After studying the situation with healthcare costs for a long time, if there were just one single change I could make to improve affordability, it would be to force as many doctors as possible into taking salaries instead of “fee per service” transactions. When you dig deeply into the cost structures of healthcare in the United States versus every other industrialized nation, the one thing which jumps out at you is that in most cases doctors are on salaries everyplace else, but not here.

The anecdotal evidence is widely available. For his movie “Sicko,” Michael Moore interviewed a doctor in London, England, who makes a nice salary and owns a million-dollar home in a very nice area of London. A doctor on salary has no incentive to run up the costs by performing extra serivces. A doctor who generates a “fee per service” has every incentive in the world to perform larger and more-costly “services” as many times as possible. Salaried doctors lack those same incentives and are better positioned to keep costs down while not compromising healthcare quality.

Last week I was sitting around a table with friends. Many of them are on Medicare, and many of them had stories of what doctors were forcing them to do in order to maximize the income of the doctors. In one case, a person had two ingrown toenails, each of which needed the exact same minor surgery. The doctor told him that he could do one toe in November and the other toe next February. My friend asked why he could not get both toes done at the same time. The answer the doctor gave him was that the insurance company paid more if the surgeries were at least 60 days apart. Another friend needed two blood tests. The doctor scheduled him to come back on two different days. When he asked why he couldn't do them both the same day, the doctor told him that the insurance company would not pay for both tests if they were both done the same day.

In the early 1980s I traveled up to Canada as part of a business deal with a doctor in Quebec. I had a long talk with this doctor about Canadian healthcare. As a doctor, he was paid a salary of $100,000 (Cdn) for 40 hours a week working in the Canadian public health service. With inflation, I'm sure this would be a lot more today. But after he had worked his 40 hours, he was allowed to work whatever additional hours he wished in private practice, and so he joined a local private practice where he saw patients who preferred to use that system. These doctors were selling convenience and rapidity of service as their primary product, since any Canadian could obtain the same services for free from the public healthcare service. My doctor friend in Canada made so much money from those two jobs that he was heavily invested in three outside businesses, which he owned. Canada proves that you don't need to eliminate the “fee per service” model entirely, and that doctors aren't going to be forced onto poverty rolls if we prevent them from earning millions of dollars per year in “fees per service” deals.

As I pointed out in an earlier piece, the origins of the Blue Cross/Blue Shield system were in the community of hospitals and doctors (“service providers”) who desired to continue the “fee per service” cost structure while finding a way to ensure that they were always paid for their services. This is where our idea of health insurance comes from: ensuring not our health, but rather ensuring the income for doctors and hospitals. Now, virtually all health insurance plans are organized around that one single concept: ensuring that healthcare providers get paid. If the costs go up, everybody in healthcare makes more money, and the percentage return to the shareholders goes up as well, so there is no real incentive at all for individual costs to be controlled in any way, shape, or form. If we ever want to control healthcare costs in these United States, we need to break away from the “fee per service” model which doctors and insurance companies are working so hard to protect. We can begin down that path by taking at least new doctors and putting them on salary, just like they do in Canada and England.

Did you ever wonder why your doctor always seems to be so rushed when you go to a doctor's office for a routine visit? The answer is this: the more patients the doctor can see in any given hour, the more money that doctor makes. So, the incentives are all in favor of rushing through as many patients as they can manage, and not taking any real time to ensure that each patient is getting appropriate quality care. It is no wonder, then, that the costs in the United States are by far the highest, while outcome measurements are below average for Western industrialized nations (Germany, France, England, etc.).

Public healthcare in most countries is made possible in part by paying doctors salaries, thus largely fixing the cost at an affordable level, no matter what the healthcare needs of the community might be. The vast majority of people I have spoken to from Canada and England have been quite happy with the care they received for free from the public system. Yes, you can find people who have been forced into long waiting lines, but those are the odd occurrence and not the regular routine. And the reasons for the waiting lines are generally the same as they are here in the United States, such as a lack of donor organs for transplants. And quality of care is an issue no matter where you go. The system in the United States does nothing whatsoever to ensure each patient receives a quality treatment. Instead, the incentives in the United States are all in favor of higher incomes for healthcare providers while minimizing the costs of delivery to the patients, which means minimizing quality of care.

Healthcare statistics prove that the system in the United States is severely broken. We have the highest costs in the industrialized world, and on the basis of outcomes, we rank somewhere around Costa Rica. We are paying for a Cadillac and getting a Chevrolet. This is what most needs to get fixed to be able to afford to provide healthcare for all citizens and legal residents. And the first step towards cost containment should include putting doctors on salaries to minimize their incentives to run the costs up in order to line their own pockets with our money.

Author's Website: http://www.mrmoderate.com/

Author's Bio: I am an early baby-boomer, growing up in Orange County California during the 1950s and early 1960s. During the 1964 election, I strongly supported Barry Goldwater, even though I was too young to vote (just 17). I still consider myself to be a Goldwater Conservative. After high school, I tried college, but for various reasons, I didn't do well. So, after I was granted a 1-A draft classification, I joined the Navy. Discretion is the better part of valor, and while I was glad to serve my country in the Navy, I didn't care to be a target for some other jerk serving HIS country. I made it to Vietnam a few months after the Tet offensive. After President Ford finally brought our involvement in Vietnam to an end, the Navy decided it didn't really need as many people as it had, and I was encouraged to leave. So, I did, and like many former military veterans, I joined the "military industrial complex." I worked at that for a few years, and then leaped all the way out into private enterprise, starting a series of high-tech companies. But I never hit it big with any of them, and lost my shirt a couple of times along the way. That is the nature of a free market economy: few will succeed and many will fail. I now work for a "Fortune 50" company, still in high-tech of course. But outsourcing means I will never have anything that even resembles job security. My best hope is to somehow manage to keep working until age 70, at which point I will qualify for the maximum amount of Social Security I can ever hope to earn. After that, it is all about where to live to stretch those dollars to the max, as my 401K can't be relied upon to provide anything resembling a retirement income.

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