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Paying surgeons less can cost more.

J Bernstein1, G B Holt

  • 1Leonard Davis Institute of Health Economics, University of Pennsylvania, Philadelphia 19104-6081, USA. orthodoc@mail.med.upenn.edu

The Journal of Medical Practice Management : MPM
|February 8, 2000
PubMed
Summary
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Lowering surgeon fees may paradoxically increase total healthcare costs due to physician income homeostasis. Paying surgeons for non-surgical tasks can optimize healthcare spending.

Area of Science:

  • Health Economics
  • Medical Practice Management

Background:

  • Physician fees constitute a small fraction of overall healthcare expenditures.
  • Complementary costs, such as hospital charges for surgery, significantly outweigh physician fees.

Purpose of the Study:

  • To analyze the economic impact of physician fee adjustments on total healthcare costs.
  • To explore strategies for optimizing healthcare spending by aligning physician incentives with cost-effective care.

Main Methods:

  • Economic modeling of physician fee structures and patient demand for surgical procedures.
  • Analysis of the relationship between surgeon reimbursement, surgical volume, and complementary costs.

Main Results:

  • Decreasing surgeon fees can incentivize increased surgical procedures to maintain income (physician income homeostasis).

Related Experiment Videos

  • This can paradoxically elevate total healthcare costs due to higher complementary expenses.
  • Shifting payments towards non-operative care, research, or teaching may mitigate this effect.

    • Conclusions:

    • Physician fee policies must consider the impact on complementary costs to effectively manage total healthcare spending.
    • Incentivizing physicians for non-surgical, lower-cost services can lead to more efficient resource allocation.
    • Understanding physician income homeostasis is crucial for designing effective healthcare payment reforms.