Is medical fee for service the real villian or it is price controls?

I will argue that it is the price controls on the fees and not the fee-for-service (ffs) system per se.

The more popular argument is to the contrary. One example appeared recently in the NEJM,Oct 8,2009 edition in the "Perspective" section which featured a discussion about economics and health care reform. The comments of one of the participants seems typical. Dr. Elliot Fisher said in part ," Fee for service does not pay us to have long conversations with our patients.When we're feeling constrained, it is much harder for us to have the long conversation with patient with heart failure to see if we can manage them at home".

Fee for service once did pay us to have those longer conversations and offer longer history and physical exams when the fees were considered by the physicians to be adequate compensation . When I practiced in a fairly large group of internists ( circa the 1980s) most of us set aside one hour for new patients and 15-20 minutes for followup.Then CMS imposed wage and price controls and other third party payers typically followed the lead of CMS. This is the origin of the constraints of which Dr. Fisher speaks.

The price controls have worked as price controls have almost always everywhere.The quantify demanded increases, the quantity supplied decreases and quality of service diminishes.In econospeak, the demand curve slopes downwards and the supply curve slopes upwards.

FFS as currently constituted does not pay enough for physicians to spend the time previously spent with patients when fees were higher. To compensate physicians have decided to spend less time and thereby see more patients per day .Even with this, generally physician incomes are lower now than in the pre price control era when inflation is taken into account.

In these discussions, one jumps quickly to a fix-how to have a system that will rectify the defects of the flawed fee for service way of doing business, assuming away any argument counter to the assertion that FFS is to blame for the cost curve that is bent the wrong way.

One fix was suggested in the above referenced NEJM article-just pay one flat fee based somehow on a risk adjusted basis and on the quality and value of what they deliver. (as if quality and value are inherent characteristics such a weight or specific gravity) Enter from stage left the "accountable care organization", (ACO) which will save us from the FFS induced mess we are in now.

The ACO is the latest incarnation of a entity or mechanism that will do the wine for water trick for health care-improve quality and save money. Here is a brief discussion of the ACO from Kaiser Health News which, for some strange reason, reminded me of Will Roger's comment about boiling the oceans.

One of by two favorite EP cardiologist bloggers hit it solidly here when he said "

"Perhaps I'm too cynical, but I think the subliminal message coming from Washington so far is really this: doctors should be happy becoming salaried employees of larger health systems. This way, the government can pay the health system a bundled fee and the doctors can fight for their share of the kitty."