Performing Procedures Can Be Lucrative for Physicians

The Wall Street Journal has just run an excellent piece (see: Medical Specialties Hit by a Growing Pay Gap) about how some highly trained medical specialists like neuro-ophthalmologists end up at the lower end of the pay scale because they don't perform procedures. Here's the "money" quote from the article about why procedures tend to be reimbursed by payors at a high level as compared to, say, physician time and expertise. Blame it on Medicare and the federal government (boldface emphasis mine):

But in the early 1990s, Medicare implemented a new system to set standard fees for physicians' services and procedures. The system's aims were to clamp down on prices and, ironically, narrow the disparity between the bread-and-butter office visit and more-expensive specialty procedures. Over time, private insurers have taken their cue from Medicare to set their reimbursements, too. But many health-policy experts argue Medicare's fee-setting mechanisms are making those disparities worse. Its formula still rewards the capital expenses of new technologies, and is slow to reduce those fees as costs depreciate and physicians learn to perform procedures faster. But at the same time, it hasn't significantly increased fees for lengthy and complex patient visits, which are much harder for doctors to make more efficient without harming patient care.

The WSJ Health Blog picks up on this pay-gap theme as well as physician reimbursement (see: Doctors Shun Less Lucrative Specialties) and then presents the best graph I have ever seen to illustrate this problem (see left). You just can't argue with these numbers. You are a physician, you perform procedures, and you double your income.

Now comes the interesting discussion. What's the most equitable way to compensate physicians?  For me, the only reasonable approach would be physician time with the patient plus physician training/expertise, as documented by years of formal training. I would probably factor in some measure of patient satisfaction (hard to do) and outcomes success rate (also hard to do) and perhaps a small kicker for capital investment. Suddenly you have a very complicated compensation program that everyone will immediately start to game and suddenly we will be back in the same mess.