simply the easiest way to express my dismay at the impenetrable wall between those who make policies and those who live with the consequences.
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    This system can be vastly improved with political will. Each Republican elected is an obstacle.
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    runasim,

    Was your husband in a for profit hospital or a not for profit hospital. 80% of the hospitals are not for profit. I do not understand your rant about profits.

    Few physicians actualy work for a corporation. Most are in limited partnerships. There is no idea of profit but just paying the bills and making a good living.

    Medicine is one of the least profit driven business in the U.S. compared to something like housing, automobiles, or IT.
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    Superdestroyer--

    Are you actually defending the treatment Runasim's husband received? Or are you just making a technical, legalistic distinction about the word "profit"?

    I imagine everyone understands the context: the word profit is equivalent to the phrase "making a good living".

    Please clarify, Superdestroyer. Many thanks.
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    georgesorwell,

    Since Runasim used the term "profits" to imply something bad, she should have defined what are good profits and what are bad profits. Non-for-profit hospitals do not have owners that share in the income of the hospitals. The same goes for virtually all physicians groups. They are just partnerships that shares expenses but depend upon themselves to make a living.

    I am surpirse how far the left is getting in this country to demanding medical slavery where people who study medicine are forced to work against their will for lousy wages.

    i guess that is why Senator Obama believes that GS-12 clerks at Center for Medicare/medicaid Services should make more money and have better working conditions than emergency room nurses.
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    Superdestroyer--

    "medical slavery where people who study medicine are forced to work against their will for lousy wages."

    That's what you've got?
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    georgeSorwell,

    If you are going to advocate for socialized medicine so that non-medical workers can get a bunch of government goodies, you should look up the healthcare workforce data. Nurses are in demand and can easily switch jobs. That is why virtually all inner city hospitals have problems keeping nurses. If a hostile clinet base and lousy working conditions, the nurses move on. The job market is the same for pharmacist, x-ray techs, OR techs, etc. That cannot be be forced into slavery no matter how many times moveon.org uses the term "greedy profits."

    I also noticed that you did not define profit. Please do or admit that what you really want if medical care paid for by others.
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    Superdestroyer--

    Um....

    To quote my first, unanswered response to you: "are you just making a technical, legalistic distinction about the word 'profit'?"

    If that's the case, shouldn't you be the one to define the word "profit"?

    Did you know that you could use an online dictionary to find most commonly used words in the English language?

    Weren't you originally complaining about how most health care-providing institutions were not for profit...?

    Do you think the wide range of costs for end-of-life medical services reflects poorly considered incentives in the delivery of medical services...?

    Do you think the wide range of costs for end-of-life medical services is sensible?

    Are you defending the treatment received by Runasim's husband?

    And are health care workers slaves or not...?
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    Georgesorwell,

    80% of the Hospitals in the U.S. are not-for-profit. They do not have owners, do not distribute profits or income, and do not have stock holders. The same can be said for medical practices. The owners are the physicians who work in those practices. Non-physicians do not act as owners and do not receive checks from the practices. Even several insurance companies such as blue cross-blue shield are not for profit. To argue like Runasim that profit is what is wrong with medicine is incorrect , naive, and nothing more that a moveon.org talking point.

    That most Americans are not aware when they are in a for profit hospital such as HCA or UHS versus being in a not-for-profit such as Kasier Permanente should tell you that profits do not affect care.

    The costs for end of life care is just the culture of medicine. The medical practitioners just keep trying. That is why everyone is encourage to fill out advanced directives and have powers of attorneys. Remember, most physicians have a full practice. If they spend time on one patient, they have less time for another patient. To believe that a physician is ordering brain scans on a elderly patient to make a few more dollars is not correct.

    Runasims has made several misstages about how medicine works in the U.S. Why should I trust her judgement on what is good care or not. She seemed to believe he was at a restaurant where she could order exactly what she wanted and could tell the cook exactly how to make the meal. That is not how medicine is practiced (just ask the tort attorneys).

    And healthcare workers are not slaves. They can walk away from a job and physicians can walk away from a patient. However, in the socialized medicine you support, physicians, hospitals,and care providers will become price takers who will be forced to work for a set wage, forced to work in lousy conditions, and forced to risk their livelihoods when the government inspections and tort lawyers show up.
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    Superdestroyer--

    You're free to question Runasim's judgment, my judgmen