Decline of the Family Doctor, The

Policy Review, Apr/May 2004 by Alper, Philip R

The moral dimension

THERE IS A MORAL dimension here that has received insufficient attention in the mechanistic analyses that create deep gulfs between doctors and non-doctors. Commentators often portray medicine as a monopolistic system in which the American Medical Association deliberately used the report of Abraham Flexner in 1910 to close quack medical schools in order to limit the supply of physicians. Supposedly, this was an attempt to control the market and eliminate competitors exclusively for financial gain, and nothing has changed since then. Indeed, Milton Friedman has spoken of abolishing professional licensure in order to enhance competition. There is evidence to support these positions. Medical Economics income surveys showed that between 1930 and 1980 physicians increased their constant-dollar income enough to move collectively from the lowermiddle into the upper-middle class.

Nevertheless, this physician recalls that in the 19605 and 70s, physicians who earned high salaries were not highly respected by their peers. Star surgeons and "society doctors" were not the objects of envy and emulation that celebrities have become today. In fact, there was something slightly disreputable about making too much money. A conscientious surgeon told me at the time, "A good doctor worries about his patients." The physicians I worked with in a suburban practice near San Francisco were cautious in raising prices and generally prized their reputations for professional excellence. Nurses, pharmacists, hospital administrators, and the rank-and-file medical assistants and clerical personnel who staffed our clinics, hospitals, and offices mirrored this attitude. Self-interest was always present, but it did not run rampant.

The 1980S introduced business into medicine. Cost-effectiveness and a "businesslike approach" were newly deemed appropriate, even essential, to health care. New financing schemes such as HMOS and PPOS combined with utilization review and other management tools to enhance productivity and control costs. Hospital administrators became executive vice presidents. Physicians formed new organizations to meet the new era, and doctors became their chief executive officers. Contracting for access to groups of patients replaced unorganized word-of-mouth referrals.

This legacy continues, and it has created severe strains within medicine. The business ethic and the medical ethic coexist most uncomfortably. Realworld financial considerations do allow the more businesslike actors in health care to abuse those who are less businesslike. The necessary delicate balance between humanism and rational economic behavior has yet to be achieved. I say this with full awareness that medicine was never totally blind to business considerations, nor were physicians saints. But joining management was not the road to professional success that it has become.

Moreover, patients sense that something is very wrong. Physicians are supposed to contract with insurers, whose job it is to enroll them into networks for the lowest price they will accept either individually or through organizations that evaluate the contracts on their behalf. Naturally, physicians are not happy with this arrangement, but in high managed care areas, few physicians can function entirely outside the prevailing structure. The initial idea was for physicians to drop their prices in exchange for an increased volume of patients attracted by the lower prices. In order to determine true market rates for reimbursement, however, physicians must reject contracts that they think are too onerous while insurers continuously test the market with lowball offers until it becomes hard to find takers. Patients benefit from the resulting lower prices, provided the prices are not so low that they drive the doctors away and restrict the availability of services. It's all gotten very complex. (So complex that a Harvard game theorist visiting the Hoover Institution told me there are too many variables to even try to model the process.)