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This trend of regulating physicians, and trying to squeeze every last ounce of efficiency out of them has troubled me for awhile because it reminds me of the squeeze on teachers, and both have been happening for decades. Doctors by and large get paid more than teachers, but they also have a ton more training to go through, and some hefty liability insurance to deal with. Both professions are seen, increasingly, as a “calling” therefore should accept whatever reimbursement is offered. Um. This seems like two sets of rules, where hedge fund managers can gripe and whine about the shabby treatment they receive with their tax rates, but teachers and physicians can just “get over it” when their reimbursement is stagnant. It’s pretty stunning really when you contemplate their relative good to society. Today, in New York, all finance offices are securely shut, whereas my friend who is a Pediatrician is biking it to work, and uncertain whether she will be able to make it home. She’s 60 years old.
The first article looks at the faulty data about extended office hours for physicians, and how they do not produce efficiency. The second article is written by a (naive) economist suggesting taxing primary care physicians at the same low rate as hedge fund managers. (Silly economist, don’t you know that hedge fund managers are the real “makers” in our society and the doctors a bunch of “takers”?) We discussed the toll on doctors here. (For the record, I do not include myself in the group of squeezed doctors, my practice is totally independent of those pressures, maybe that’s why I have time to write about it…)
October 25, 2012, 11:42 am
Challenging Assumptions in the Push for Better Care
By PAULINE W. CHEN, M.D.
When a colleague of mine announced her retirement recently, she said she was going to miss her patients – but not the pressures of running a practice, nor the plethora of new insurance regulations and initiatives to improve the way doctors run their offices.
“Where’s the proof?” she asked tensely, forgetting for a moment that she was retiring. “Why is it that I can’t prescribe a medication without studies to back me up, but we doctors must overhaul our practices without data to show that the changes will actually make a difference?”
But when the results were analyzed more closely, it turned out that the savings was not a result of fewer emergency room visits or hospital stays. Rather, costs were lower because doctors offering extended hours tended to prescribe fewer expensive drugs, blood tests, X-rays and other procedures commonly associated with normal office visits…
The study also raises the broader issue of whether certain proposed policies have the potential to offer more bang for the buck than others. Mandating extended office hours, for example, might be a less effective way of holding down expenditures than creating new ways of rewarding doctors for being cost-conscious in the exam room…
“Why not choose to do what make the biggest difference for practices and their patients?”
October 26, 2012, 6:00 am
If Primary-Care Doctors Were Taxed Like Hedge-Fund Managers
By UWE E. REINHARDT
Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.
If raising primary-care fees or salaries turns out to be too difficult, an easier alternative might be to enhance the future income stream of primary-care physicians through the federal income-tax code by taxing the practice income of full-time primary-care physicians at the same low rate now accorded the managers of private-equity and hedge funds on certain portions of their income.
The managers of private-equity and hedge-funds are typically paid a performance bonus called carried interest by other investors in the funds. The bonus is earned if the funds under management yield a return above a certain minimum level (e.g., full preservation of invested capital plus 8 percent).
Although carried interest is not a long-term capital gain on the fund managers’ own investment in the funds they manage, carried interest is taxed at the low capital-gains rate (currently 15 percent), rather than the ordinary-income tax rate (currently 35 percent plus payroll taxes) that would apply to similar performance-based bonuses in other industries (e.g., sales commissions), cash bonuses paid executives for performance or to, say, the income earned by physicians.
While economists, including Gregory Mankiw of Harvard, can be found valiantly trying to defend this practice (though Professor Mankiw sometimes seems to support the opposite view), probably most others, including myself and my fellow Economix blogger Bruce Bartlett, take the opposite view.
As long as this tax preference accorded private-equity and hedge-fund managers remains on the books – presumably because they are deemed precious and important to our country – why doesn’t Congress treat full-time primary-care physicians as equally precious and important? That would show we really are serious about an acute shortage of primary-care physicians.