Healthcare and the Supply Chain (Part 2): Physician Providers

When the Obama administration projected the budgetary impact of the stimulus package it assumed that unemployment would not go above the 8 per cent mark. Unfortunately, the unemployment numbers that came out recently put unemployment at 9.4 percent with many economists now predicting that it will go over ten percent before long. The President's economic team clearly overestimated the effect of the stimulus plan on the supply of jobs in the economy. They may be making exactly the same mistake in their planning for universal healthcare. Here's why.

The assumption is that there will be more than enough doctors to treat all currently insured patients plus the 50 million uninsured, many of whom will surely avail themselves of “free care” under a universal healthcare scenario. But there is a problem. While the government moves to a less capitalistic form of paying for coverage, physicians, the people who actually provide the front line care, are still largely capitalists. People who become doctors surely want to help their fellow man but in the U.S. that has also meant helping themselves to a much higher than average income. And it was assumed that higher earning potential would draw more people into the medical profession. But most doctors pay dearly for their medical education and often have in excess of $100,000 in school loans to repay when they graduate. Opening a new practice can cost over $150,000. And certain specialties require enormous annual malpractice insurance payments. That does not include the cost of nurses, office staff and the cost of billing, collecting and the endless paper chase.

The loudest complaint against health care over the past few years has been related to cost. Now the government believes that somehow the nation can spend less than it is currently spending on health care while adding as many as 50 million new, formerly uninsured, and potentially high volume health care service consumers. Unfortunately, there are really only two sources for those savings at the government level. It will come either from rationing (reduced access to care) or from lower payments to service providers including physicians. But, as capitalists, doctors can choose to stay in practice or leave. Where might they go one could ask. The answer is almost anywhere they choose. At the core doctors are scientists. Most are extremely intelligent and can think through complex issues.

Any significant decrease in reimbursement will likely mean fewer doctors. If that happens the government won't have to ration care because they will have effectively done so by driving doctors from the provider side of the industry.

- Lynn James Everard