What ails doctors

Theirs is a voice often unheard. What do they believe health-care reform will do to the practice of medicine?
Edward Martin

He walks in minutes before closing time Friday, a rangy, white-haired man in green golf shirt and khaki Bermudas. “I could make an appointment for you Monday,” the receptionist volunteers. The man shakes his head, and she leaves, moments later returning with John Sensenbrenner. “I was up this way, so I thought I’d drop by and get you to take a look at this,” the man says, thrusting his hand to the doctor, who bends closer. Sensenbrenner, 52, has the muscular arms of a brick mason — his grandfather was one — but he gently flips the older man’s hand and looks at the palm. “Nothing urgent,” he concludes. “I can fix you up with a hand specialist.“ Relieved, the man and his wife sidle out the door.

One of North Carolina’s best doctors (page 48), Sensenbrenner has a primary-care practice — one patient might have a sore finger, the next, potentially deadly early-stage melanoma — in an affluent Charlotte suburb a few miles from the farm where he grew up. At East Carolina University’s medical school, he bypassed higher-paying specialties to train as an internist. A few years ago, leaving a large hospital-based practice cut his pay nearly a third, but it was worth it. “Now I feel like I’m doing what God wants me to do every day when my feet hit the floor.”

One of 21,008 physicians in North Carolina, Sensenbrenner practices with boundless zeal. But these are troubling times for doctors, more so than any since Medicare exploded on the scene 44 years ago. Back then, future president Ronald Reagan warned that it would plunge the nation into socialism. Though financially imperiled — it could be insolvent before 2020 — Medicare insures nearly 50 million people over 65, provides a benchmark for medical fees, guides protocols for care and subsidizes physician training.

Some doctors fear — and some hope — that the impact of health-care reform being bashed out in Washington could exceed Medicare’s. Most believe that, in some form, it’s needed. “We keep people alive and well longer than ever, but the problems occur in the unevenness of delivery,” says Albert Osbahr, a Hickory occupational-health specialist who is president of the 12,000- member North Carolina Medical Society. “If you’re the working poor or you can’t afford it or your employer can’t afford it, you’re not in the same boat. What we have is a private system that can deliver if it’s at the right price.”

At the same time, many of the state’s doctors harbor a gnawing concern that reform could wedge itself between them and their patients. At the end of a long week at Sensenbrenner’s clinic, bottles of hand sanitizer on the front counter have been replenished for Monday, the nurses and physician’s assistants gone home. He pauses. “I go to work excited, happy to just see who’ll walk in the door next. I’d like for my son to be like that, but in his mind I know he’s saying, ‘Will I be able to follow in my dad’s footsteps, or will I just become another government doctor?’”

What could health-care reform bring? There’s a spectrum of choices. At one end, do nothing in hope that the present system of free-market and government care corrects itself. At the other extreme, a single-payer system covering everyone, with taxpayers footing the bill. In between are proposals for co-ops, member-owned nonprofits that would compete with private insurers. Another possibility: mandating that everyone be insured, as with cars; employers could be required to insure employees. Or there might be hybrids. As James Boyd, a Charlotte medical oncologist, says, “How can I oppose it when I don’t know what it is?”

Doctors contribute to the uncertainty. Potentially a powerful voice, they’re hard to herd, like cats in white coats. Some proposals — several would reward preventive medicine and benefit primary-care doctors — pit specialists against generalists, and others, older against younger doctors. Unanimity is rare, though a recent poll shows Tar Heel doctors favor a government-insurance alternative to commercial insurance, one of reform’s most controversial proposals. Internist Alex Federman, a researcher at Mount Sinai School of Medicine in New York, says 62% of the doctors in North Carolina that were polled as part of a nationwide survey of 2,130 favored a public option.

That underscores the divisions among doctors, rebuffing the positions of the North Carolina Medical Society and the American Medical Association. The state medical society opposes a public option, contending it could drive private insurers out of business and lead to government medicine. The AMA sidesteps the issue, supporting the rubric of reform but taking no stand on a public option. “The AMA represents less than 30% of the nation’s doctors,” Federman says. “It is likely it has simply fallen out of touch with its constituency.” Roughly 60% of the doctors practicing in the state belong to the North Carolina Medical Society.

Health care has an economic impact that exceeds $50 billion a year in this state, and medical practices are no more immune to rising costs than any other businesses. Even a small practice with three or four physicians typically has 30 to 50 employees. “I’m a physician and a businessman, and I certainly don’t like sitting down every year and seeing health-care insurance for my employees going up by 28% like it did last year,” says Robert Clark of Cary Skin Center PA. He and another dermatologist perform mostly outpatient skin-cancer surgery. They employ more than 30.

At the same time, physician compensation is under pressure, according to Englewood, Colo.-based Medical Group Management Association, which has about 22,500 members nationwide. Since 2004, inflation-adjusted compensation for primary-care internists such as Sensenbrenner has dropped about 0.5%. The median last year was $191,198. For dermatologists, it was $368,407, up 4.6%, but overall specialist compensation has risen a scant 0.4% since 2004. “In the long run, there’ll be tremendous pressure to hold down health-care costs by restricting payments to physicians,” says Eric Janis, an invasive cardiologist with Smithfield Heart & Vascular Associates, part of Wake Heart & Vascular Associates PA, a large Raleigh-based cardiology practice. “It’s easy to target ‘rich doctors.’”

Compensation has less to do with doctors’ skill than bargaining muscle. Pressure on physician compensation begins with Medicare, the hardest bargainer of all. It typically pays 60% to 80% of what it costs doctors or hospitals to treat a patient, forcing them to shift costs to other patients. Medicare rates serve as guidelines for commercial insurers — they might negotiate with a surgeon, say, to perform diabetes-related amputations for 150% of the Medicare rate. Sensenbrenner’s office is surrounded by other practices, including some owned by Charlotte-based Carolinas HealthCare System, which he left to set out on his own. He nods toward one across the parking lot. “That’s 100 yards from here, and those guys are getting 166% of what Medicare pays from Blue Cross.” That’s because they work for the nation’s third-largest health-care system and a ferocious bargainer. Blue Cross and Blue Shield of North Carolina Inc. is the state’s largest nongovernment insurer, with more than 3 million members. “I get 108% of what Medicare pays for a given procedure because I’m by myself here.”

But reform’s reach extends beyond those wearing white coats and stethoscopes. Since 2000, Tar Heel health-insurance costs have risen nearly 97%, five times the rate of wage and salary growth, boosting the cost to insure a family to more than $13,000 a year. “I had a conversation with a person who used to run a textile plant,” says Kevin Schulman, an internist and MBA who is a professor in Duke University’s medical school and its Fuqua School of Business. “His health-care costs were going up $1,000 a year per employee in recent years, and shortly thereafter, those jobs left North Carolina and moved to China. For $1,000, you can employ someone in China for a full year. To the extent that physicians also worry about their children and their ability to live as well as we have, that’s a huge issue.”

We enjoy some of the best technology and innovation the world has to offer,” the Medical Society’s Osbahr says. But behind that fact lies a morass of delivery and payment methods — private insurance, government insurance, self-pays and no-pays, the last typically charity care. Medicine emerges as an elite profession beset by numbing bureaucracies imposed by private insurers and government regulations and besieged by wacky conundrums.

The health-care dollar? Much of it isn’t spent on health care. Typically a third to a half of a practice’s staff is administrative rather than clinical, Schulman says. “We’ve built a bureaucracy around health care that’s estimated at 20% to 30% of total cost, that offers essentially no value to the system or services received by the patient.” In Colorado, the nonprofit that represents medical-group managers says doctors spend three hours a week — time to see at least 10 patients — dealing with insurers. It costs $31 billion a year, $68,000 per doctor, to hire the staff to file insurance paperwork and battle red tape.

But some 1.4 million Tar Heels — about 15% — were not covered by health insurance in 2008. Some doctors doubt such numbers, including the widely quoted figure of 45 million to 50 million uninsured nationwide. “It’s totally inflated,” says Lisa David, a plastic surgeon at Wake Forest University Baptist Medical Center in Winston-Salem who strongly favors a free-market medical system. As few as 10 million, she says, are unavoidably uninsured. “Many don’t want to pay because they’re not citizens, or they simply choose to pay for things other than insurance” — often young adults betting on their good health.

Regardless of why they’re uninsured, those patients are one reason Schulman says physicians might benefit from reforms that increase coverage and prevent insurers from refusing preexisting conditions. “They’d be more likely to get paid for what they do.” And having insurance could prevent medical meltdowns: High cholesterol that could have been controlled with cheap statin drugs becomes $100,000 bypass surgery. As an occupational-health specialist, Osbahr often sees patients trapped by the system. “They aren’t getting their blood pressure and diabetes taken care of, and I can’t let them go to a job if they’re not stable.” But they can’t afford treatment for their controllable conditions without insurance, which they can afford only if employed. “It’s a Catch-22. All we can do is refer them to the charity system, which is really just a Band-Aid response.”

Boyd, the oncologist, is equally concerned about the underinsured. “Our treatment often is with expensive drugs that we have to buy and deliver to patients in hopes of getting payments from insurance companies,” he says. A year’s regimen of Herceptin, an antibody used to prevent relapse in women with breast cancer, costs about $50,000. Chemotherapy can add another $10,000. “A lot of our patients have to deal with higher deductibles and coinsurance that’s often 20% of the bill,” Boyd says. “Twenty percent of a lot of money is still a lot of money. So sometimes we’re stuck paying the cost of the drugs ourselves.”

Tap top Tar Heel doctors on the current system’s flaws, and opinions flow like lava — and sometimes as hot. Cary’s Clark rankles at regulations that force patients — and employers — to buy insurance only through North Carolina-based insurers. “Why shouldn’t I take Blue Cross of, say, Utah or Montana or wherever and get the same coverage for less?” Hickory internist C.L. Gray created Physicians for Reform in 2006 to lobby for, among other things, insurance coverage across state lines and inexpensive, high-deductible policies. Doctors also complain that health care rewards them for treating sick patients rather than keeping them well. “We don’t pay doctors to spend time talking to people — what we call evaluation and management services,” Schulman says. “Why should I spend half an hour with you in the office and lose $100 when I can take you over to the hospital and do a procedure and make $100?”

“Can we continue as now?” Osbahr asks. “No. It’s not sustainable in terms of economics — or leaving 20, 30 or 40 million on the sidelines without insurance coverage taking roulette-type risks. Private insurers need to jump in and put some skin in the game, and the government needs to put some skin in the game.” But are current reform proposals the way to do it?

If doctors could shape — reform — health care themselves, how might it look? Not, some insist, like the nightmare of Lisa David, the plastic surgeon. “I did fellowships in Paris and Sweden, both with socialized systems paid for by the government. It was a two-tiered system. People with the government plan had rationed care and got appointments that took six to nine months — surgeries were longer. People who had the ability to pay for insurance beyond what the government provided got a different kind of care.” Some dispute such dire pictures, but few doctors believe the government is the answer to reform. They’re skeptical, for example, about President Obama’s proposal to pay for it by wringing waste and fraud from Medicare and its companion program for the poor, Medicaid. If the savings are there, they ask, why aren’t they being tapped?

Are there other measures that might curb the potentially devastating rise in health-care costs? The Washington, D.C.-based National Coalition on Health Care projects that spending will equal 17.6% of gross domestic product in 2009, the world’s highest rate, and will double to $4.4 trillion by 2018. Unchecked, medical costs will destroy the nation’s global competitiveness, Duke’s Schulman says. Many doctors say the private market also should be prompted to address such issues as portability of insurance. Tar Heel doctors often cite patients who are trapped in dead-end jobs because they might lose their insurance if they left them. However, they argue, the solution should be through competition.

Fundamentally, doctors say, if medical reform seems elusive, it merely reflects their profession, an elixir compounded from art, science and human nature. Despite his surroundings — Lexuses and Land Rovers prowl the parking lots of upscale shopping centers that were farms and forests two decades ago — Sensenbrenner’s vision of medicine would be more at home in a country doctor’s office. “I’m a capitalist,” he says, “I believe in free enterprise.” Reform should be about more than asking doctors to shoulder the burden. “Not everybody wants health care or cares whether they’re eating at McDonald’s every day, smoking, drinking or exercising. The ideal health-care system would be one in which everybody who wants health care and will take an active role in maintaining health would be able to afford it.” Reform, he says, that’s shared.

Is there a case for tort reform?

If physicians agree on anything, it’s that malpractice lawsuits drive up health-care costs while driving doctors out of business. Tort reform, they argue, should be a foundation stone of any health-care reform. But the facts don’t bear that out. “The published literature shows that 1% or less of health-care goes for malpractice,” says Kevin Schulman, an internist and director of the Center for Clinical and Genetic Economics at Duke University School of Medicine. He’s also a professor in Duke’s Fuqua School of Business. “I would not score tort reform very high in terms of saving money.” Some key points:

• North Carolina requires that an independent physician certify a malpractice claim has merit before it goes forward. “That’s made us one of the more tort-friendly states so far as avoiding truly frivolous lawsuits,” says Eric Janis, a Smithfield cardiologist. His Raleigh-based practice pays about $15,000 a year per doctor for malpractice insurance. It has about 25 doctors. “Of course, when you add it up, that’s not trivial.”

• Lawsuits and inflation-adjusted settlements and payouts in the state and nation have been declining for more than 15 years. About 440 cases were filed in North Carolina in 2008, the fewest since 1998. Doctors win three out of four that go to trial.

• Being sued is unlikely. One patient in 50 with a medical-negligence injury sues, and lawyers say they’re reluctant to take cases because their contingency fees — 30% to 40% — aren’t worth the risk of losing. Expert-witness fees and other costs, which can run $100,000 and up, come out of the attorney’s pocket, win or lose.

• Would a cap — $250,000 is often mentioned — on pain-and-suffering awards cut health-care costs? In Texas, where such a limit was set in 2003, lower malpractice premiums are attracting newly licensed doctors. But health-care costs have risen, not fallen.

• Defensive medicine drives costs? Nearly all doctors take marginally necessary steps to ward off lawsuits. Albert Osbahr, president of the North Carolina Medical Society, estimates the cost at 10% or more of the health dollar. But Schulman, a report by the nonpartisan Government Accountability Office and other sources say the rise in defensive procedures also has paralleled the growth of large, closed-network health-care systems. Doctors that work for them refer patients to system-owned labs and equipment, and insurers, including Medicare, generally pay more for tests than doctor consultations, encouraging more tests.