One thing I learned from this chapter is that every hospital has a Master Chart of prices for every imaginable health care procedure. It was originally devised as a way to standardize the cost of medical work and handed down by MediCare, I believe, but it was so useful in clarifying pricing that all insurers eventually adopted it. Everything from a checkup to a surgery is listed with the price which is later charged to a patient, which inevitably is forwarded to an insurer.
This raises an interesting question because it also sets limits on what doctors can make. If you are paying doctors a la carte via the Master Chart, then the more surgeries or tests or exams they perform, the more they are getting paid. Either that or they can charge above the standard rate. One such doctor Gawande interviewed did just this - he was considered an expert in a certain field and charged nearly ten times the standard rate. He also mandated payments in full by patients, none of this pay-through-insurance mess. He did great business and was paid more than most doctors while doing less work.
Of course that solution will by definition only work for a small percentage of doctors. Another potential solution was attempted by a doctor-run health care cooperative in Vermont. Several doctors with different specializations grouped together and charged patients a flat rate, while they took flat salaries. They were therefore incentivized to manage the efficiency of their medical care. Their network grew, and eventually they added doctors of other specializations. Eventually the co-op became one of Vermont's biggest insurers, ironic because they were trying to get away form the big insurance methods. Sure enough, size brought problems - highly specialized doctors wanted to be paid more than the standard rate, and a bigger network of doctors meant not everybody was as committed to efficient patient care as were the founding members. The head and founder of the network left after a certain point, somewhat disappointed with the outcome.
Many of the points that Gawande raises in his New Yorker article reappear here. Chief among them is the fact that doctors spend all of their training learning to be good at medicine, and none of their time learning to be good at business. But once they have a practice, their livelihood depends on being as good at business as they are at medicine. He argues that often times their lack of preparation leads to unecessary cost burdens on the system, such as overtreatment. Doctors may be incentivized to overtreat either because they get paid by the treatment or because they own a particular testing machine, and are therefore more likely to order those tests for the insurance reimbursement.
He cautions at the end of the article that at some point soon, the apparently untenable insurance and reimbursement system will need to be changed for the benefit of doctors and patients. This book was written before Obama's push for health care reform. I wonder if Gawande feels that the current health care conversation is even asking the right questions?
Two other recent discussions we had about health care were titled Health Care - What the F*ck?, regarding where the debate was headed about a mont ago (spoiler: not where Gawande had hoped), and a pair of Business Week articles titled How to Cut Health Care Costs which does, I believe, point in a useful direction.
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