How Doctors Are Trapped, Part II

Of all the people in the health care system, none is more central than the physician. Fundamental reform that lowers costs, raises quality and improves access to care is almost inconceivable without physicians leading and directing the changes. Yet of all the actors in modern health care, none are more trapped than our nation’s doctors. Let’s consider just a few of the ways your doctor is constrained, unlike any other professional you deal with.

No Telephone. Sometime in the early part of the last century, all the other professionals in our society — lawyers, accountants, architects, engineers, etc. — discovered the telephone. It’s a handy device. Ideal for communicating with clients. Yet even today I find that I can rarely talk to a doctor by phone. Why is that?

The short answer is: Medicare doesn’t pay for telephone consultations. Medicare has a list of about 7,500 tasks it pays physicians to perform. And talking by phone isn’t on the list — at least in a way that makes it practical. Private insurance tends to pay the way Medicare pays. So do most employers.

At a time when doctors feel like they are being squeezed on their fees from every direction by third-party payers, most become very focused on which activities are billable and which are not. And most are going to try to minimize their non-billable time.

And now my life has changed in oh so many ways,
My independence seems to vanish in the haze.

No E-Mail. Sometime toward the end of the last century, all the other professionals discovered e-mail. In some ways it’s even better than the phone. Everybody e-mails everybody these days. Even the corner liquor store e-mails me when they have a bottle of wine they know I will like. Everybody e-mails everybody — except doctors.

Why is that? Again, the short answer is: this is another task that’s not on Medicare’s price list — at least not in any way that makes e-mailing practical. Since Medicare doesn’t pay, all the private insurers who piggyback on Medicare’s payment system follow suit.

The fact that patients cannot conveniently consult with physicians leads to two bad consequences. First, the unnecessary office visitors (say, patients who have a cold) expect at least a prescription in return for their investment of waiting time, and all too often the drug will be an antibiotic that won’t help their cold. Were e-mail or telephone consultations possible, the physician might recommend an over-the-counter remedy, thus avoiding the cost of waiting for the patient and the cost of degrading the effectiveness of antibiotics for society as a whole.

At the same time, rationing by waiting at the doctor’s office imposes disproportionate costs on chronic patients who need more contact with physicians. This might be one reason why so many are not getting what they most need from primary care physicians and what is most likely to prevent more costly problems later on: prescription drugs.

The ability to consult with doctors by phone or e-mail could be a boon to chronic care. Face-to-face meetings with physicians would be less frequent, especially if patients learned how to monitor their own conditions and manage their own care.

Lack of Electronic Medical Records. The computer is ubiquitous in our society and many believe that electronic medical record (EMR) systems have the capacity to improve quality and greatly reduce medical errors. Yet, only about half of physicians have such systems and most of those are not connected to other physicians’ offices and hospitals, do not allow electronic prescribing, etc. The same is true for hospitals. One study concluded that “information systems in more than 90 percent of U.S. hospitals do not even meet the requirement for a basic electronic-records system.” Why are most medical records still stored on paper? Again, the short answer is this: There is no financial incentive to do otherwise.

EMRs may improve quality, but in the third-party-payer system, doctors do not compete for patients based on quality. EMRs may be a boon for patient convenience — especially in transferring information from doctor to doctor, but physicians don’t get paid for increasing patient convenience.

The Kaiser Exception. There is one health plan that does make extensive use of the telephone, e-mail and electronic medical records (EMRs). The insurer is California-based Kaiser Permanente. Unlike most private insurers, Kaiser doesn’t pay for care the way Medicare pays. Instead, it employs most of its doctors in a health maintenance organization (HMO) model. Because the plan is responsible for all the health care costs of its enrollees, it has an incentive to make use of technology that reduces overall cost. Telephone, e-mail and EMRs are among these. HMOs have their own perverse incentives, however, and some of Kaiser’s less attractive outcomes have been chronicled by Harvard Business School Professor Regina Herzlinger.

Ironically, the tax law favors the HMO form of delivery (because all premiums an employer pays to Kaiser are paid with pre-tax dollars) and has traditionally discriminated against individual self-insurance. However, the HMO doctor is no more free than the fee-for-service doctor. Both are trapped — although in different systems.

Inadequate Advice About Drugs and Other Therapies. Why do doctors so often prescribe brand-name drugs and fail to tell patients about generic, therapeutic, and over-the-counter substitutes? Why do they typically not know the price of the drugs they prescribe or the costs of alternatives? Even when they are vaguely aware of cost differences, why does your doctor not know where you can get the best price in your area for the drug she prescribes? Once again, the short answer is: They do not get paid to know these things. Knowing the current best price, knowing where the patient can obtain that price, and knowing the prices and availabilities of all of the alternatives is demanding and time consuming. For the doctor, it is time that is not compensated.

Inadequate Patient Education. Numerous studies have shown that chronic patients can often manage their own care, with lower costs and as good or better health outcomes than with traditional care. Diabetics, for example, can monitor their own glucose levels, alter their medications when needed, and reduce the number of trips to the emergency room (ER). Similarly, asthmatics can monitor their peak airflows, adjust their medications and also reduce ER visits.

To take full advantage of these opportunities, however, patients need training that they rarely receive. ER doctors could save themselves and future doctors the necessity of a lot of future ER work if they took the time to educate the mother of a diabetic or asthmatic child about how to monitor and manage the child’s health care. But time spent on such education is not billable.

Escaping the Trap. What is the common denominator for all of these problems? Unlike other professionals, doctors are not free to repackage and reprice their services in customer pleasing ways. The way their services are packaged is dictated by third-party-payer bureaucracies. The prices they are paid are similarly dictated. Doctors are the least free of any professional we deal with. Yet these un-free actors are directing one-fifth of all consumer spending!

Comments (23)

Trackback URL | Comments RSS Feed

  1. Devon Herrick says:

    It’s almost blasphemy to suggest the current system is not ideal (after all, that’s why we have the current system). Yet, it’s impossible to truly comprehend what medicine would look like if doctors where not trapped (and hospitals, drug makers, medical device makers and patients) in a system of rigid regulations, third-party payment and government reimbursement. Because medicine is administered in discrete or episodic visits, people mostly avoid the doctor until they have a problem. The care they receive is often disconnected because it’s not free unless connected to an insurable event.

  2. Pete Pettersen says:

    Interestingly, other professionals also don’t get paid by the phone calls they make or emails they send. It seems that the medical professionals are “full up with business” and cannot take any more clients thus don’t have to provide the value-added services that other professionals provide.

    Yes Medicare and Medicaid determine what is paid for but does a doc have to be paid for every single activity they perform?

  3. Ken says:

    Great post.

  4. Morris Bryant, MD says:

    There are certainly other professionals that charge for their phone time, i.e. lawyers, accountants, computer specialists. Those that don’t specifically charge for their phone or email time must necessarily build this into their pricing structure. Physicians don’t typically have that opportunity. Prices are set for us.

    Imagine the following advertisement that we will probably never see: “Your Dr will answer your email in an hour or its free!”

  5. Paul Dibble MD says:

    I think you are incorrect about email and EMRs. I think it was HIPAA, et al that put medical electronic communication back to the stone age. (I give my perspective as an insider.)

    By the way, my patients can call me directly and email me, and I don’t get paid directly for it. I also use an EMR and needed no financial carrot to do so. I am able to do these things because I do not participate with insurance and Medicare and Medicaid.

  6. George says:

    So if physicians are “un-free”, presumably neither slave doctors (see Plato, The Laws, Two Catefories of Doctors) nor serfs (see Hayek), maybe this is why the “healthcare industry” routinely refers to them as “providers.” Understand the probable intent–low cost fungible parts in a command and control system. But what does this mean for the putative professional, who is only free when s/he becomes a provision at the direction of a “third party” to a “consumer?” Merely one of several “cost centers?” On their faces, these notions seem incompatible.

  7. frank timmins says:

    Lawyers, accountants, architects, engineers, etc. all charge either based upon the successful completion of the job, or are paid by the hour. Either of these allow for inclusion of communication with clients other than office visits. Although I think phone and e-mail methodologies are used to some degree by doctors, as John notes, most docs are obviously prevented from any creative billing practices by governmental as well as commercial contracts.

    Clearly we are not using the most efficient system, but why can’t we make the obvious improvements? Why can’t we reorient the process so that the person receiving the services is the person paying for that service?

    The tacit (if unspoken) answer from the left is that we (great unwashed) are too stupid to manage our affairs in such a way as to not be taken advantage of. While we have no problem evaluating and purchasing hi tech appliances – electronics and sophisticated automobiles, for some reason it is too much for us to communicate as a customer to our doctors. How did this notion get started?

  8. ralph weber, says:

    Prior to the 1960’s “Medical Care” was the product. Product can be easily defined, measured, changed, enhanced etc.
    Today the “Health Plan” has become the product, and medical care is simply the commodity that is kinda-sorta needed to be an afterthought to “the product”. This means that physicians really aren’t important to the product. MediCrats realize that financial products are more profitable the higher the volume they are, so there is an incentive to increase costs and utilizaiton, just like a mortgage broker will earn more selling a $500,000 mortgage than a $50,000 mortgage.
    The reason that MediBid has saved consumers so much money is because “Medical care” really is the product, and the physicians who produce it, also price it and package it. There are no third party payers price fixing it behind the scenes.
    SInce it is the product, which drives the commodity, costs will continue to escalate at alarming rates, until we change the product.
    Gee…sounds a little like the mortgage bubble that burst 4 years ago!

  9. Linda Gorman says:

    The physicians I see communicate by phone and, for minor things, email. Things work so well when third party involvement is minimal!

  10. ralph weber, says:

    but the product is still the financing scheme

  11. Brian says:

    Very telling post.

  12. wanda j. jones says:

    One reason that EMRs are not more widespread is that doctors do not want to use computers while they are with patients, and it takes too long to write notes after the visit. Now that language recognition software has moved along, it will not be long before it will feel natural to create the record while the patient is being interviewed and examined.

    The other reason for retaining paper files is that there is still so much paper to be filed, alongside the physicians chart pages; consent forms are big, paper copies of lab results, copies of clinical protocols, and so on. As one commentator said, “Every piece of paper was a lawsuit.”

    The liberation of physicians will come most simply when health plans pay via capitation or block grants and healthcare systems pay according to the nature of the provider and the service, as they contract to do.

    Wanda J. Jones
    New Century Healthcare Institute
    SF, CA

  13. Rick says:

    This is a great article! 80% of all visits to a primary care could be doing by phone. Everyone could save money and time.
    HMO’s do phone work because they have fixed revenue (PMPM) and therefore have incentive to be more efficient.
    Thanks for enlightening the public about this!

    Great work John!

  14. Robert Cihak, MD says:

    Exceptions: cash and insurance-free (including Medicare-free) medical practices. These doctors deal directly with patients, and communicate by phone and email, for mutual convenience. For example, my own doctor (and personal friend going back 20 years) uses these tools, as well as an EMR system.

  15. John Goodman says:

    @ Pete Petersen

    The reason physicians are “full up with business” is because first dollar coverage has made health care free at the point of delivery and we ration care by waiting.

    @ Morris Bryant and Frank Timmons


    @ Paul Dibble

    HIPAA is not the problem, or it need not be the problem. Teladoc of Dallas has 2 million customers who get telephone consultations. There has never been a lawsuit or any legal problem.

    @ Ralph Webber

    I think you are right. All too often the patient becomes an excuse to bill the third party payer.

    @ Wanda

    “Liberation” will come when patients control the money.

    @ Robert Cihak

    These are often called “concierge” doctors or “personal service” doctors.

  16. Alieta Eck, MD says:

    The key is for insurance to return to its original purpose. Instead of being pre-paid health care, it ought to simply protect against the major unforeseen medical events. The government dictates that health insurance pays for routine and “preventive” care, making the premiums too expensive and the insurers micromanagers.

    Those physicians who have broken free from insurance find that they can now work for their patients and not the government or the insurance company.

    Being able to charge sufficiently for a visit makes telephone and e-mail consults a simple added benefit. It’s that simple.

  17. Paul Nelson, M.D. says:

    C. Northcote Parkinson was an accountant with the British Admiralty around WWII. You may remember that he coined the economic law for complex institutions that states “Work expands so as to fill the time available for its completion.” In healthcare, the corollary is that the use of specialty services is related to the availability of those services, such as tonsillectomy, hysterectomy or plastic surgery. However,for Primary Health Care another economic law from Mr. Parkinson applies: “The man who is denied the opportunity of making decisions of importance begins to regard as important the decisions he is allowed to make.” Day to day if I am not paid to manage a person’s over-all Basic Health Needs and coordinate these with any Complex Health Needs, I probably won’t. Since standard health insurance can not distinguish between health needs and health wants, the Primary Physician should be paid to make this determination given an over-all knowledge and understanding of the person’s health. Standard fee-for-service reimbursement plus a risk-adjusted capitation might be one alternative.

    I personally liked the 100% risk capitation for Primary Health Care that included my own services, all pharmacy costs, ancillarly services, my orders for lab and radiology plus ER/Urgent care with a stop-loss provision for high expense patients. The capitation should represent 30% of the premium revenue per patient to the HMO. Our group received total income of about $1.5 for each $1.00 of our billed charges. As a result, we were paid well to be accessible with or without a “visit.” Since there was no pre-authorization craziness except for out-of-network referrals, we chose the care that was best for our patients. It was also the least expensive in the long run. In effect, we were not restricted by Parkinson’s Law #2.

  18. Alieta Eck, MD says:

    Dr. Nelson, while it may have been pleasant to care for patients in that system, it probably wound up costing too much. It was still a centralized system and somewhat difficult to differentiate wants from needs– as long as the patient was not footing the bill.

    The original closed HMOs in the US operated under that model. I observed the difference in my training. Those HMO doctors were relaxed and had plenty of time to teach the residents. They were very happy– until cost overruns forced the HMO to shut down. They had been sustained by huge infusions of federal dollars, and when those dried up, the HMOs were forced to close.

    Would you get the same results if you collected 150% of the cost of primary care from the patient directly? Why would you need a third party other than for the catastrophic care? This seems more like a concierge model, which may very well be the only way doctors will be accessed in a timely manner in the future.

  19. frank timmins says:

    Good post Alieta. It highlights the frustration of trying to get good folks to think of a different solution dynamic (thinking outside of the “managed solution” box if you will).

    Realizing that all of us in the healthcare business (professional, support or financing) could certainly come up with tweaks in the the current structure that would “fix” specific problems temporarily, it is merely kicking the can down the road. It is the entire third party system that is flawed, and we aren’t going to get anywhere until we recognize and address this fact. Are you listening Mitt and Newt?

    We need ideas of how to get decision making authority and buying power into the hands of the individual citizen and away from third parties (to the greatest extent possible). Rearranging the deck chairs on the Managed Care Titanic is not going to help.

  20. Paul Nelson, M.D. says:


    I participated in gate-keeper HMO that was in a market dominated by Blue Cross and Mutual of Omaha. Since it was a home market for Mutual, they priced their Plans below market rates in order to buy market share. In addition to the fierce competition, there were no federal support funds for the HMO. The HMO was owned by a Corporation that had HMOs in the Twin Cities, Chicago, Des Moines and Austin. By the mid-nineties, the Corporation was eventually purchased by United Healthcare essentially because there was such a high degree of employee push-back within the employer groups. You may recall that this was a time of same day admits for elective surgery and 48 hour post-partum care, now standard for all Plans.

    The positive element as a physician was the working relationship with the Plan. It was not without difficulties. But, the CEO clearly believed in trust, collaboration and transparency as a basis for relationships with physicians, hospitals, “members” and employers, values not in high regard uniformly within the current healthcare industry. He also believed in stable governance, an attribute also not well honored within the healthcare industry.


  21. Kent Lyon says:

    The answer to these ills, as I keep repeating, is a first party payor system. It’s OK to say that out loud, Dr. Goodman.

  22. Aldovarai says:

    Dear KK,Two quick comments:1. The heedar on your thought provoking article has a typo- it should be pray .2. In this sometimes lopsided world, we find that while societies spend time and money to discuss, accomodate and even legislate on issues of sexuality and such like, they are scared of acknowledging spirituality. It is unfortunate, that when we talk of spirituality- people like to become politically correct and are unsure on the best way forward. Any movement from any walk of life to enccourage spirituality and practice irresepective of the stage of life- birth or near death, should be supported and proactively encouraged. Your personal values and practice, which I have had the privilege to experience is a refreshing and eye opening change.Regards and Thank you!Vijay

  23. Tensaldon says:

    Write more, thats all I have to say. Literally, it seems as though you reiled on the video to make your point. You obviously know what youre talking about, why throw away your intelligence on just posting videos to your weblog when you could be giving us something enlightening to read?