Addressing Healthcare Costs - Health Professional Salaries
The primary contributors to higher costs are administrative costs, healthcare professional labor, and pharmaceutical. Administrative costs in the USA average 8% with some reported to be over 15% compared to other countries 1% to 3%. Medicare while many opponents of government managed care administrative costs are around 2% (Medicare is More Efficient Than Private Insurance). Physician and nurses salaries are also higher in the USA than in most other countries. Primary care physician average $218,173 while in other high-income countries salaries are $86,607 to $154,126. The USA medical education system is more costly and more prolonged than those in other countries. Regarding pharmaceuticals in different counties, the average cost ranges between $466 to $939 while in the USA is $1,443. The first in this series will be addressed administrative costs, followed by health professional salaries, and pharmaceutical expenses.
Health Professional Salaries
Compensation of healthcare professionals particularly Physician Compensation Worldwide is highest in the world. Some factors have contributed to this continuing escalation in compensation paid particularly since the implementation of Medicare and Medicaid in the mid-1960s. Before that time physicians were primarily paid on the fee-for-service basis paid by limited insurance coverage or whatever the patients were able to afford. With a more structured program offered through the Medicare and Medicaid program continued growth in the private insurance market the compensation paid to physicians continued to escalate.
The fee-for-service model that was the primary modality had built-in conflicts of interest. Without any significant oversight by the payer meaning Medicare or private insurance companies physicians were free to charge pretty much whatever the market would bear. For the most part, they were not even questioned about the procedures that they were recommending. The escalation in costs of care eventually created movements within the Centers for Medicare and Medicaid to begin restricting how compensation was paid to physicians. As noted in an earlier posting, there have been significant changes in terms of how physician within healthcare organizations are compensated through the Medicare and Medicaid program. While these have the potential of making substantial changes in terms of the amount of revenue spent on care provisions there are still some factors contributing to physician compensation.
One of the significant factors that from my perspective is the curriculum required for physicians in the United States. Our model is a postbaccalaureate degree, and most cases require at least a four-year educational experience followed by four years of medical school, then another one year of internship, and then followed by a 3 to the 5-year residency program. For some specialties, the additional two years or more of fellowship is required. Read more about medical education in the USA The Road to Becoming a Doctor. Thus we are demanding an extensive amount of education for these medical school graduates with limited improvements in outcomes based on a lesser complex model of medical education found in developed countries.
The cost of this model is extremely high, and students often have to borrow substantial funds to pay for this lengthy and questionable valuable educational model. It’s almost as if medical education relies primarily on an apprentice model with interspersed educational requirements. Addressing this curriculum requirement is necessary if we're going to be able to help drive down some of the cost of educating new physicians.
Most developed, as well as middle-income countries, have a well-established model for physician education. The student enters into medical school following high school and then at the end of the six years can choose to go on for postgraduate education. The degree at the end of this program is a bachelor of science in medicine. Then with further education and specialties training depending on the option, chosen a doctorate of medicine degree is awarded. The curriculum is more focused on the necessary knowledge need to provide competency care thus fostering a shorter curriculum. Since the Flexner Report was completed in the early 1900s, there has been a little review of what a medical school curriculum should contain. An article in the German Medical Science journal published in 2017 provides A comparison of medical education in Germany and the United States: from applying to medical school to the beginnings of residency.
It seems that the developed and middle-income country models that are graduating physicians for less cost and achieving better patient outcomes are something that needs to be seriously considered. In my opinion, the change will only come when state legislature who fund these programs begin to demand changes in the curriculum. Also, the state legislature is also going to have to’s provide additional funds to the schools to decrease the cost to students.
At the moment there is a restriction on the number of medical school students. This is created by having fewer medical schools, limiting the number of applicants that they will take, followed by a residency slot system that is fostering the creation of specialists. The curriculum reform by primarily shortening the educational programs, providing additional financial support to the establishment of new medical schools using both state and federal resources, should produce an opportunity to increase the number of positions for medical students.
The residency requirement is another area that needs to be evaluated. Currently, Medicare pays for these residency slots at an estimated cost of $150,000. The 1997 Balance Budget Act capped the number of slots. The vast majority of these positions are for a specialist. Many of which we do not need. The most urgent need is for primary care physicians. If Medicare would stop funding the high number of specialty positions and concentrate on primary care, this would be a significant contribution to not only decreasing the cost of education, and as well as compensation paid to specialist physicians. Primary care doctors typically made substantially less than a specialist. Using specialist to provide primary care services not associated with their advanced training is a misuse of their education and expertise. Determining the number of specialists by category would be part of a policy decision that needs to be made annually using a model similar to that found in the European countries.
The use of foreign medical graduates needs to be expanded. America needs foreign medical graduates. Currently, there are significant barriers in place for many of these well-educated physicians to enter practice in the United States. Reviewing the competencies of these programs could be one way of helping to assess skills. In the state of Missouri, they have created an exciting program in which some of these foreign medical graduates who currently are not able to meet all of the specific requirements for licensure are allowed to practice under the supervision of a physician. Many middle-income countries have an export model of educating physicians and using these competent graduates particularly in our underserved areas will also help with the cost of care.
Advanced practice registered nurses as well as physician assistants and other healthcare professionals have demonstrated their ability and competency to provide a significant percentage of primary care needs. In fact, some studies have shown that these providers can care for up to 80% of patients seen in primary care settings. Nurse Practitioners can fill the void in primary care. Because of the cartel approach to limiting the number of providers driven primarily by the medical associations as a restriction of trade to force a limited supply of physicians has impacted the practice of these providers. Eliminating these restrictions so that they can provide a full scope of practice services primarily for advanced practice registered nurses can also serve as another high-quality lower-cost provider to meet the needs of many individuals who are currently not receiving adequate services.
Often cited as a limitation on why there is a restriction on the number of providers and the requirements for lengthy residencies and in some cases fellowship has been related to our legal system. While some states have enacted restrictions on malpractice claims the practice of such is minimal. If there could be a consideration in the legal system to also include standards of care from our Europeans colleagues some of the malpractice concerns could become less prevalent. Given we work in an international environment and the European outcomes of care are substantially higher than the US, it seems logical that we should also review and potentially at that some of their standards of care particularly in regards to our legal system.
Changing the compensation of physicians is currently underway. The Centers for Medicare Medicaid have begun limiting compensation paid to providers. Also, policymakers are also starting to realize that merely providing unlimited funds for federal insurance programs without addressing outcomes and other related activities is not a good idea. Ultimately, it’s my opinion that a decrease in revenue from the federal government insurance programs will force changes in physician and other healthcare professional compensations.
Change is difficult. Mainly when working in an environment in which physicians are well respected and provide a valuable service. At some point, we can no longer afford the $100 billion additional cost of providing compensation to these individuals. This is especially true when outcomes are not on par with what we find achieved by our European colleagues for much lesser compensation. There will always be arguments about our population mixed being such that we cannot compare apples and oranges and at the same time nowhere else in the world do we find such high salaries paid to so many physicians.
In summary, there needs to changes in the curriculum. Placing a priority on primary care residency slots. We need to increase the number of medical schools. There should be innovative programs to engage the use of foreign medical graduates. The need for all 50 states plus territories needs to enact legislation to allow advanced practice registered nurses to practice under full scope authority. And adopting some of the European standards of care is going to help address the cartel focus on the restriction of physicians as the only provider of healthcare services. Change is necessary and visionary leaders supported by policymakers can assist with addressing excessive compensation. For additional thoughts on this topic view the 2017 article by Dean Barker in Politico The problem of doctors’ salaries
