User:Pschweik/Physician Entrepreneurship

Physician Entrepreneurship is the phenomenon of health care providers recommending or providing care based in part upon their own financial considerations rather than patient health status, practice guidelines and/or medical training.

Introduction

The most expensive piece of medical equipment is a physician's pen.

The relationship between the patient and their physician is the foundation upon which the entire health care system is based. Patients rely upon their physician to make recommendations about care, provide care and to represent their interests within the health care system. Society has created an expectation that physicians will place the interests of their patient above their own desires. This expectation is enforced through a system of license and professional standards. However, a physician’s income is directly tied to the decisions they make regarding patient care. Furthermore, there are third parties such as other providers, hospitals, payers and manufacturers whose livelihoods also depend upon the decisions a physician makes concerning patient care. These third parties attempt to create incentives for physicians to act in a manner that benefits their agendas. Physicians have an inherent conflict of interest with many of the care decisions they make in which they have to weigh their own financial considerations against the needs and desires of their patients. The ethos of the medical profession compels physicians to provide the best available care for their patients. However, given the extent of financial incentives arrayed towards influencing physician care decisions and the bewildering array of care choices available to physicians it is easy for them to appear to provide the “best” available care to their patient while simultaneously increasing their own income. This troubling conflict is the crux of the matter, which casts doubt upon the professional standards that have upheld the physician as a selfless healer for many a generation.

Background/Evidence

Ken Arrow in his seminal paper Uncertainty and the welfare economics of medical care was one of the first authors to pinpoint the importance of the relationship between physicians and their patients. Arrow described how the non-market forces of social expectations and professional standards of physicians create an implicit trust relationship between the provider and patient which is necessary to compensate for the market inefficiencies of medical uncertainty and asymmetry of information between the patient and physician. Arrow followed up his earlier work by arguing that one of the major problems inherent to the health care system is that the professional standards and the trust relationship between patients and physicians has been eroding over time. This breakdown in professional standards has resulted in physicians increasingly using their informational advantage to influence patient decisions to their own financial advantage. This concern for the breakdown in professional standards and the adverse effects that this change would have on the treatment of patients and the overall efficiency of the health care market has been noted by several other authors. This concern over the breakdown in the ethos of the medical profession has been increasing over the last several decades.

There are many other signs of the erosion of the physicians’ patient centric ethos:

• Physicians have been increasingly pursuing careers in lucrative specializations in lieu of the lower paid primary care field.
• Increasing the amount of ancillary and diagnostic testing is another way in which physicians can raise their incomes while sticking to their do no harm oath is also on the rise. Furthermore, in order to capture more of the revenue from prescribing such procedures physicians have increasingly been ordering such tests in house or through diagnostic and imaging centers in which they are investors.
• The amount of charity care that hospitals and physicians have been providing is on the wane.
• Physicians have also been increasingly avoiding emergency room care and treating the uninsured.
• There is evidence to suggest that physicians paid via capitation a fixed payment per patient per year reduce the amount of services provided to those patients. Although, this reduction in services does not appear to adversely affect health outcomes.
• The cozy relationship between some physicians and the pharmaceuticals industry is well documented.

Implications

A series of studies conducted by Dartmouth University’s Institute for Health Policy and Clinical Practice established that there are large regional variations in Medicare expenditures. Furthermore, although the patients in the high expenditure regions received about 60% more care on average these studies were unable to detect a difference in the health outcomes or patient satisfaction between high spending and low spending regions. The expenditure differential appears to be driven by the quantity not the quality of care received. The last piece of evidence that firmly establishes quantity of service as the primary culprit in the regional variation in Medicare expenditures is a study showing that Medicare paying cost of living adjusted reimbursement rates blunts the differentials but only explains a small percentage of the regional variation in expenditures. If all regions Medicare expenditures were reduced to the level of the lowest spending region the cost of Medicare would fall by up to 30%, which would solve Medicare’s long term fiscal problems. Moreover, this idea if extrapolated health care system wide would imply that health care costs could be substantially reduced without a penalty to quality, if the levels of inefficient or unnecessary care were reduced.

The question as to what drives these regional variations in Medicare expenditures remains an open one. However, Antul Gawande’s comparison of the physician cultures endemic to McAllen and El Paso Texas provides at least a partial answer. McAllen and El Paso are similar cities in many ways; they both have similar demographics, population wide health status, similar numbers of providers and hospitals, levels of medical technology, regulatory structure and population socioeconomic status. However, they differ in one important manner McAllen’s per capita Medicare expenditures of $15,000 are nearly double that of El Paso’s $7,504. The difference between the two cities is caused by the fact that the average citizen of McAllen’s health care utilization is much heavier than that of El Paso’s. But what drives the higher utilization rates in McAllen? The quality of neither care nor the health outcomes as measured by a number of different metrics is not higher in McAllen than in El Paso. The answer appears to be that the physicians in McAllen are more driven entrepreneurial impulses than physicians in El Paso. Gawande hypothesizes that in McAllen the patient centric ethos of the medical community has been largely subsumed by physicians’ desire to maximize their incomes. The physician rather than assuming their traditional role as a selfless healer and advocate for their patients have become entrepreneurs that view their practices as a businesses and their patients as customers or a source of revenue.

External links

• example.com