28 July 2009

What GruntDoc Said

GruntDoc » Blog Archive » Salaried docs vs. fee for service
What salaries do not do is get docs to work harder, see more patients. Some docs are very dedicated, motivated people who would work for rent and grocery money. Others on a salary would do the minimum: if every patient is more work and more liability without more pay, well, why work more/harder? As an incentive to produce nothing beats getting paid for it.

Also, a happy side effect of getting paid for what you do rather than for having a pulse is those who work hard resent those that don’t (but who would make the same on salary) a whole lot less. Way less inter-group stress.

Salaries aren’t all bad, but they’re not the Key to Great Healthcare.

I've been in a salaried model, and it was painful.  There'd be three docs on duty and the call from the medics would come in that there was an intubated drunk trauma or the like, and I'd look up and find that my two partners had managed to slip off to the cafeteria.  We switched to a (modified) fee for service, and suddenly, docs were eager to care for patients.  Each new ambulance that rolled in represented an opportunity, not a burden.  Why does this matter?  Because the waiting room was always full.  Patients were languishing hours before being seen by a doc.  And our salaries were low enough that we couldn't easily just hire/staff more doctors.

Now, our docs are on average 20% more productive and the average patient is seen within thirty minutes of arrival.  Productivity pay was not the only thing that enabled this, but it was huge.

The ironclad rule of management is this: You get the behaviors you incentivize.

I can see the policy-level benefits of eliminating the fee-for-service incentives to over-utilize.  But it's a complex system with many moving parts, and without motivated docs, the system bogs down.

The Cleveland Clinic and Mayo are oft-cited as awesome because of their salaries; I'd be really interested to get the details of that salary model and I wonder if we'd find that there are some incentives buried in there.


  1. Amen. Innate reponse to incentives is simple human nature/behavior; any educated person can't deny this. I think the question here is what incentive model can be had where a minimum quality of care is maintained at all times where patient-as-profit-center will never be part of the equation. Doctors are people too and struggle to find balance among finances, work, family, etc just like anyone else.

  2. Also could be that some ER docs have short attention spans, seek immediate gratification, and aren't particularly interested in team objectives. Meanin' no disrespect... just sayin' could be other explanations......

  3. And yet most people I know work for salaries, and work pretty darned hard for those salaries. Maybe it's that we could actually be, you know, fired if we didn't work? Or that we're held accountable in some way?

  4. SF,

    You are more Republican than you think you are.

  5. Anon,

    Um, thanks for the compliment, I think.

    But I think some people have a distorted understanding of what Democrats believe. Republicans don't own the copyright on market-based economics! Y'all seem to enjoy calling us socialists, but we're actually good capitalists and some of us are even free-marketeers.

  6. Cleveland Doc7/29/2009 8:58 AM

    As a Cleveland Clinic surgeon, I can guarantee you that there are definite not-so-subtle incentives here. Pay is proportional to RVU productivity - not a perfect quid pro quo, but if you drop one year to the next you aren't going to be getting a raise.

    The junior guys are paid much less than the senior ones. The old pension plan is so much more lucrative vs. the current 403b plan that it is frightening.

    We have been cited as a "model" to follow - when we hear that we all stare at each other and scratch our heads... Most of us think we are about as efficient as GM or the US Army in peacetime.

    I have never been taken to task for ordering too many tests, using really expensive things in the OR or referring too many people to our in-house therapy, rehab, brace shop, etc.

    The nice thing, despite being overwhelmed with MBA's in suits and nurses with clipboards, is that we make a load of money from the ancillaries that pays the bills when hard working physicians are unable to do so.

  7. There might be a middle ground. I understand your arguments against salaried docs, and a good analogy to that is the academic doc vs. private practice doc. Academics generally earn less, see less patients, but make up for it with publishing and teaching responsibilities. The tradeoff there is one of giving back, intellectual or ego satisfaction with being the leaders in the field.

    However, if there is no discernable tradeoff, many docs would (as you say) be unhappy and less productive on a salaried basis.

    On the other hand, the fee-for-service does have a lot of problems too: cost-control issues, does not value the time of the doc-just the diagnosis, and conflict-of-interest issues w/AMA owning the CPT codes.

    So I've come up with a solution: http://drbrenner.blogspot.com/2009/06/medicare-reform-part-3-new-model-for.html that is based on an hourly base that is adjusted up for more years of training,completion of CMEs, experience etc...and also complexity of patients (e.g. neonatal and elderly, HIV). This values the time of doctors, allows them to focus on complex/chronic disease patients, and has the added benefit of making patients happy and cost-wise is self-limiting (only so much time available) and on my blog you can see how I propose to prevent abuse of this system.

    While you and others make fine arguments against these ideas, I'd like to see more people in medicine proposing possible solutions. The status quo is not a solution.

  8. You get the behaviors you incentivize.

    Oh God, you're not really going to open that can of worms, are you?

    Teen single mothers with babies (free health care, free money, free food, free shelter, free daycare).

    Medicaid with $1 ER co-pays: Going to the ER with bug bites or to get high.

    Small tax to not provide health insurance to employees: Employers drop health insurance in bad economy.

    "Subsidized public option": People deliberately make less money to qualify for subsidies and people choose it, making private insurance obsolete over the long term.

    etc etc etc


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