Physician Incentives Simply Unethical

For the past 30 years, physicians, hospitals, insurance companies and pharmaceutical and medical technology companies have had a free hand in determining the cost and degree of medical care.

That era, however, is over.

Many in medicine knew that the incredible rise in the cost of medical care would end someday. Yet, no one either in or out of the medical field seemed to be able to change how medicine was being practiced in this country.

But now, the United States has found a solution to the spiraling cost of medicine - “managed care.”

Managed care is the process whereby patients carefully are programmed into a cost-containing environment utilizing a variety of tools such as primary care, gatekeeping, evidence-based medicine, early discharge from hospitals, reduced fee for service and health maintenance organizations (HMOs), to name just a few.

One technique already being used to lower medical costs in this country is blatantly unethical and should be stopped before it becomes ingrained in managed-care life.

That technique uses financial rewards and penalties to influence physicians’ behavior. It results in hospitals and HMOs hiring or firing doctors based on their economic credentials rather than on the quality of care they dispense.

In the late 1980s, most HMOs paid physicians a straight salary. Today, however, more than half of the HMOs pay physicians bonuses or inflict penalties depending on the cost of care they administer.

This change came about because straight salaries did not reduce costs or expand corporation profits sufficiently. But physicians whose incomes are linked to reducing care admit fewer patients to hospitals and give them less outpatient treatment than do those physicians simply on salary.

Such incentives are unethical.

A physician free of incentives should, with appropriate guidelines and clinical pathways, be able to keep hospitalization and clinic visits to a reasonable limit while maintaining quality of care and, at the same time, reducing costs.

In some cases, physicians’ payments are reduced by 50 cents on every dollar that a patient spends in an emergency room visit recommended by that physician.

For example: A patient complains of chest pain late at night and calls his physician, who refers him to an emergency room for evaluation. That process costs $1,000 and finds only indigestion as a cause of the pain. The referring physician is docked $500 from his or her paycheck.

How will that physician react the next time the patient calls in the middle of the night with chest pain?

Many managed-care plans are collecting data on doctors, not to determine their medical experience, training, knowledge, judgment and outcomes, but rather, to determine how much their care is costing the managed-care plan. A doctor who spends the least money for care of his or her patients will be credentialed positively and kept on staff, while the physician whose care is the most costly will be credentialed negatively and be in jeopardy of losing his or her practice.

This process ultimately puts control of what kind of medical care is rendered to patients into the hands of non-physicians - and this simply is unethical.

Doctors - not managers - should be making these decisions. While administrators can and should have a say in some aspects of care, most medical decisions should rest with the physician.

However, physicians must establish evidence-based medical practices with well-thought-out and agreed-upon pathways of care. Without leadership by physicians in this regard, Americans can expect more medical management by non-physicians.

Make no mistake about it: Administrators of managed-care plans, in many instances, are robbing physicians to pay themselves and stockholders.

Recently, The New England Journal of Medicine pointed out that U.S. Healthcare, a large HMO, spends only 74 percent of its revenue on medical care while maintaining a $1.2 billion cash reserve. In addition, the chief executive officer was paid $20 million and had $534 million in company stocks.

Managed care can be - and, I believe, eventually will be - an effective way not only to reduce the cost of medical care but also to maintain the quality of that care.

But guidelines and laws will need to be adopted to put an end to activities such as economic credentialing of physicians. It is unethical to do otherwise.

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