Quo Vadis

NJ Medical Society Past President Ralph Kristeller MD gives Fee For Service some historical perspective.

Fee For Service does not operate in a vacuum. It operates in an environment.

My apology in advance for this long email; however, the subject “Fee For Service” urgently requires an airing.

In January 1963, after 8 years of active duty in the US Air Force – the largest HMO in the world at the time, I completed my obligation under the “doctor draft” law. I returned home to Millburn NJ where I rented space in a building almost fully occupied by physicians in solo or 2 or 3 partner practices and opened my office for the solo practice of Internal Medicine. Having entered Military Service the day I graduated from Medical School, I had no experience as a physician in civilian life. An older seasoned Internist gratuitously told me “Ralph it will take you a year to establish your “fee schedule.” How correct he was. Nevertheless I began by charging $5.00 for an office visit, $10.00 for a house call $15.00 for an EKG and $20.00 for a PA and Lateral Chest X-ray.

My cost for doing business included my rent, salary for a part time secretary, interest on my loan, premium payments for disability insurance and premiums for a medical negligence policy. The premium for the negligence policy was less than $100.00 a year.

I applied for membership in my County Medical Society. In order to qualify for full membership I was required to accept call by roster for 2 years. This entailed taking call for the Society’s answering service.

Patients who had an “emergency” and did not have a physician called the County Medical Society and I was required to respond with a house call. There were, as yet, no Emergency Rooms. Other than Blue Cross/Blue Shield, a.k.a the Surgeons Plan because it only covered hospitalization, there were no third party payers. It was a cash and carry system IF the patient had the cash. Otherwise it was Pro Bono.

In addition I applied for membership on the Staffs of two local hospitals. Again there was a requirement for participating in the hospital’s “clinic” which met, as I recall, every 2 weeks. This of course was also Pro Bono.

Since “time is money” Pro Bono must be considered a cost of doing business and therefore factored into my fee schedule. Accordingly, my challenge was: If I set my fees too low I would be in financial difficulty, if I set my fees too high, I lost the patient, the patient’s family and any potential patient referrals. Furthermore, if I failed, in the patient’s opinion, to provide value for my fee, the patient walked across the hall and made an appointment with an older more established physician. Parenthetically, I garnered some patients who walked across the hall to me from my competitor because of patient dissatisfaction. In my view this real world experience is “fee for service” in its pure form.

In 1966 Title XVIII, Medicare, became the law of the land. It promised non interference by government in the practice of medicine and non interference in the fees charged by physicians.

Well, everyone knows what happened and is happening to that promise.

Most importantly failure to keep a promise to the public by government was a little noted C change in the culture of our country and our country continues to pay a very dear price for that change.

To continue - In the 1970’s the Plaintiffs Bar found the deep pockets in negligence litigation.

The cost of doing business for physicians escalated tremendously due to the steep rise in the cost of negligence policy premiums. Paradoxically physicians were conveniently blamed for charging too much for their services. In addition physicians were accused of ordering unnecessary tests in order to increase their incomes. However, what was never brought forth was the astute observation by Mr. Chuck Hardwick when he ran unsuccessfully for Governor of NJ. He stated: “The power to sue is the power to terrorize.” Extra testing as a defense against terror by rational physicians was mischaracterized as “unnecessary testing” by politicians for their own self interest. It has been estimated that the added cost to our current health care system, due to “mal practice” expenses, is 50 Billion dollars a year. For politicians the medical tort system is the third rail and they refuse to touch the issue. However, unassailable studies by Professor Localio et al have shown that our medical tort system does almost nothing to compensate truly injured patients. Meanwhile for the country it creates an economic disaster.

By manipulating the words, and thereby poisoning minds, politicians captured public attention and focused the debate on the need to control cost, implying that physician fees are the main culprit.

However, the facts are that Physicians have been under price control ever since the promise of non interference by Medicare was broken. More importantly there has been no attempt to control practice costs which are the main ingredient in physician fees. Rather it has been politically profitable to blame physicians rather than deal with the core issues that contribute to the real cost of our healthcare system.

In short the “Victims (physicians) Are Blamed For the Crime.”, quality of medical care, as defined in AMA policy, continues to deteriorate, the lobbyists and the politicians continue their lucrative careers and the country is, according to the polls, going in the wrong direction.

Finally: Two thoughts come to mind:

"No one can make you feel inferior without your consent." Eleanor Roosevelt

More to the point:

Ann Landers adage: "If you act like a doormat, don’t be surprised when people wipe their feet on you."

Respectfully
Ralph Kristeller

Well said, Dr. Kristeller.