Paying doctors to keep patients healthy – if the price is right

Thursday, Jan 9, 2014, 07:06 PM | Source: The Conversation

Anthony Scott

Innovative health policy solutions could help the health budget and improve patients' health. Image from

Consensus and evidence suggests a compulsory co-payment of A$6 for a visit to the general practitioner will reduce population health but might save some money. Can we not try a bit harder and think of policies that might save money without harming health, or maybe even improve health? Why not pay doctors to improve patients’ health – and perhaps even their happiness?

A new type of practice is emerging in New York called “concierge medicine”, where super-rich patients pay a large annual fee to have doctors at their beck and call for anything from home visits, accompanying patients to procedures, screening, and lots of diagnostic tests.

This seems like a recipe for very happy patients, but also for over-servicing, over-treatment and over-diagnosis that can lead to unnecessary harm in the longer term. Surely doctors’ valuable time could be spent saving people’s lives rather than being babysitters.

So, what services are “appropriate” and what price are we prepared to pay for them?

Evidence-based medicine

There are some interventions and activities that doctors undertake that do not improve health, and may in fact cause harm: prescribing antibiotics for coughs and colds, imaging for low back pain, and screening for prostate cancer are just a few examples. Yet patients seem to “want” and demand these services.

The payment system doesn’t help. On its own, fee-for-service means that doctors can be paid for providing any service whether it works or not. In most other sectors, such a situation would not be tolerated by customers who would recognise this and seek treatment elsewhere – competition would encourage doctors to provide only services that work. But as we’ve seen from the debate about the A$6 co-payment, it’s naïve to apply simple economic principles in health care.

There is considerable uncertainty about the effectiveness of health-care interventions and a lack of evidence about what works and does not. This is not helped by the lack of routine measurement of the impact of treatments on health outcomes.

Most patients generally don’t know what is wrong when they go to see a doctor and don’t know what treatments work and what does not, or whether doing nothing is best. This is why, if left to their own devices, patients’ “demands” will not always lead to improvements in their health, though it may improve their short-term happiness.

Though patients don’t know what works, many demand quick access and most want the doctor to do something (a prod, poke, test, prescription or referral), even if the chances of it working are close to zero. This provides reassurance, information, and for end-of-life care, hope. These factors are clearly valued by patients even though their health is unlikely to improve as a result.

Doctors clearly have more knowledge based on their training, opinions of other doctors and their own experience. Even when contrary evidence from clinical trials exists, some doctors would rather continue to do what they have always done and view new evidence with caution.

Doctors also like to “do something”, help and intervene rather than “wait and see” – they are trained to fix health problems and patients may go elsewhere if they think the doctor has not done enough or hasn’t taken them seriously.

The impact of treatments on health outcomes is not routinely measured. Image from

Funding smarter choices

The amount and quality of evidence about what works is getting better. This is increasingly highlighting services and treatments that are being funded by taxpayers and insurers but which may not improve health.

As evidence grows about what diagnostic tests, treatments, and procedures are cost-effective, it is becoming possible to use this evidence to augment funding and payment systems to reward doctors and other health professionals for improving their patients’ health. This is already occurring in the United States and United Kingdom, but Australia is lagging behind.

This new emerging evidence needs to be harnessed by government and private insurers to make smarter funding choices. There are several reforms to payment schemes in Australia, combined with evidence on what works, that could help save money for our over-burdened health system without harming patients. Here are five simple options:

  1. Withdraw or reduce funding for tests, treatments and procedures that are of low value.

  2. Pay doctors and hospitals more for providing treatments that are more cost-effective.

  3. Pay doctors and hospitals less for treatments and procedures that have become less costly (quicker) to provide because of technological advances.

  4. Decide more clearly on what medical services the taxpayer should fund. Strengthening and expanding the review powers of the Medical Services Advisory Committee (MSAC), for instance, is very important. MSAC decides on what Medicare should be funding, but their processes aren’t as rigorous or independent as they could be.

  5. Consider introducing blended payments for chronic disease in primary care. The Diabetes Care Project is one such model currently being evaluated – it includes care co-ordination, flexible funding and pay-for-performance, as well as usual fee-for-service for GPs.

Some of these options require long-term commitment and vision, so hopefully the government’s Commission of Audit will consider strategies for reforming the health system that require some initial investment for longer term gain. There are no magic bullets, and sometimes doing less is doing more.

The evidence on whether new payment systems can improve health is mixed but promising. Of course, the rewards are not only financial, as doctors will be confident that the services they provide improve their patients’ health and in some cases their happiness.

Though caution is warranted in the adoption of new payment systems, more bold steps still need to be taken to examine and begin to apply and evaluate these options in Australia.

The Conversation

Anthony Scott receives funding from the ARC, NHMRC, Department of Health (Victoria) and is a member of the evaluation team for the Diabetes Care Project funded by the Department of Health. He runs the Medicine in Australia: Balancing Employment and Life (MABEL) longitudinal survey of doctors funded by NHMRC. The views in this paper are those of the author.