Holes in the bottom of the boat

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Healthcare is in crisis.  Costs are rising well ahead of inflation, and both patient and physician satisfaction is dropping.  How could this be?  Doesn’t rising healthcare costs mean more money to physicians?  Obviously not, in fact the number of primary care physicians is dropping as is the overall satisfaction of physicians with their job.

As pundits try to solve the crisis, the main means of fixing the problems seems to be focused on the payment system.  Either migrate toward a single-payer system, or employ a “free market” approach.  But as I said in a previous post, simply addressing who writes the checks is not enough; we need to address who is cashing the checks.  Simply put: any system put in place must have a means of cost-containment – something that is missing from most plans.

It is as if we are talking about getting a bigger bucket to bail the boat rather than patching the holes in the bottom of the boat that are spewing money.  Any system in place that does not contain cost somehow will fail.  So what are the holes in our boat?  There are many – and I expect this idea to take more than a single post to describe. 

So let’s get started.

Hole # 1 – Profiteers

There are individuals and industries that are far better rewarded by a dysfunctional system.  They are financially motivated to keep the system broken.  These are the publically-held companies that have made their fortunes in medicine: health insurance companies and drug/device companies.

Now, I must first say that I hesitate putting both of these industries in the same category – as I have far less stomach for the insurance industry than the drug/device manufacturers.  The former simply add a layer of administration, while distributing the money of healthcare transactions (and taking a substantial chunk of it).  The drug/device companies do contribute vital products for the benefit of patients, but the profit-driven mindset of the publically-held corporation has caused a number of well-known abuses to occur.

Just do the math:

CEO Name Company 2007 Salary
Miles White Abbott $33,400,000
Fred Hassan Schering-Plough $30,100,000
Bill Weldon J  & J $25,100,000
Bob Essner Wyeth $24,100,000
Robert Parkinson Baxter $17,600,000
Daniel Vasella Novartis $15,500,000
Richard Clark Merck $14,500,000
Frank Baldino Cephalon $13,300,000
Sydney Taurel Eli Lilly $13,000,000
Jeff Kindler Pfizer $12,600,000
Jim Cornelius BMS $11,300,000
     
Total   $210,500,000

Source.

CEO Name Company 2005 Salary
William McGuire United $135,000,000
John Rowe Aetna $57,0490,00
Edward Hanway Cigna $42,1300,00
Total   $234,620,000

Source

Now, William McGuire has run into some hard times recently with the practice of back-dating stock options.  He had to pay back $30 Million to shareholders (not policy holders).  Looking at his salary, this has not hurt him too much.  As far as I can tell, his net-worth is still around $1.2 Billion (nearly all of it made from being an insurance company executive).

One more fact: in 2006, the profits for the top 6 insurers in the US was $11 Billion.

Let me put all of this into perspective. 

1.  There are around 40 Million people over age 65 in the US. 

  • The 14 CEO’s together could give each person over age 65 $12.40. 
  • From their profits in 2006, the insurance companies could give each of these people $306. 
  • Mr. McGuire could personally give each of them $33.

2.  There are an estimated 40,000 primary care physicians in the US.

  • The CEO’s could pay each one $11,128 or they could give 3000 PCP’s a salary of $150,000.
  • The Insurance companies could give each PCP in the US a salary of $275,000 with their 2006 profits.
  • Mr. McGuire could pay give them a bonus of $30,000, or pay 8,000 PCP’s a salary of $150,000

3.  The estimated average cost of a Colonoscopy is $675, a mammogram costs $150, and an MRI of the LS spine costs $2,500.  This means:

  • The CEO’s could fund 659,000 Colonoscopies, 2.9 Million Mammograms, and 178,000 MRI’s
  • The insurance companies could afford to pay for 16 Million Colonoscopies, 73 Million mammograms, and 4.4 Million MRI’s.
  • McGuire could personally fund 1.78 Million Colonoscopies, 8 Million Mammograms, and 480,000 MRI scans.

This is just one area of money lost.  Yes, the CEO’s deserve a salary, and the insurance companies deserve some profit; but if the system is going down the toilet, the solution needs to be found wherever possible.  Clearly there is excess (as shown by the math).  What do we get for all this money?  Another bureaucratic layer on our system, rising insurance premiums, and a bunch of private jets.

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And remember, this is only the first hole in the boat.

63 thoughts on “Holes in the bottom of the boat”

  1. Oh my, I don’t even know what to say. Do you suppose the insurance company pays the medical bills for the CEOs or are they self pay?

  2. Oh my, I don’t even know what to say. Do you suppose the insurance company pays the medical bills for the CEOs or are they self pay?

  3. The problem is not capitalism. The problem is trying force socialistic philosophies and practices into a capitalistic society. As physicians, we cannot charge what we believe is fair and right. We cannot join together as physicians in communities to negotiate contracts. We don’t even know what CPT codes will and will not be paid for before signing a contract nor the “relative” pay we will receive for each CPT code. It’s like trying to buy auto or home insurance without know what the exclusions are and what percentage value of the damage that occurs that they will pay. It is ludicrous and the Joe public has no idea. At least physicians have some ethics in regards to the situation and still charge a “reasonable” amount for their services, unlike the pharmaceutical and insurance industries. There are now too many faces presenting themselves in the exam room, interfering with the health and welfare of our patients and creating socialized medicine. It is on the way. Thanks for the good blog site and for not being afraid to educate the public about how the system functions (or doesn’t function).

  4. The problem is not capitalism. The problem is trying force socialistic philosophies and practices into a capitalistic society. As physicians, we cannot charge what we believe is fair and right. We cannot join together as physicians in communities to negotiate contracts. We don’t even know what CPT codes will and will not be paid for before signing a contract nor the “relative” pay we will receive for each CPT code. It’s like trying to buy auto or home insurance without know what the exclusions are and what percentage value of the damage that occurs that they will pay. It is ludicrous and the Joe public has no idea. At least physicians have some ethics in regards to the situation and still charge a “reasonable” amount for their services, unlike the pharmaceutical and insurance industries. There are now too many faces presenting themselves in the exam room, interfering with the health and welfare of our patients and creating socialized medicine. It is on the way. Thanks for the good blog site and for not being afraid to educate the public about how the system functions (or doesn’t function).

  5. Part of the problem is excessive numbers of bean counters collecting metrics, and not actually doing anything about medicine except forcing healthcare professionals (all levels) to spend time filling in reports and not doing medicine either.

  6. Part of the problem is excessive numbers of bean counters collecting metrics, and not actually doing anything about medicine except forcing healthcare professionals (all levels) to spend time filling in reports and not doing medicine either.

  7. Brilliant. Viewing your “hall of shame” table of salaries speaks volumes about where we have put our priorities as a nation. “Get all you can and let everyone else fend for themselves.” I believe in capitalism as the best system for innovation and growth. But capitalism without conscience or policies to regulate greed is a failure and we are living it.

  8. Brilliant. Viewing your “hall of shame” table of salaries speaks volumes about where we have put our priorities as a nation. “Get all you can and let everyone else fend for themselves.” I believe in capitalism as the best system for innovation and growth. But capitalism without conscience or policies to regulate greed is a failure and we are living it.

  9. Oh, good call Toni. How many of these CEOs etc are giving significant money to charity, and of those, how many do so because it’s “the right thing to do” rather than as a tax break?

  10. Oh, good call Toni. How many of these CEOs etc are giving significant money to charity, and of those, how many do so because it’s “the right thing to do” rather than as a tax break?

  11. Female Anonymous In the Indust

    I am hand-carrying this to my representatives in state and national level. Screw their “listening to constituents to get reelection votes” – the USA has a crisis of greed, and it is going into the pockets of a 1%, plus the lobbyist organizations.
    It is SHAMEFUL that insurance companies reward NOT taking care of healthcare (ie: turning down claims)…AND many companies refuse to do preventative care because it “costs”. (My 50 year old male friend is not allowed a physical from his insurance until he is 55). I think that a doctor making a $300 preventive-care physical can save an insurance company up to $60,000 or more in fixing what could have been advisory in conversation ahead of a medical incident.

    How dare the US government allow such greed? Oh, yeah, I forgot – it’s busy taking over other countries for oil and starting wars about it, and lying about the reasons. Oops. Silly me.

  12. Female Anonymous In the Industry

    I am hand-carrying this to my representatives in state and national level. Screw their “listening to constituents to get reelection votes” – the USA has a crisis of greed, and it is going into the pockets of a 1%, plus the lobbyist organizations.
    It is SHAMEFUL that insurance companies reward NOT taking care of healthcare (ie: turning down claims)…AND many companies refuse to do preventative care because it “costs”. (My 50 year old male friend is not allowed a physical from his insurance until he is 55). I think that a doctor making a $300 preventive-care physical can save an insurance company up to $60,000 or more in fixing what could have been advisory in conversation ahead of a medical incident.

    How dare the US government allow such greed? Oh, yeah, I forgot – it’s busy taking over other countries for oil and starting wars about it, and lying about the reasons. Oops. Silly me.

  13. I disagree. Unrestrained capitalism results in abuse. Every part of life needs laws, and business is no exception. Teddy Roosevelt had to break up monopolies because of the abuses in a free market. People in power don’t want the market to be really free (i.e. they don’t want to lose their power – and I am talking about those in business). I am not saying the government should CONTROL the system, I am simply saying that they should REGULATE (i.e. make laws and enforce them) it so that this kind of abuse does not happen.
    The fact is, the money going to these CEO’s is taken out of everyone else’s pockets. It is offensive. I am fairly conservative overall, but in this way I think winking at repulsive big-business practices is no better than government control. This is not a free market, it is a “old boy network.” Nobody can do a start-up drug company or insurance company. The cost of entry is too high. That means it is the job of the government to make sure that the market stays as free as possible through laws.

    Saying that anything besides government control is fine is naive. Greed is the issue here, and until corrections are made, the people in control will do whatever it takes to stay there.

  14. I disagree. Unrestrained capitalism results in abuse. Every part of life needs laws, and business is no exception. Teddy Roosevelt had to break up monopolies because of the abuses in a free market. People in power don’t want the market to be really free (i.e. they don’t want to lose their power – and I am talking about those in business). I am not saying the government should CONTROL the system, I am simply saying that they should REGULATE (i.e. make laws and enforce them) it so that this kind of abuse does not happen.
    The fact is, the money going to these CEO’s is taken out of everyone else’s pockets. It is offensive. I am fairly conservative overall, but in this way I think winking at repulsive big-business practices is no better than government control. This is not a free market, it is a “old boy network.” Nobody can do a start-up drug company or insurance company. The cost of entry is too high. That means it is the job of the government to make sure that the market stays as free as possible through laws.

    Saying that anything besides government control is fine is naive. Greed is the issue here, and until corrections are made, the people in control will do whatever it takes to stay there.

  15. You are so on target! Thanks for starting this timely and well written series. Looking forward to reading more.

  16. You are so on target! Thanks for starting this timely and well written series. Looking forward to reading more.

  17. Rob said: “Every part of life needs laws, and business is no exception.” Who would (or did in this forum) ever say any different? The rule of law is what allows capitalism to thrive. But law must be sensible and must derive from the rights of individuals. The notion that somehow the government should control the salaries of its employees (either at the low end, through minimum wage laws, or at the high end, by keeping CEO’s wages down) is anathema to the rights of all those involved. A company and individual should be free to negotiate their own terms so that they are mutually acceptable. It is by respecting these rights that the great progress of capitalism has occurred allowing you to have the computer you are typing with, the internet you are making use of, and the standard of living you currently enjoy. The alternative is a worse and worse economy, eventually a crash, and finally, if left unchecked, the squalor and disease of the Middle Ages.
    Specifically regarding the salaries of CEOs, the truth is you get what you pay for. If there is a spectacular performer, who could turn around your company and make it profitable, as opposed to going out of business, you might be willing to pay a lot for such a person. Indeed, you might be willing to pay a good percentage of the worth of your company, or a bonus for good performance, to such a person. There simply is nothing wrong with this. You must understand the context and realize the benefit conferred by a good CEO. No one is taking this money out of your pocket. It isn’t your money to begin with, it is the company’s money, and they aren’t prone to waste it, they are using it to purchase perhaps the most important piece of ‘equipment’ in their entire company.

  18. Rob said: “Every part of life needs laws, and business is no exception.” Who would (or did in this forum) ever say any different? The rule of law is what allows capitalism to thrive. But law must be sensible and must derive from the rights of individuals. The notion that somehow the government should control the salaries of its employees (either at the low end, through minimum wage laws, or at the high end, by keeping CEO’s wages down) is anathema to the rights of all those involved. A company and individual should be free to negotiate their own terms so that they are mutually acceptable. It is by respecting these rights that the great progress of capitalism has occurred allowing you to have the computer you are typing with, the internet you are making use of, and the standard of living you currently enjoy. The alternative is a worse and worse economy, eventually a crash, and finally, if left unchecked, the squalor and disease of the Middle Ages.
    Specifically regarding the salaries of CEOs, the truth is you get what you pay for. If there is a spectacular performer, who could turn around your company and make it profitable, as opposed to going out of business, you might be willing to pay a lot for such a person. Indeed, you might be willing to pay a good percentage of the worth of your company, or a bonus for good performance, to such a person. There simply is nothing wrong with this. You must understand the context and realize the benefit conferred by a good CEO. No one is taking this money out of your pocket. It isn’t your money to begin with, it is the company’s money, and they aren’t prone to waste it, they are using it to purchase perhaps the most important piece of ‘equipment’ in their entire company.

  19. David, This is the misguided thought process of the ‘robber barons’ of the early 20th century, the railroad tycoons, steel manufacturers, where are they nonw? Your thought process is flawed, and laced with greed. You rationalize our progress and base it on a few greedy men who are so egocentric that they fail to realize they will self destruct. Witness the disarray the financial markets are now experiencing.200 million is outrageous. It is no wonder that capitalism is blamed for social injustice.

  20. David, This is the misguided thought process of the ‘robber barons’ of the early 20th century, the railroad tycoons, steel manufacturers, where are they nonw? Your thought process is flawed, and laced with greed. You rationalize our progress and base it on a few greedy men who are so egocentric that they fail to realize they will self destruct. Witness the disarray the financial markets are now experiencing.200 million is outrageous. It is no wonder that capitalism is blamed for social injustice.

  21. I agree, Gary. David is right when it comes to companies like GM. They have a right to pay their CEO this kind of money. It just might make their products cost more, but I can buy someone else’s. The problem is this case is that people actually die because of insurance company behavior. It is more analogous to price gouging by gas stations. There must be moral boundaries to how people behave – and like it or not, that is what government does.
    If David wants to live in the “tough world of capitalism,” he can go on defending this stuff. I see people not able to afford medications, getting legit procedures denied, getting sick, and dying. It is hard for me to stomach Mr. McGuire in the face of that fact.

  22. I agree, Gary. David is right when it comes to companies like GM. They have a right to pay their CEO this kind of money. It just might make their products cost more, but I can buy someone else’s. The problem is this case is that people actually die because of insurance company behavior. It is more analogous to price gouging by gas stations. There must be moral boundaries to how people behave – and like it or not, that is what government does.
    If David wants to live in the “tough world of capitalism,” he can go on defending this stuff. I see people not able to afford medications, getting legit procedures denied, getting sick, and dying. It is hard for me to stomach Mr. McGuire in the face of that fact.

  23. Let me add that the whole economic crisis of today happened because the government did not regulate the lending practice of companies who preyed on the weak and made tons of money by issuing bad loans. Since they immediately passed on the loans, they made their cut and did not live with the consequences. This is capitalism at work, right? Clearly the government turned its eyes too long and now we are paying dearly.

  24. Let me add that the whole economic crisis of today happened because the government did not regulate the lending practice of companies who preyed on the weak and made tons of money by issuing bad loans. Since they immediately passed on the loans, they made their cut and did not live with the consequences. This is capitalism at work, right? Clearly the government turned its eyes too long and now we are paying dearly.

  25. Richard (via Hello Kitty Hell)

    CEO envy is not the solution. The amount money made by the CEO’s you listed is only .13% of 2007 Medicare outlays of 333,000,000,000. The heart of the problem the third part payer system whether it is the insurance company or worst government. The problem is not only the cost of administration but also government under reimbursing doctors expense and forcing expensive political mandates on insurance converge. The biggest problem is insurance and government t covering routine medical visits instead of insurance against cost of major medical treatment. The solution is both patient choice and responsibility to pay for routine medical treatment. If a person can buy a 44,000 suv or a 20000 LCD HDTV they cat afford to pay for a simple doctor

  26. Richard (via Hello Kitty Hell)

    CEO envy is not the solution. The amount money made by the CEO’s you listed is only .13% of 2007 Medicare outlays of 333,000,000,000. The heart of the problem the third part payer system whether it is the insurance company or worst government. The problem is not only the cost of administration but also government under reimbursing doctors expense and forcing expensive political mandates on insurance converge. The biggest problem is insurance and government t covering routine medical visits instead of insurance against cost of major medical treatment. The solution is both patient choice and responsibility to pay for routine medical treatment. If a person can buy a 44,000 suv or a 20000 LCD HDTV they cat afford to pay for a simple doctor

  27. Richard, do you live in an upscale subdivision, by any chance? The majority (yes, majority!) of taxpayers in this country are not driving 44k SUVs or watching 20k TVs. You need to get out a little more.

  28. Richard, do you live in an upscale subdivision, by any chance? The majority (yes, majority!) of taxpayers in this country are not driving 44k SUVs or watching 20k TVs. You need to get out a little more.

  29. This is but a single hole in the bottom of the boat. I am not saying it is the entire problem, nor am I saying it is the biggest. It does, however, illustrate the problems with having a third-party payment system. I am going to hit on some of your points in future posts, but just because there are other wrongs does not make it right that the insurance industry does what it does. A HUGE percent of the grief we feel in our offices is at the hands of the insurance industry. They are an impediment to care. To have to face that every day and then to see the money that they are not paying for legit care going to these CEO’s is offensive. Their industry siphons huge amounts from legit medical care. It has no motivation to be efficient at all; and these salaries are a gross example of that.

  30. This is but a single hole in the bottom of the boat. I am not saying it is the entire problem, nor am I saying it is the biggest. It does, however, illustrate the problems with having a third-party payment system. I am going to hit on some of your points in future posts, but just because there are other wrongs does not make it right that the insurance industry does what it does. A HUGE percent of the grief we feel in our offices is at the hands of the insurance industry. They are an impediment to care. To have to face that every day and then to see the money that they are not paying for legit care going to these CEO’s is offensive. Their industry siphons huge amounts from legit medical care. It has no motivation to be efficient at all; and these salaries are a gross example of that.

  31. Dave, you are correct about CEO salaries not being the ‘whole problem’ with health care, but then again no one is saying that.However I don’t think the public or providers are going to be enamored with CEOs or health insurance companies that pay that type of salary. Since the health insurance company and most of medicine is regulated the CEOs stipends need to be regulated as well.
    Mr Mcguire probably has the best health coverage anyone can get, save for congress and the FEHBP.
    I am not saying he does not work hard for his $$$, tell that to the PCPs who only make about 150-200,000 per year working 60-80 hour weeks. Does he have to have malpractice coverage? I’m sure his company covers him for his liabilities.
    Even though it represents 0.13% of the medical costs, how much does it cost in terms of his single company. Yes, there are moral issues here…it’s called plunder the poor, and let them eat cake!!! (she lost her head)

  32. Dave, you are correct about CEO salaries not being the ‘whole problem’ with health care, but then again no one is saying that.However I don’t think the public or providers are going to be enamored with CEOs or health insurance companies that pay that type of salary. Since the health insurance company and most of medicine is regulated the CEOs stipends need to be regulated as well.
    Mr Mcguire probably has the best health coverage anyone can get, save for congress and the FEHBP.
    I am not saying he does not work hard for his $$$, tell that to the PCPs who only make about 150-200,000 per year working 60-80 hour weeks. Does he have to have malpractice coverage? I’m sure his company covers him for his liabilities.
    Even though it represents 0.13% of the medical costs, how much does it cost in terms of his single company. Yes, there are moral issues here…it’s called plunder the poor, and let them eat cake!!! (she lost her head)

  33. Dave, let me get this straight. Here is an insurance company executive saying, ‘I’ve got mine” you get yours”This is nothing more than greed, avarice, and a sick attitude (sociopathic, perhaps?)
    Rob from the poor and give to the rich. Let’s remember where this money is coming from…patients’ premiums,….200 million can deliver a lot of care, educate more PCPs,
    Dave
    This type of stuff does not belong in healthcare. It sounds like the boards of directors of these companies are so desperate to make profits they will pay anything to hire someone who talks a good story and can add and subtract.

    Perhaps this is a good area to regulate more.
    We physicians have been capped by insurers, payors…

    Dave, what is your background and career?

  34. Dave, let me get this straight. Here is an insurance company executive saying, ‘I’ve got mine” you get yours”This is nothing more than greed, avarice, and a sick attitude (sociopathic, perhaps?)
    Rob from the poor and give to the rich. Let’s remember where this money is coming from…patients’ premiums,….200 million can deliver a lot of care, educate more PCPs,
    Dave
    This type of stuff does not belong in healthcare. It sounds like the boards of directors of these companies are so desperate to make profits they will pay anything to hire someone who talks a good story and can add and subtract.

    Perhaps this is a good area to regulate more.
    We physicians have been capped by insurers, payors…

    Dave, what is your background and career?

  35. Rob,
    Ira Kirschenbaum MD wrote a similar entry in his blog on WebMD “Mad About Medicine” several months ago. I’m glad others such as yourself are bringing this subject out in the open as well, exposing this huge problem. Knowledge is power.

  36. Rob,
    Ira Kirschenbaum MD wrote a similar entry in his blog on WebMD “Mad About Medicine” several months ago. I’m glad others such as yourself are bringing this subject out in the open as well, exposing this huge problem. Knowledge is power.

  37. This isn’t Russia either. Regardless of where it is or isn’t, there are only 2 ways that insurance companies make more profit:-1) Charging higher premiums.
    2) Paying less in claims.

    See where that’s going?

  38. This isn’t Russia either. Regardless of where it is or isn’t, there are only 2 ways that insurance companies make more profit:-1) Charging higher premiums.
    2) Paying less in claims.

    See where that’s going?

  39. Gary,
    To answer your question about my background, I’m a neurologist in private practice.

    I’m just not into the whole class warfare approach taken by many (including yourself) on this topic.

    I’m also very against our third-party payor system (as someone has already commented). I would remedy this by changes in the tax code, promoting Health Savings Accounts, and promoting a gradual reduction and simplification in the innumerable laws that make it hard to practice medicine, hard to be a patient, and hard to be a company that supplies health insurance. You may not think there are consequences to so many people thinking that health care should be an exception to the usual marketplace rules – but as result of this attitude there are simply MANY, MANY laws and much red tape associated with anything one does or dreams of doing in medicine. I also hate the control of third-parties over payments and medicine – so fight THOSE (by the methods above) since they are your true enemy.

    It is the astounding lack of freedom in medicine that is at the root of our problems. Consider the following:

    (1) In Maryland, and some other states, if a patient is admitted and seen by you in the hospital, you are, by law, forbidden to charge your usual rates to that patient if they have an HMO. Instead, you can only charge what you would have been paid IF YOU HAD SIGNED A CONTRACT with the HMO. This injustice is referred to as “no balanced billing”

    (2) In many regions, you must apply for a certificate of need in order to open a hospital or clinic! And who gets to testify at the hearing? Your potential competitors – like the local hospital. Instead of being able to assess a marketplace, take a chance, and open a business, you must convince some board, with who knows what motivations, that this is the right thing to do. Sounding more like communism?

    (3) The FDA (not doctors and patients) decides what things (drugs and devices) should be in the marketplace and which things shouldn’t. Their one size fits all approach creates orphan diseases and many people being denied good, currently available, therapy. Sound like a free system?

    (4) The DEA has fined, jailed, and taken away the license of many physicians for ‘overprescribing’ narcotic medications, charging them with ‘drug trafficking’ even if no intent was proven – while simultaneously admitting there is no inherent ceiling dose for narcotics and having no real criterion by which to judge this. This has created a climate of fear in the United States for pain management doctors.

    (5) Medicare will fine and potentially jail you for fraud if you (a) put down the ‘wrong’ billing code on a reimbursement form (codes that even experts only agree on 25% of the time) (b) offer a cash paying patient [and thus, a patient for whom you don’t have to pay an extra 30% to billers to get your money] a discount (c) violate any of the thousands of pages of rules that no single person actually knows. Does this sound like a capitalist-created system?

    (6) If you want to treat the elderly and get paid a reasonable amount then you must either (a) get out of Medicare altogether [since no balance-billing is allowed] – which cuts off a large number of people from your treatment or (b) develop a concierge-style practice, which skirts the law by making the concierge payment for ‘extra services not covered by Medicare’ – which is currently legal, but about which many in Congress are dead set against (Pete Stark, etc.) and which will cause them either to prosecute a few cases or to change the law to deny this type of practice. Does this sound like a free-market system?

    (7) Insurance companies are simply not allowed to create a product (an insurance coverage plan) that is cheap and limited (which many people would want). Supposed do-gooders have made this illegal. There must be routine outpatient services, outpatient medication coverage, mental health coverage. The health insurance industry is one of the most, if not the most, heavily regulated industries in this country. How could anyone (that was YOU Gary) think that more regulation is somehow the answer!

    I could go on, but I’m sure you are bored – but the point is that there is an appalling lack of freedom; this lack of freedom, combined with our third-party payor system and mentality, is at the crux of the problems in medicine.

  40. Gary,
    To answer your question about my background, I’m a neurologist in private practice.

    I’m just not into the whole class warfare approach taken by many (including yourself) on this topic.

    I’m also very against our third-party payor system (as someone has already commented). I would remedy this by changes in the tax code, promoting Health Savings Accounts, and promoting a gradual reduction and simplification in the innumerable laws that make it hard to practice medicine, hard to be a patient, and hard to be a company that supplies health insurance. You may not think there are consequences to so many people thinking that health care should be an exception to the usual marketplace rules – but as result of this attitude there are simply MANY, MANY laws and much red tape associated with anything one does or dreams of doing in medicine. I also hate the control of third-parties over payments and medicine – so fight THOSE (by the methods above) since they are your true enemy.

    It is the astounding lack of freedom in medicine that is at the root of our problems. Consider the following:

    (1) In Maryland, and some other states, if a patient is admitted and seen by you in the hospital, you are, by law, forbidden to charge your usual rates to that patient if they have an HMO. Instead, you can only charge what you would have been paid IF YOU HAD SIGNED A CONTRACT with the HMO. This injustice is referred to as “no balanced billing”

    (2) In many regions, you must apply for a certificate of need in order to open a hospital or clinic! And who gets to testify at the hearing? Your potential competitors – like the local hospital. Instead of being able to assess a marketplace, take a chance, and open a business, you must convince some board, with who knows what motivations, that this is the right thing to do. Sounding more like communism?

    (3) The FDA (not doctors and patients) decides what things (drugs and devices) should be in the marketplace and which things shouldn’t. Their one size fits all approach creates orphan diseases and many people being denied good, currently available, therapy. Sound like a free system?

    (4) The DEA has fined, jailed, and taken away the license of many physicians for ‘overprescribing’ narcotic medications, charging them with ‘drug trafficking’ even if no intent was proven – while simultaneously admitting there is no inherent ceiling dose for narcotics and having no real criterion by which to judge this. This has created a climate of fear in the United States for pain management doctors.

    (5) Medicare will fine and potentially jail you for fraud if you (a) put down the ‘wrong’ billing code on a reimbursement form (codes that even experts only agree on 25% of the time) (b) offer a cash paying patient [and thus, a patient for whom you don’t have to pay an extra 30% to billers to get your money] a discount (c) violate any of the thousands of pages of rules that no single person actually knows. Does this sound like a capitalist-created system?

    (6) If you want to treat the elderly and get paid a reasonable amount then you must either (a) get out of Medicare altogether [since no balance-billing is allowed] – which cuts off a large number of people from your treatment or (b) develop a concierge-style practice, which skirts the law by making the concierge payment for ‘extra services not covered by Medicare’ – which is currently legal, but about which many in Congress are dead set against (Pete Stark, etc.) and which will cause them either to prosecute a few cases or to change the law to deny this type of practice. Does this sound like a free-market system?

    (7) Insurance companies are simply not allowed to create a product (an insurance coverage plan) that is cheap and limited (which many people would want). Supposed do-gooders have made this illegal. There must be routine outpatient services, outpatient medication coverage, mental health coverage. The health insurance industry is one of the most, if not the most, heavily regulated industries in this country. How could anyone (that was YOU Gary) think that more regulation is somehow the answer!

    I could go on, but I’m sure you are bored – but the point is that there is an appalling lack of freedom; this lack of freedom, combined with our third-party payor system and mentality, is at the crux of the problems in medicine.

  41. David, thanks for your reply. I had to go back and review the thread of this discussion.
    1. I did not mean you are greedy
    2. I heartedly agree about governmental intervention, and regulation, bureaucracy and the rest of it.
    3. Survival of the fittest? By rewarding successful executives outlandish salaries? Many times this approach fails, companies crash and burn and the CEO, etc either bail our or are fired….and they float away on their golden (if tarnished) parachutes)
    Why should that pay for performance be rewarded.??
    4. Do you equate saving a life, with saving a company? Is there more at stake?

    I agree with about 98% of your reply to me and you took quite a bit of time to elaborate….I cannot and will not disagree with any of it. My feelings exactly..
    I no longer have the stomach to practice, and I have been a highly ethical, moral physician always putting my patient’s welfare first….which is almost impossible now. One is unable to refer a patient to whom you think is the best physician for the problem. Insurance payors now have the final word in credentialling doctors. They are arbitrary, capricious and also vengeful if you dispute their rules. I can give you many a case in point if you wish.

    Frustration abounds when it is a no win no win situation.

    Life is too short, my career as a physician at about an end, and frankly Scarlett, I don’t give a damn…the world changed, and I didn’t. I’ve ranted about it for over 25 years…it’s time for the next generation to take over…Be glad to “coach” the team, however for me watching the grandkids and enjoying the family are where my energy is going from now on.

    BTW I have a blog http://healthtrain.blogspot.com

    P.S. I’m an ophthalmologist……and had a great career, loved what I did.

  42. David, thanks for your reply. I had to go back and review the thread of this discussion.
    1. I did not mean you are greedy
    2. I heartedly agree about governmental intervention, and regulation, bureaucracy and the rest of it.
    3. Survival of the fittest? By rewarding successful executives outlandish salaries? Many times this approach fails, companies crash and burn and the CEO, etc either bail our or are fired….and they float away on their golden (if tarnished) parachutes)
    Why should that pay for performance be rewarded.??
    4. Do you equate saving a life, with saving a company? Is there more at stake?

    I agree with about 98% of your reply to me and you took quite a bit of time to elaborate….I cannot and will not disagree with any of it. My feelings exactly..
    I no longer have the stomach to practice, and I have been a highly ethical, moral physician always putting my patient’s welfare first….which is almost impossible now. One is unable to refer a patient to whom you think is the best physician for the problem. Insurance payors now have the final word in credentialling doctors. They are arbitrary, capricious and also vengeful if you dispute their rules. I can give you many a case in point if you wish.

    Frustration abounds when it is a no win no win situation.

    Life is too short, my career as a physician at about an end, and frankly Scarlett, I don’t give a damn…the world changed, and I didn’t. I’ve ranted about it for over 25 years…it’s time for the next generation to take over…Be glad to “coach” the team, however for me watching the grandkids and enjoying the family are where my energy is going from now on.

    BTW I have a blog http://healthtrain.blogspot.com

    P.S. I’m an ophthalmologist……and had a great career, loved what I did.

  43. My response to David:Do I think that we should cap the salaries of CEO’s? No. I don’t think that regulation of this type ever works, and I don’t think it is even ethical.

    Do I think that government regulations cause a mess? Duh! I am a PCP, remember. I rant regularly on the mess of Medicare. The rules tied to the delivery of care or the over-zealous regulation (such as CON) messes things up plenty.

    BUT…I don’t make the jump to say that the solution is de-regulation and “letting the free-market” fix things. These companies could compete based on cost – the salaries of the CEO’s and their profits are witness to the lucrative nature of their business. They could work on tight margins and force the other members of the system to become more efficient. Initially, this is what HMO’s accomplished – increase efficiency.

    But they are not maximizing value for consumers. Their main priority is to maximize return for their shareholders. They are morally obligated to take out as much money from the system as possible. This is a conflict of interest at the very heart of the system. It can’t work. It will result in gouging. It will result in collusion (wink-wink, don’t lower your prices and we won’t lower ours).

    These salaries are just an obscene demonstration of the sickness of the system. I agree that fixing it has to be done carefully – and sometimes regulations just cause more harm. But to then say that you should never regulate things is a bad jump.

    Did deregulation of the banking industry fix things? No, it caused a new industry of bad lenders to come up and now put us into recession. Deregulate? Really???

  44. My response to David:Do I think that we should cap the salaries of CEO’s? No. I don’t think that regulation of this type ever works, and I don’t think it is even ethical.

    Do I think that government regulations cause a mess? Duh! I am a PCP, remember. I rant regularly on the mess of Medicare. The rules tied to the delivery of care or the over-zealous regulation (such as CON) messes things up plenty.

    BUT…I don’t make the jump to say that the solution is de-regulation and “letting the free-market” fix things. These companies could compete based on cost – the salaries of the CEO’s and their profits are witness to the lucrative nature of their business. They could work on tight margins and force the other members of the system to become more efficient. Initially, this is what HMO’s accomplished – increase efficiency.

    But they are not maximizing value for consumers. Their main priority is to maximize return for their shareholders. They are morally obligated to take out as much money from the system as possible. This is a conflict of interest at the very heart of the system. It can’t work. It will result in gouging. It will result in collusion (wink-wink, don’t lower your prices and we won’t lower ours).

    These salaries are just an obscene demonstration of the sickness of the system. I agree that fixing it has to be done carefully – and sometimes regulations just cause more harm. But to then say that you should never regulate things is a bad jump.

    Did deregulation of the banking industry fix things? No, it caused a new industry of bad lenders to come up and now put us into recession. Deregulate? Really???

  45. By the way, Forbes online list of the best paid CEO’s, in order of salary:
    1. Lawrence J Ellison ($192 Million)
    2. Frederic M Poses
    3. Aubrey K McClendon
    4. Angelo R Mozilo
    5. Howard D Schultz
    6. Nabeel Gareeb
    7. Daniel P Amos
    8. Lloyd C Blankfein
    9. Richard D Fairbank
    10. Bob R Simpson ($72 Million)

    Not one of these companies deals primarily with health insurance.

    To Rob: There is no conflict of interest between making a profit and providing a good product or service – in a sensible system, they tend to be one and the same or else there is a limited market for the product/service. When these two do not coincide, then look at the distortions in the system (usually external, governmental) and you will find an explanation. I think you are agreeing clearly that fixing the whole system is desirable, so on this I guess we agree.

    We clearly disagree on how much and what types of regulations should be allowed, but I think that discussion is so tied in with one’s underlying philosophy and view on economics that it is impractical to try to tackle it in this forum.

  46. By the way, Forbes online list of the best paid CEO’s, in order of salary:
    1. Lawrence J Ellison ($192 Million)
    2. Frederic M Poses
    3. Aubrey K McClendon
    4. Angelo R Mozilo
    5. Howard D Schultz
    6. Nabeel Gareeb
    7. Daniel P Amos
    8. Lloyd C Blankfein
    9. Richard D Fairbank
    10. Bob R Simpson ($72 Million)

    Not one of these companies deals primarily with health insurance.

    To Rob: There is no conflict of interest between making a profit and providing a good product or service – in a sensible system, they tend to be one and the same or else there is a limited market for the product/service. When these two do not coincide, then look at the distortions in the system (usually external, governmental) and you will find an explanation. I think you are agreeing clearly that fixing the whole system is desirable, so on this I guess we agree.

    We clearly disagree on how much and what types of regulations should be allowed, but I think that discussion is so tied in with one’s underlying philosophy and view on economics that it is impractical to try to tackle it in this forum.

  47. nzou.com » Blog Archive » Can A Doctor Be Happy?

    […] RUC and pressure from attending physicians, to avoid primary care as a career choice.  While 14 healthcare executives make enough money to pay all an army of primary care docs… while government pays for expensive […]

  48. The bulk of the problem with current financial crisis is that it is a result of federally mandated performance by lenders. To extract that performance, the lenders had to be enticed to go against rather well-established lending criteria. It wasn’t deregulation, but more regulation poorly thought out and implemented that is the cause.
    Even though the goal was admirable — more people owning homes, thereby building equity — it failed like so many other acts of mere good intention. It was helped along by the greedy, who will always be with us.

    As for healthcare and insurance crises? Remember how health insurance came about fellas? Hospitals and doctors wanted it so badly, they created it. It’s the primary reason why you’re getting paid today in $$ rather than chickens and a loaf of bread. It’s why you have a higher social status than the guy who runs the the local hardware store.

    I’m not holding current day doctors liable for inheriting a system started by doctors of a previous era. You inherited a good intention gone very very wrong. But I do think you have more political power to change it than you realize. This political power must not, cannot be, expressed as “I want to get paid more” no matter how much more you want to get paid. That’s what started this mess, dammit.

    It was when large employers started getting into the business of selling health insurance that more insurers arose to meet the demand.

    Then the government starts providing health insurance. Then people start clamoring for insurance for everybody. And it’s all out of control by now.

    People clamoring for more and more treatments and cures, as well as access to them. Blame the media. They’ve been throwing “medical miracle” stories at the public for decades. Patient expectations are increased, but not rationally so. But their governments hear them and mandate that insurance cover everything from earaches and ingrown toenails to heart attacks and brain tumors. For everybody. Greedy insurance companies, greedy patients, and yes some greedy healthcare providers.

    I don’t see health insurance going away, so my wildest dream of a “cure” is out of the question. But we can get businesses out of the business of providing health insurance. That is step one.

    And… doctors will take a pay cut while this reform is going on. You can either take that pay cut now, or forever have your fees and medical decisions regulated by government and insurance.

  49. The bulk of the problem with current financial crisis is that it is a result of federally mandated performance by lenders. To extract that performance, the lenders had to be enticed to go against rather well-established lending criteria. It wasn’t deregulation, but more regulation poorly thought out and implemented that is the cause.
    Even though the goal was admirable — more people owning homes, thereby building equity — it failed like so many other acts of mere good intention. It was helped along by the greedy, who will always be with us.

    As for healthcare and insurance crises? Remember how health insurance came about fellas? Hospitals and doctors wanted it so badly, they created it. It’s the primary reason why you’re getting paid today in $$ rather than chickens and a loaf of bread. It’s why you have a higher social status than the guy who runs the the local hardware store.

    I’m not holding current day doctors liable for inheriting a system started by doctors of a previous era. You inherited a good intention gone very very wrong. But I do think you have more political power to change it than you realize. This political power must not, cannot be, expressed as “I want to get paid more” no matter how much more you want to get paid. That’s what started this mess, dammit.

    It was when large employers started getting into the business of selling health insurance that more insurers arose to meet the demand.

    Then the government starts providing health insurance. Then people start clamoring for insurance for everybody. And it’s all out of control by now.

    People clamoring for more and more treatments and cures, as well as access to them. Blame the media. They’ve been throwing “medical miracle” stories at the public for decades. Patient expectations are increased, but not rationally so. But their governments hear them and mandate that insurance cover everything from earaches and ingrown toenails to heart attacks and brain tumors. For everybody. Greedy insurance companies, greedy patients, and yes some greedy healthcare providers.

    I don’t see health insurance going away, so my wildest dream of a “cure” is out of the question. But we can get businesses out of the business of providing health insurance. That is step one.

    And… doctors will take a pay cut while this reform is going on. You can either take that pay cut now, or forever have your fees and medical decisions regulated by government and insurance.

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