Code Red: Two Economists Examine the U.S. Healthcare System

June 6, 2014

The Future of the Physician

Filed under: Uncategorized — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 8:39 am

On Wednesday June 4, the Kellogg School of Management hosted its annual MacEachern Symposium. A packed auditorium listened to an impassioned discussion about The Future of the Physician. Presidential adviser Ezekiel Emanuel and AMA President Ardis Hoven were among the speakers. While Emanuel was optimistic about the impact of the Affordable Care Act on hospital-physician integration and the resulting potential for cost savings and quality improvements, Hoven was concerned about the impact of the business of healthcare on the medical profession. In this blog, we offer our perspective on the evolving role of the physician.

The hit television series Marcus Welby, MD last aired in 1976. Dr. Welby was the physician of every baby boomer’s dreams, whose patients always felt cared for and always got better. By the end of the century, Dr. Welby had been replaced by Dr. House, an MD cum Sherlock Holmes with Narcissistic Personality Disorder and an opiate addiction. While his bedside manner is decidedly not Welbyesque, Dr. House still embodied the basic premise of the all-knowing and dedicated provider that solves problems with little concerns for costs or standard practice.

But in the real world, physicians are evolving along a different—and we argue—better path. The 20th century physician was self-employed, championed the interests of patients, and had complete control over the medical system. But this system had at least two primary problems: (1) ever escalating costs and (2) dramatic variations in physician practice patterns with little connection to outcomes. We shudder to think how much Dr. House spent on his patients. This system is no longer sustainable.

Enter the 21st century physician, who is increasingly an employee of a large provider organization that scrutinizes every medical decision based on both cost and quality. We may all be better off for this transformation – the question is will we accept it? If past is prologue, we fear that American public is still not ready.

This transformation began with the HMO movement of the 1980s, abruptly halted in the backlash of the 1990s, but has returned with a vengeance. Despite their seeming ability to restrain cost growth, the HMOs of the 1990s were vilified. These organizations were caricatured as cruel attempts by insurance companies to deprive Americans of medical care. They’ve even served as the villain in Denzel Washington’s hostage movie John Q.

Given these facts, HMOs needed a reboot. Enter Obamacare’s Accountable Care Organizations (ACOs) – i.e. HMOs 2.0. Organized by physician groups or hospitals, ACOs contract with Medicare and private payers and attempt to hold down costs and meet performance measures in order to reap huge financial returns. To meet these objectives, ACOs are relying on the very top down control of medical decision-making that made people revolt against HMOs. This entire process is made much easier when ACOs employ physicians, many of whom are more than happy to sacrifice their autonomy in order to have a guaranteed income and a better work/life balance. Employment (by group or by hospital) is not just a viable option, it is desirable.

Employment is just the first step. Historically, we have forced many participants in the medical community, such as pharmaceutical companies, to test their products through clinical trials that rely on the scientific method. Physicians, however, develop their practice styles through personal experiences with small numbers of patients and their immediate colleagues. The result has been a patchwork of treatment patterns, broad differences in outcomes, and little consideration of costs.

Increasingly, the medical profession has accepted the idea of routinizing care delivery though protocols, and ACOs are using big data to implement diagnostic and treatment checklists. Some doctors push back against these efforts, saying these checklists effectively force them leave their judgment at the examining room door. They fear that physicians will be transformed from professionals relying on personal experience and judgment to technicians following a user’s manual. That may be, but if these technicians are making the right diagnoses and ordering the correct treatments, saving lives and money in the process, then we are all for it. Protocols are not perfect, of course, because patients are not identical. The best ACOs will use protocols as the default option and allow their physicians to occasionally use their discretion when necessary. But we have erred on the side of unlimited discretion for too long.

Much like lunch, this move to ACOs will not be free. Effective ACOs work by controlling the full scope of medical care delivery, and this will often necessitate restricting patient choice of provider. No longer can we simply shop around for the physician that will provide expensive and unnecessary treatments in order to satiate patient demand. Many fear this world, because they confuse choice with quality. In a world where people seek out physicians based on personal recommendations or Yelp-like rating system where personality matters more than skill, a little less choice might be exactly what we need.

If one of today’s ACOs recruited Dr. Welby, he might run in the opposite direction. To which we say, good riddance. The days of “physician as father figure” are long behind us. But we were looking at those days through rose colored glasses. Tomorrow’s physicians will be grounded with the information they need to make the right medical decisions and the incentives to properly balance cost and quality, even if they must rely on others to guide those decisions. Gregory House once asked, “What would you prefer – a doctor who holds your hand while you die or one who ignores you while you get better?” This may have been the dichotomy that Dr. House inherited from Dr. Welby, but it is false. It is possible for employee physicians to be compassionate and even cost conscious, while making their patients better. There is every reason to believe we are moving in that direction.

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