Thursday, December 17, 2009

Fee-For-Service Medicine: Hold on to your Tonsils!

Last week, I bravely expressed vigorous support for medical rationing. No one has yet sent the ‘death panels’ after me and I still have a pulse. This week, emboldened by my continued survival, I tread again into dangerous terrain. I will offer support for another policy that is accused of being the cause of ongoing hemorrhage of the health care system. Who would risk public opprobrium by expressing support for a practice that is so corrupt and evil? The Whistleblower knows no fear.

Caution! Any minors reading this post are strongly admonished to close this window immediately so that your impressionable minds won’t be irrevocably contaminated. I shall write the nefarious term in the smallest print allowable, hoping it will escape the attention of web censors and the D.C. Health Care Thought Police.


The hardest part of treating an addiction is to admit the problem publically. I stand before you with humility and hope.

"My name is Whistleblower and I am a FFS physician"

Only 11 steps to go.

I practice FFS medicine, which is felt my many to be a gangrenous limb of our health care system that needs to be excised. FFS physicians are portrayed as profiteers who are fleecing the system. Even our president offered a rather damning comment this past July.

"Right now, doctors a lot of times are forced to make decisions based on the fee payment schedule that's out there. ... The doctor may look at the reimbursement system and say to himself, 'You know what? I make a lot more money if I take this kid's tonsils out,'"

This comment really stuck in the throats of thousands of ENT (ear, nose and throat) physicians who were being accused of pushing a No Tonsil Left Behind policy. Perhaps, the president was misinformed that ENT stands for Everyone Needs a Tonsillectomy.

The president, who bristles at the suggestion that he may harbor some socialist tendencies, joins a chorus of ‘reformers’ who want physicians to salaried. Indeed, he champions large medical institutions that pay physicians by a fixed wage, as if this model could be extended nationally. Only under a salaried construct, they argue, will we phyisicans be unshackled from financial conflicts of interest that taint our advice to our patients. The word profit joins medical rationing and FFS on the dark list of evil phrases that should never be broadcast during family viewing hours. (Not to worry parents, these time slots are already reserved for Viagra, Levitra and Cialis advertisements.)

When I recommend a colonoscopy, I do so because of medical need. I have confessed in an earlier post, that there are other factors that can influence my advice, but financial gain is not one of them. FFS gives an incentive for practitioners to provide excellent customer service. Which physician will be more likely to squeeze you in for an appointment, stay late for you or meet you in the emergency room when you are sick? Will it be a physician who is paid for this extra performance, or one who is on salary? Of course, this is a generalization. There are excellent physicians on salary and average practitioners who are compensated by FFS. However, in general, folks perform better when they have an incentive to do so.

I know that many readers are convinced that salaried physicians are the right medicine. Why stop with doctors? Why not simply remove profit from all professions and trades? Do they argue that only physician financial conflicts of interest should be eliminated? Here are some other folks who operate in FFS and profit models.
  • Attorneys
  • Accountants
  • Plumbers
  • Auto mechanics
  • Business Owners
  • Consultants
  • Salesmen
  • Retailers
  • Investors
  • Capitalists

If FFS medicine is corrupt, then why shouldn’t we strike out at profit wherever it exists? Wouldn’t we all be better off if the folks who advised us and sold us stuff had nothing to gain personally from the transaction? See how silly this is sounding, at least for those of us who are avowed capitalists?

Is FFS medicine the best we can do? Perhaps not, but I’m not willing to demonize it. FFS is not the only compensation system that is flawed. Remember HMOs where physicians had an incentive to limit care? Patients loathed this system, which had an irredeemable conflict of interest. Will a replacement for FFS medicine have conflicts that are more pernicious than the current ones? I do not welcome a ‘reformed’ compensation system that pays me just for showing up or rates me using a new quality measurement metric that measures everything but actual medical quality. We need to think this through to make sure a new method to compensate physicians will be fair to the public and to the medical profession.

There are diverse opinions on this issue in the blogosphere. Gooznews, a prominent health blogger, believes that FFS should be eliminated. Medrants and Musings of a Distractible Mind point out that the current system does not reward cognitive effort and time. Dr. Wes, angry about the president’s tonsil gaffe, requested an apology on behalf on the medical profession. I doubt that one was received.

What have I learned from all this? The president has given me an idea on how I might reach higher toward a new goal in my practice. I think I can kill 2 tonsils with one stone. During one of my profit seeking FFS colonoscopies, I will use an extra long scope and try to snatch a pair of tonsils at the same time.


  1. Actually I think there is an agenda to go after any activity which yields profit. Medicine happens to be in the cross hairs presently.

  2. Except for a few at the lunatic edge, most Americans love the idea of profit. The problem comes in when too many people try to slice the pie.

    The difference between a private company and a public stock company, for example, only partly rests on profitability. A private company has a small identifiable group of actual owners splitting net profits. But when that same company issues stock they create a new population of so-called "owners" but there is no way there will be enough net profits to match those of the original owners.

    That's why dividends are typically small. But no one complains because the value of a stock investment is not dividends but the marketability of the stock, the price of which only partly echoes profitability. Demand for the stock has more to do with potential profits than actual profits... and the investment game is more about potential than the more pedestrian operational profits.

    Looking through the profit lens, the health care challenge is two-fold. At the operational level professionals must be appropriately compensated, but compensation is not the same as profits. Profits are an operational function of the organization, whether it be a small clinic or group practice, or a much larger delivery system such as a hospital, insurance group or chain.

    So the challenge is to protect profits only to the degree that organizations that are needed are protected but those that are poorly operated are allowed to either tighten up or go out of business.

    But as the process plays out, professional compensation must be separated and protected from operational profits and losses.

  3. What's all this about profit? My GI practice has been a not-for-profit organization for several years running.

  4. Nice post. I just wrote on a real world example of salried doctors versus FFS doctors. I in the private sector and my wife Staci in a government system. It illustrates yout points nicely.


  5. I am really enjoying your blog. I find it so refreshing to hear a doctor express views like yours, an always welcome breath of fresh air. I look forward to your next posts, Dr. Kirsch.

  6. All comments appreciated, especially kind words from Anale K. Perhaps, I don't have to be guilt-ridden that I am making a living. All the best for the New Year, 1st anniversary of Whistleblower.

  7. FFS is a problem. However, what bothers the average patient probably has more to do with perceived value of services rendered. Waste and inefficiency abound in medicine. People often mention FFS, i think, because they imagine that a departure from FFS will improve efficiency and reduce waste. I'm of the mind that the problem has more to do with the inflexibility of medicine and medical practitioners.

    It is ridiculous in 2010 that I do not have a personal online account with either my health care or insurance companies. Consumers do not have a problem with profits, they have a problem with the consumer experience provided by an industry trapped in technology from the 80s.

  8. Frank, I believe you are a medical student, so you likely won't have to worry too much about fee-for-service medicine when you are in practice. It is being targeted for extinction. The medical technology you desire is coming. It will solve many problems, and create others. I fear that it will further dehumanize medical care. Our profession is evolving quickly and beyond our control. We all hope that the essence of the profession will remain. Best of luck in your studies.

  9. Demand Affordable Accessible Legalcare for All Now!

    OUR LEGAL CARE system has become a criminal and civil punishment system and the time for change is well overdue.

    AS A NATION we can no longer afford to accept the status quo. The cost of inaction is simply too much to bear.

    IMAGINE an America in which disenfranchised socioeconomic groups and disparity populations had access to the same quality legal care provided to the wealthiest Americans!

  10. Michael
    Thanks for alerting me to this post. This is a great entry.

  11. The problem is not FFS, it is the way we contract. If I could say "I charge 50 dollars for x, 100 for y" and let people get insurance to cover what it will, that would be a true FFS model. But if I have 100 different contracts with different payments for x and y, then the confusion favors waste. I agree that salary is stupid (I've done that and it just penalizes hard work). But the fact that the fees are hidden makes real FFS very dysfunctional.

  12. How can a business survive without profit?
    I still think ffs is ideal for the medical profession. One thing I disagree: cognitive value of the work? So, should we pay phd level mathematicians more? Prices are dictated by supply and demand, not wishful thinking, doctors are not highly paid because they are smart, but because it's a good business.

  13. The goal of many 'reformers' is to extinguish private practice medicine. All physicians would in essence be employed with their compensation directly tied to various quality metrics (read: hoops to jump through and tunnels to crawl through). Specialists like me will be paid a lot less and primary care physicians will be paid a little more. With such a future, and the health care system in turmoil, what caliber of students will aim to be doctors? I heard and read a lot about access and cost, but nothing about quality.

  14. ...there are other factors that can influence my advice, but financial gain is not one of them.

    OK St. Michael, I like reading old posts -first because the sociogenetics of a writer and their public characterology but I always find political bodement damn interesting too.

    Looking back 4+ years, and with the boon of time, what do you think the future holds for FFS?

    BTW, I think the comments miss the public's concern

  15. FFS medicine will become increasingly rare. This model had clear advantages but led to rampant overutilization of care. Will 'reform' be better? How does it look so far?

  16. Ignoring the patients who vis a doctor to practice medicine without any Hippocratic catastaltic, overutilization of care is either dolus bonus or dolus malus.

    Verily, intent is of no consequence because both motives equally do not benefit the consumer's physical, mental or financial health equally.

    Do you think this model has an effect on iatrophobia?

    BTW, your comment moderation feature is a hindrance. You can turn it off to people who have commented, and still approve any further remarks

  17. Sorry about the moderation feature. Had to do it. I suffered a tsunami of spam comments which clogged up the blog. The moderation feature is a partial firewall against this. I try to stay current with all comments. I hope this impediment will not restrain you from offering your incisive and cogent analyses.

  18. I hate the feature; it prevents comments, and I won't use it on my own blog.

    I believe blogger allows for those you have pre-approved to comment easily, and I noticed you have older readers -It must be annoying to them too.

    "Do you think this model has an effect on iatrophobia?" was ignored -I think that more interesting than your technical reply

  19. I am not aware that iatrophobia is a significant issue. If I understand your question, I do not ink that the FFS model is a significant deterrent to folks seeking medical care. What would be a deterrent is if the public had to bear more financial responsibiity for their care.

  20. Fee-for-service makes sumptuary control difficult, if not impossible for those who purchased insurance outside the employment model.

    Naturally, your opinion reflects your position but receiving medical care in a monopoliesque billing game is enough to make anyone iatrophobic