Will ObamaCare’s Switch to “Physician Extenders” Increase Costs?
Recently enacted health reform legislation is in many ways the culmination of several decades of attempts to reform the structure of medical practice. In many cases, the legislation codifies assertions that specific changes will improve matters even though those assertions have virtually no reliable empirical backing.
For example, the legislation contains many sections equating physicians to other “other health professionals.” It makes Medicaid Advantage plans eligible for bonuses if the plans use “additional resources like nurses, nurse practitioners, and physician assistants” and they fund the “development and operation of nurse-managed health clinics.”
The problem is that the substitution of other health professionals for physicians beyond what is naturally occurring has primarily been championed by theoreticians and rent seeking interest groups. Some proponents appear to believe, without much evidence, that new practice forms will do a better job of delivering medical care than traditional practice models. Virtually all substitution proponents claim that substitution will reduce costs without compromising care. Or that, as one example of the genre puts it, nurse practitioners can “reinvent primary care” by substituting for physicians, providing “comparable services regardless of practitioner,” and reduce “more costly health resource use.”
Unfortunately, this may not be the case.
Mean hourly earnings for full-time employees in selected civilian sector health occupations from the Bureau of Labor Statistics (BLS) are given below. They suggest that in some cases physicians may cost less than people in other occupational specialties.
Even after knocking out the lower levels of physician wages on the assumption that they reflect the earnings of residents operating at artificially low rates of pay, the mid-range of physician wages overlaps the higher range of registered nurses. Depending on the practical aspects of workflow, relative efficiency, and knowledge acquisition, the push to replace physicians with “physician extenders” could end up increasing costs.
There are surprisingly few empirical papers on this subject. An abstract of a 2005 review of existing studies of the substitution of nurses for doctors in primary care by Laurant et al. notes that a database search of articles on doctor-nurse substitutions found 4,253 articles. Only 25 articles on 16 studies were suitable for analysis. Only one study was designed well enough (had sufficient statistical power) to assess whether alternative practitioners provided equivalent care. The few existing British studies of the cost savings from substitution tend to be inconclusive. Though nurse practitioners spend more time with patients, visits with them are longer, canceling out their hourly wage advantage.
The BLS estimates do not include wages for physicians and others in private practice, operating their own businesses, or for people who work part-time. They also do not include benefits.
“Work level” refers to rankings of task difficulty given by the National Compensation Survey based on knowledge required, task complexity, contacts required, and physical environment. There are 15 work levels. Level 1 is the least complex and demanding, level 15 is the most complex and demanding.
Physicians begin at work level 9 and go to level 14, though parts of the physician category have not had levels assigned. In 2008, private sector occupations with task difficulty that extended to level 15 were those like Chief Executive, certain engineers, and Engineering Managers. There are no Level 15 classifications in the State and Local government occupations that have been classified. In most occupations, pay increases as work level increases.
I just read that all the Minnesota nurses are going out on strike for a day. Anyone who thinks that we don’t need doctors should contemplate that fact for a while.
The appropriate mix of medical skills that health care providers should retain goes back to the debate about whether reform should come from the demand-side or the supply-side.
A bureaucrat cannot, with any degree of accuracy, tell a hospital how many RNs, LVNs, PTs, OTs or RTs to have on staff (or how many to contract with from agencies versus hire). Neither can a bureaucrat know how many MRI scanners a hospital needs or the number of ORs.
Each facility is in a better position to decide the appropriate mix of inputs. The catch is; hospitals are unlikely to look for methods that save payers money unless the hospital is competing on price. And price competition is less unlikely to occur under third-party payment.
If I’m looking for a plastic surgeon, I don’t have to decide what the appropriate mix of technology is. The surgeon has done that for me and I can compare prices, feedback from other patients and (what I perceive to be) his or her quality. This occurs because cosmetic surgery is outside the third-party payment system.
Having the government make decisions about whether I can see a doctor or a nurse is worrisome.
For many centuries there have been doctors in society, but most if not all the other health professions only came into being when hospitals formed and provided their services at the home of patients until this proved more deadly than the institutions where infected poor citizens were placed so as to not infect the general population.
All these “institutions” were operated by religious or other charitable entities or city governments but were not constructed to heal patients but rather for established physicians to train entering physicians on treatments that they then provided to citizens but only in their homes. When the “Wards of the state” faired better in “City” hospitals than they did at home, the demand produced “Doctors Hospitals” in which the more affluent citizens would receive care, which was at two levels poor in the City Hospitals and the rich at Doctors hospitals, while most of the citizens remained being treated at home until they required a hospital at which time they were admitted into one or the other based on their ability to pay. It remained this way until 1954 when “charitable immunity” exclusion in malpractice was declared illegal.
Hospitals and their staffs were formed and have always operate under physicians for whim they work and who are trained and certified by state agencies. To make sure their staffs were capable and trained; the hospitals started and ran schools for nurses and other emerging staff to make sure they were of high quality and competently trained and state agencies rose up to regulate and certify their abilities.
Perhaps we are about to return to yesterday’s two medical approach operation where the rich will see doctors while the poor are sent to clinics run by lesser and less costly staff. Then we could shift to Medicare, Medicaid and states exchange members being sent to the clinics and the private pay being seen in doctors offices and hospitals.
But this does acknowledge that the government knows there are not enough doctors; and I wonder when they will discover that the same is true of nurses and all other medical provider fields.