United States’ tenth ranking in the index of economic freedom does not even begin to explain how little freedom we have left in America

Patients and Physician Practice under Obamacare


By —— Bio and Archives January 13, 2013

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As if health care was not undergoing enough fundamental transformation in this country, Democrats are now attacking the profits that hospitals and doctors make in the delivery of their services. Why should doctors and hospitals make obscene profits or any profits at all? An article in The New York Times, “Health Care and Profits, a Poor Mix,” by Eduardo Porter, claims that nonprofits (hospitals and clinics) deliver better care.

“There is really is no such thing as a nonprofit. A nonprofit is an organization that claims on its books at the end of every year that it didn’t make any money.” But the people that work at nonprofits score like bandits. The low-information voter thinks nonprofits are people sacrificing for the common good and they’re not burning any money and they’re not getting rich.” (Rush Limbaugh, January 9, 2012 broadcast)

“Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.” (Eduardo Porter)

The crux of the New York Times article is that we should not rely on the private sector at all to satisfy “broad social needs” like health care delivery, we should allow the federal government to do it all because it can do it better. Obamacare, with its government-run exchanges, will show us soon enough how well the feds are delivering health care. The health care insurance will be enforced and wayward citizens penalized by the vigilant 16,000 IRS agents. A 15-member death panel will be tasked with approving and denying care and procedures.

“By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.” (Eduardo Porter)

Any thinking American knows that when compared to a small island like Cuba, third world nations, or communist China, the U.S. does not deliver worse value, it is misinformation aimed at low information voters. What good is access to care and insurance if that care is sub-standard and lacking in training, equipment, meds, and procedures?

Socialized medicine is used as an example of success in Europe. Medical care works to an extent in Western Europe because, by comparison, those countries are small and they handle simple medical problems while rationing care for complex medical issues and testing. They are generally strapped for cash and doctors receive a government set salary. These western Europeans have relied on the United States to provide military protection while the freed funds were used for social programs, medical care, and lavish welfare.

Why do most foreign nationals, who can afford and have free health care in their countries, flee to the United States when serious health issues are at play? Could it be that we have the best trained doctors in the world, the best hospitals and medical equipment, the most break-through and life-saving procedures particularly in the treatment of cancer?

Should U.S. follow in the footsteps of France that recommends the legalization of “accelerated deaths” based on three sets of circumstances?

Porter says that we can improve the delivery of health care and pensions “simply by removing the profit motive from the equation.” Everything the federal government is involved in, with the exception of the military, the delivery of services is slow, the paperwork is daunting, and costs are bloated.

Profit was a dirty word for communists, it was called surplus, which was supposed to be equally shared with the proletariat. The problem was that, in the “socialist workers’ paradise,” the proletariat never saw the “surplus,” neither did they get proper and qualified medical care, abundant services, and the medicines they needed. Shortages and rationing always came into play. Those who truly benefited were the ruling communist elites for whom nothing but the best was provided.

Rush Limbaugh argued that nonprofits have huge pools of unspent money that keep growing with profit from wise investments. Harvard has an endowment of $40 billion which makes about $10 billion in profit every year and they don’t pay a penny in taxes – it’s saved for a rainy day but they never spend it if that day comes. They keep asking for more donations. People who work for nonprofits are well remunerated, they are not suffering or sacrificing their standard of living for the “social justice” they advocate. (Rush Limbaugh show, January 9, 2012)

Colleges in general are awash in money and donations that they spend generously on sports and building stadiums and academic buildings. Professors are paid lavishly and nobody questions the profit motive in academia because it is the fiefdom of the left who indoctrinate our youth.

Nonprofits are supposed to be morally superior because they do not exploit people like the immoral profiteering hospitals. Profit must be an evil entity that kills innocent and hapless victims. At the end of the year many for-profit hospitals show a tremendous loss. Both for-profit and non-profit hospitals are bound by the same laws to provide the same care to any person entering their ER and doctors have sworn the same Hippocratic Oath.

Why should pension funds not run on profit? How would pension funds be insulated from bad times when there are not enough people working to replenish the stock in order to pay the retirement of those who live longer and healthier lives? Why rely on the government for pensions, the very government that can take away benefits just as easily as it doles them out?

Suzanne M. Kirchhoff, analyst in healthcare financing, prepared a 27-page report released on January 2, 2013 for members and committees of Congress, “Physician Practices: Background, Organization, and Market Consolidation.”

The report addresses the growing number of U.S. physicians who are “combining practices, affiliating with hospitals, insurance companies, and specialty management firms, or going to work directly for such organizations.” (p. 2)

The reasons given were multifold:

  • Desire to have a set schedule and salary
  • Private practices are too complex to manage
  • Physician compensation and reimbursement by insurance, including Medicaid and Medicare, declined
  • Larger practices control costs
  • Larger practices can negotiate higher reimbursement with insurers
  • A smaller group of doctors are creating “concierge” practices where they see a limited number of patients per year who pay an annual retainer and a set fee per visit.

    Because of these trends and the increased number of patients who will be insured through exchanges, many studies warned of shortage of doctors, particularly primary care physicians.

    The deceptively named 2010 Patient Protection and Affordable Care Act caused the creation of a system called Accountable Care Organizations (ACO). Under this system, the providers make contracts to oversee a patient’s total course of care in order to manage costs and “improve quality.”

    Physicians, insurers, and hospitals have formed associations in order to qualify for these ACOs. These associations appear to be more beneficial to the providers rather than the patient. Obamacare forces doctors to consolidate in order to “reduce fragmentation and control government and private health spending.” Will this consolidation have a negative effect on patient access, prices, and competition? Mergers in the 1980s and 1990s had negative effects in terms of patients being restricted or blocked from access to specialists and procedures.

    Hospitals and physicians are in a rush to hire more doctors to fill the increased demand from the millions of new insured under Obamacare. My personal doctor has hired a nurse practitioner and a physician aide. I am not particularly thrilled to see someone young who is just now learning how to deal with patients and diagnose them properly, cannot do surgery, or someone who does not have a medical degree at all.

    The American Medical Association (AMA) calls the 972,376 doctors and residents who work primarily from solo or smaller practices a “cottage industry.” Eighty-four percent of Americans’ visits to the doctor are to the primary care physician. Twenty percent of physicians work for hospitals. (Congressional Report Services, pp. 1-2)

    Twenty percent of medical spending goes to physician payment accounts. Physicians make referrals, tests, hospital admissions, therapy, and other actions, accounting for 90 percent of total health care spending. (CRS, p. 3)

    Of the 972,376 physicians and residents, 7% are osteopaths, one-third primary care physicians, and two-thirds specialists. One fourth of U.S. doctors are graduates from international medical schools. New England and Middle Atlantic regions have the highest number of doctors per capita. Rural areas have the lowest. The Association of American Medical Colleges predicted in 2008 that by 2025 there will be a shortage of 130,600 doctors. Nurse practitioners, certified mid-wives, and physician assistants will have to make up the shortage. The law varies from state to state as to what procedures and services these individuals can perform. (CRS, pp. 4-6)

    There are 155,000 active nurse practitioners with graduate education beyond a bachelor’s degree who are registered nurses. “They can take case histories, perform basic exams, order lab work, prescribe some meds, and provide health education and counseling.” (CRS, p. 6)

    There are 86,000 certified physician assistants with a bachelor’s degree, 27 months of specialized training and 2,000 hours of clinical rotations. “They can take patient medical histories, examine patients, treat minor injuries, order and interpret lab tests, and make rounds in medical facilities.” (CRS, p. 6)

    “The consulting firm Accenture predicted that just a third of U.S. doctors would be truly independent by 2013.”  Medical practices will be morphing into two types of business consolidation:

    • Horizontal mergers (specialty practices merge for reasons of economies of scale, i.e. lower overhead costs)
    • Vertical mergers (hospitals buying physician practices or hiring physicians; physicians partnering with insurers, and joint ventures forming Accountable Care Organizations or ACOs) (CRS, pp. 8-9)

    “Concierge” medicine, seeing a limited number of patients for a set fee, already has regional groups like MDVIP from Boca Raton, Florida, and Concierge Choice Physicians in New York. At least 756-retainer based physicians charge average fees from $600 to $5,400 – they see their patients for longer office visits, more in-depth physicals, and preventive and continuous care. (CRS, p. 15)

    There are legal issues with medical mergers:

    • Compliance with state and federal laws in regards to fair competition and transparency
    • Over-utilization of services in the health care sector
    • Antitrust (Sherman Act in re to monopolization, and Clayton Act in re to anti-merger)
    • anti-kickback laws in Medicare and Medicaid
    • State laws barring the corporate practice of medicine
    • Stark law of 1989 that imposes limitations on physician self-referrals (CRS, p. 16)

    Congress might be interested in the following issues:

    • medical spending (rising health care costs due to tight associations such as ACOs; physician productivity based on volume)
    • access (disparities; ACOs may not treat sicker, more expensive patients, resulting in being more selective in their choice of patients; would patients have freedom to see the doctor of their choice or a specialist; would rural areas be able to attract physicians if there is too much consolidation; physician supply – would “concierge” medicine take too many doctors out of general access)
    • coordinated care/quality (physicians who handle their patients outside of hospitals by using ambulatory settings such as imaging, surgery, chemotherapy vs. physicians who use hospitals exclusively for their patients as is the case in Europe; in both cases, primary care physicians are left out, including cases when many patients seek first help in Emergency Rooms) (CRS, pp. 17-21)

    Physician income and practice costs can be affected by specialty, source of payment (private vs. public), and productivity (volume or range of services offered). Currently, “general practitioners and pediatricians make less than specialists such as cardiologists and oncologists.” According to the Medical Group Management Association, doctor compensation ranges from $189,402 for family practice to $514,659 for orthopedic surgery. (CRS, p. 22) 

    Congress created the Medicare Sustainable Growth Rate formula in 1997 to address annual updates to the physician fee schedule. This may not be an issue as overtures have been made towards the equal remuneration of all doctors, regardless of specialty. (CRS, p. 24)

    The electronic health record (EHR) must replace the paper-based medical system. I have already encountered the orange portable iPad style computer that patients must fill out in order to expedite the electronic compliance. EHR incentives offer $20,600 per physician although the cost of implementing the electronic health record can be as much as $54,000 per doctor. Medicare pays up to $44,000 over five years plus an additional 10 percent if the physician practices medicine in a “designated medically underserved area.” “The payments phase out over time and are replaced by financial penalties” if the doctor is not compliant. By 2015 a reduction in Medicare Part B reimbursement will occur if the doctor is not a “meaningful user” of electronic health records. (CRS, p. 24)

    Under totalitarian regimes, doctors are still forced to practice medicine where they are told because the state picks up the tab of their education. The state also tells them how much compensation they are going to expect, the number of hours they have to practice medicine six days a week, and the number of patients they must see every day. The ratio of doctor to patient is usually very high due to chronic shortages of doctors. Nobody wants to study medicine for 12 years and receive the same remuneration as a person with a high school degree.

    Rodney Atkinson said, “Corporatism is the socialist form of capitalism and it rules in most western ‘capitalist’ countries. The ultimate expression of corporatism is the European Union.” Ruled by the leftist interests of corporatists (large unions, big business, unelected non-governmental organizations with supranational powers, lobbying groups, professional interest organizations, main stream media) and run by the government, the United States’ tenth ranking in the index of economic freedom does not even begin to explain how little freedom we have left in America. And now our medical care will be fundamentally changed as well.


    Dr. Ileana Johnson Paugh -- Bio and Archives | Click to view Comments

    Listen to Dr. Paugh on Butler on Business,  every Wednesday to Thursday at 10:49 AM EST

    Dr. Ileana Johnson Paugh, Romanian Conservative is a freelance writer, author, radio commentator, and speaker. Her books, “Echoes of Communism”, “Liberty on Life Support” and “U.N. Agenda 21: Environmental Piracy,” “Communism 2.0: 25 Years Later” are available at Amazon in paperback and Kindle.

    Her commentaries reflect American Exceptionalism, the economy, immigration, and education.Visit her website, ileanajohnson.com


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