I’m convinced the only way to control overuse and prices is with global budgeting. Maryland is doing global budgeting lite, but it’s a start. That said, it’s not a panacea. The VA is budgeted and its doctors are salaried and there’s still a lot of overtreatment — but at least it is less than the rest of the system.
It’s not a ploy. It’s a documented, sad reality that a significant amount of medical practice is not based on medical evidence, but is influenced by unscientific forces ranging from outside commercial entities (drug and medical device companies, mainly), physician incentives under fee for service medicine (the more you do the more you make), and individual physician beliefs based on their own experience, which is by definition a limited sample. Universal coverage by a single government entity (Medicare for All) would solve our coverage and excessive administrative costs problems, but wouldn’t undo those perverse incentives incentivizing unnecessary care.
Agree wholeheartedly. Now if we could only convince the Medicare for All folks that Medicare’s fee for service system and physician compensation systems need reforming, too, if we are going to achieve AFFORDABLE health care for all.
Thanks for this walk through memory lane -- a very nice summary of our decades-old debate about the causes of geographic variation in health care cost. All along, the main purpose of studying cost variation by geographical areas has been to use lower cost areas as the existence proof that achieving lower cost is possible. The idea was to find out what works in those areas, and try to do the same elsewhere -- or the reverse, finding out what does not work in the high utilization areas and trying to stop doing those things.
But, it is always useful to step back and realize that when you care about improving our health care system (including improving both health and economic outcomes -- i.e. "value") and you study cost variation, you are implicitly limiting the scope of your search for cost saving opportunities to the structures and processes that already exist in some geographic areas. Cost variation studies do not identify opportunities to reduce cost (or, more importantly, to improve value) through innovation and optimization.
Innovation can take two main forms: (1) improvements in clinical decision-making processes (e.g. superior practice guidelines and protocols that can be determined through modeling, cost-effectiveness analysis, and consensus-building) and (2) improvements in care delivery processes (e.g. the fruits of CQI, TQM, 6 sigma, etc.).
As a fellow traveler in the health care improvement field, I lament the decline in interest in the admittedly tedious work of improvement, optimization and innovation. And I also lament the distraction from that tedious work caused by the continued focus on debating the relative strength of prices or utilization in predicting the cause of existing geographic variation.
A play on the headline on the Health Affairs article from 2003 by Gerard Anderson & Uwe Reinhardt: “It’s the prices, stupid”. If it was good enough for the late, great Uwe, it is good enough for me to draw attention to a finding that goes against current conventional wisdom, which is that our high health care costs are mainly driven by high prices.
The late Uwe Reinhardt and his wife May Cheng designed a non-profit single payer health system, free at the point of service, for Taiwan that provides more care for less cost to the whole population.
He advised them not to allow insurance companies from the start, saving 1/3 of every health care dollar from going to bureaucracy. (Making people “choose” plans makes the patient at fault if they choose wrongly. That’s not health care, its domestic violence)
They pay doctors fee for service. It’s not perfect but beats the alternatives. We all know “there are many ways to pay doctors, none of them very good”.
Instead of overutilization, its oversupply in some sectors driven by the need for profits, and undersupply in some sectors driven by the need for profits.
Drug companies raise their prices because they can. Private equity raises prices and reduces quality because they can. Insurers are not working for patients.
I submit it’s the profits distorting every aspect single aspect of health care.
U.S. "utilization" of expensive (and often unjustified) procedures, etc. is much higher than elsewhere. I have some data on that. I bet that's true across US regions. Wennberg showed it way-back-when across Vermont. So it's not just volume of a given basket of services, but variations in the baskets.
I agree that global budgeting and less FFS would help tamp down use of the expensive, low-value stuff. It would be interesting to see if variations across Germany or elsewhere in procedures and expenses are lower than here. As I understand it, there is still FFS in Germany, but only for outpatient work by office practitioners. Physicians in hospitals are paid salaries, and the hospitals have budget limits. And the regional medical societies that handle FFS payments have fixed budgets, so they monitor utilization and withhold payments to overusers to economize.
The belief that variation was driven by price led to simplistic thinking about spending — all you gotta do is bring down prices! But that approach was doomed in a system where a provider could keep revenue from falling by increasing utilization. (Which is a misleading term because it implies the patient, as “user” of medical services, is the one driving what services get paid for.) it has also led to the simplistic notion that increasing the number of doctors will bring down prices and therefore curb healthcare inflation. Mote doctors equals more utilization, without necessarily improving health.
I have some small experience here being a retired internist who worked in academic, public health and private-practice medicine. Excess utilization is probably 85% due to for-profit, fee-for-service medicine and 15% anxious patients and doctors. A doc who gets paid by the procedure be it skin biopsies, appendectomies, cardiac catheterizations, etc. Will look for opportunities to perform more procedures if he/she sees a chance or if he/she is employed will be ‘strongly encouraged’ by the employer to perform more. A well thought out national healthcare system could provide truly great healthcare for about 60% of what we spend now and cover everyone.
But lots of people are making bank on the current system and they don’t want to see a 40% haircut. Hence the persistence of our wasteful, irrational system.
Universal health care and an end of for-profit insurance companies would greatly reduce this problem for us, as it has for decades in civilized countries.
It’s not a ploy, it’s a fact that has been documented over and over and over again. And just because there’s massive underuse of effective treatments doesn’t mean there isn’t overuse and lots of just plain ineffective stuff.
Canadian here, 50 years in the health policy/health services research wars. We, too have variations in cost and utilization, although the way our system is funded makes it pretty much impossible for there to be as much population-level cost differences as between Medicare regions in the US.
There are remedies to all of the perverse incentives and completely unjustifiable practice variations and absurd price variations, but as Shannon Brownlee says (I'm paraphrasing here), we should not sane-wash the story. It's money and politics (now identical in the US), purely and simply.
But as noted, sub-systems like Kaiser and Intermountain Health do manage to deliver good care prudently. They have practice cultures that support it; physicians self-select into such cultures, and therein lies the hope and the problem. It is impossible to change physician practice cultures from the outside; the motivation, and importantly both the authority and accountability, must come from within. I've been in sessions countless times in Canada where some physicians are genuinely curious about practice variations and are worried about being an outlier, and others couldn't care less, some actually proud of their outlier status. Choosing Wisely has done fabulous and sadly ineffective work; medicine seems to require a rethinking of Rogers' Diffusion of Innovation theory because it is devilishly hard to get beyond the early adopters. The vanguard remains the vanguard.
As for malpractice, the evidence suggests that two things are true. One, it is a factor for some physicians, influenced (to some extend understandably) by anecdotes and personal experience. But the whole field is rife with false positives and false negatives, so the one certainty is that there is almost no justice. Second, all of this is remediable: a no-fault system. Of course no-fault is imperfect, but it is infinitely less imperfect than the status quo.
As for pricing, no observation could possible match the plain facts of the American experience. I suspect the quality of care and patient experience would improve if there were simply massive payments - about 5% of GDP - to providers and pharma and technology companies on the condition that they not induce utilization. It would be the equivalent of paying farmers not to grow crops, only by doing so in health care you would get more food.
Gooz is apparently not retired military. You see, we military retirees are part of the only true national healthcare service in the country. What Medicare B does not pay, DOD Tricare pays. Even my medication is free or deeply discounted. Oh, and no insurance clerk denies may care - with the exception of cosmetic treatments, of course.
As for long-standing access to care arguments against a national healthcare system, that is gaslight. I am the guy sitting next to you in the waiting room to see that specialist at MAYO Clinic. I get the same medical treatment as you do, and I have to sit and wait to see my doctor just as long as you do. However, my surgeries and other treatments are free while yours are pricey - with deductibles and co-pays at every turn.
My spouse is European - they all have free national healthcare in Europe - have since WWII. Of course, private care is an option for rich Europeans. It costs EU governments far less than we sucker Americans pay. And, as Gooz pointed out, them ferriners live longer than we Americans do. A big contributor is way less bureaucratic overhead due to layers of insurance company staff, and healthcare provider staff who have to understand what each insurer will pay for, revise claims and re-submit them, etc. in addition to providing treatments.
So it is ironic, that there already exists all the computer networks and software needed to implement a national healthcare system in the USA - including limits on BIG Pharma price gauging. We just lack the political will to implement a national health insurance agency within HHS (damn those DOGE people :-).
Political will is not exactly the problem. Healthcare makes a lot (a lot!) of money for a lot of people and the healthcare industry has bought and paid for the Congress we have. (If you think high tech has a stranglehold on Capitol Hill, think again.) As long as you can buy elections, healthcare will not change, no matter how many policy people write smart, insightful papers about what’s wrong and how to fix it. (Said a person who has written many smart, insightful journal papers, not to mention magazine articles and opeds.) Campaign finance is the fundamental problem and until we fix that, nothing else will change. Healthcare makes too much money for too many people.
The sad covert message in what you correctly assert is that Democrats are in this corruption as deep as the Republicans. Biden did nothing to get Congress to reverse CU much less impeach some of the corrupt scumbags on SCOTUS who enabled it.. Trump is part of the oligarchy trying to eliminate democracy, so he will not lift a finger to kill it either (Said a retired Deep Stater).
I partially agree with this view. While there is certainly a difference in utilization in different geographies, it is an open question of how much medical care is overutilization or necessary utilization.
Our study should not be misinterpreted to suggest that variation in spending and utilization levels is bad. To the contrary, we show that disease prevalence and age of a county contribute to differences in spending. States like Utah and Florida stand out for relatively extreme spending levels (low and high, respectively), but given that these are the youngest and oldest states (and that spending increases with age), it is clear that neglecting to consider the age of the population results in a distorted perspective when evaluating the spending and comparing across states and time.
I agree that indiscriminately cutting costs will cause more harm than good. Our utilization is geared towards high-cost procedures, drugs, and devices, some of which have questionable benefits. This points more towards regulatory capture by AMA, pharmaceutical, and medical device bodies that create the incentive structure to perform high RVU services (e.g., why do we approve a high-cost biologic drug based on surrogate criteria showing minimal benefit).
The current value-based care model puts the onus of cost control on ACOs/PCPs, which has led to consolidation in healthcare and large systems using PCPs as an entry point for these high RVU services along with a whole new class of administrators.
While it may be an open question <<exactly>> how much is overutilization, it’s not a stretch to say there’s a lot of it. Yes, the JAMA paper took pains to point out that Utah and florida are at the extremes in terms of population age. But even if you only look at Medicare data, where everybody is over 65, you still see tremendous variation in utilization.
ACOs were a dumb idea. Let’s face it. They haven’t worked because we haven’t changed the fundamentally fragmented structure of the system.
I agree there is over-utilization but there are also pricing problems, and they are linked. The challenge is to identify and correct for both. For e.g., we have drugs/devices that are approved which cost tens/hundreds of thousands of dollars that have minimal benefit and then add them to clinical guidelines — creating an environment (forcefully) guiding doctors hand.
Over-utilization is more complex than FFS incentives:
- an anxious patient (or doctor) will lead to over-use of resources
- malpractice leads to defensive medicine (e.g. we are still ordering PSAs for prostate cancer screening and breast ultrsounds for dense breasts in breast cancer screening without any data because of lawsuits - these lead to high downstream costs)
- large for profit systems will create incentive structure to promote procedures that make the most money
- what is over-utilization is generally determined in retrospect (and may have been appropriate “in the moment”)
People are not as litigious in other countries as us. Most other countries also have a “no fault” system in case of bad outcome. Our biggest issue is, we want a scapegoat. In today’s climate, the scapegoat are doctors in fee for service ordering unnecessary tests.
Let’s take an alternate world — where we require all-cause mortality benefit or QALY (or other similar measure) outcome before approval of any expensive drug/device/procedure that costs over a certain dollar amount. A lot of expensive over-utilization would disappear, but we would have people (backed by large corporate interests) in pitchforks and knives asking that government agencies be dismantled (this is a true story—AHRQ abandoned Comparative Effectiveness Research under lobbying pressure and patient interest groups, AFAIK).
And yes, creating ACOs was a dumb idea. It has just to consolidation and dissappearance of small practices.
I know the AHRQ story very well. My old pal Jack Wennberg was part of it at the time. Back surgeons were right in there screaming about taking away their pedicle screws, along with the manufacturers and the patient groups that were underwritten by the manufacturers. And we all know PCORI hasn't done the job either. The only things we have are ECRI (does it even exist any more?) and ICER. Which have no power except good data.
I once created a list of all the factors that incentivize overtreatment. It was a very long list and yes, FFS was just one item, but so was malpractice worries. Doctors think malpractice worries is the most important factor in overtreatment. It isn't.
And you're so right, patients would come with their pitchforks if big bad government were to try to take away their god given right to get unnecessary MRIs and back surgeries. But that's partly because these groups are awash in pharma and device industry cash and highly conflicted. Just look at the Alzheimer's Association's recent support for the new drugs, all of which are harmful and worse, ineffective. (Shameless self promotion: https://jacobin.com/2025/02/alzheimers-drugs-approval-regulations-death)
Depression screening metrics are also heavily influenced by pharma as are many of the practice guidelines created by the specialty societies. (Thanks for the link to your article.)
But I think there's one aspect of overtreatment that's often overlooked and that's the fact that if an intervention is useless or unlikely to help you, the patient, it can still cause harm. Patients and doctors forget this simple fact. The risk of harm exists even when there is little chance of benefit. Overtreatment has been talked about incessantly as a cost problem, but it's also a harm problem. Here's our paper estimating severe harms due to inappropriate colonoscopy https://pubmed.ncbi.nlm.nih.gov/39698330/
RE ACOs, I'm a member of Kaiser (Medicare Advantage) and as a patient who is alert to stuff I don't need or don't want, I'm impressed at how little junk they want to throw at me. Yes, I get nagged about doing a DEXA scan, but my PCP (I actually have one! She's great!) instantly agrees when I say I don't want one because I'm already doing everything I need to do to keep my bones as strong as possible and what's the point of a screening tool that can only worry us. And my cardiologist actually knows the literature extremely well and doesn't want to overdrug me or overtest me.
If there were a way to organize the rest of medicine into multispecialty group practices that actually pay attention to science, a lot of overtreatment would go away, along with the disorganization and lack of attention to the whole patient. But the Kaisers and Geisingers and Marshfield Clinics of the world have had a very difficult time expanding into areas where physician practices are entrenched and don't want the limitations that a group practice imposes. They don't know what they're missing. Every single person I talk to at Kaiser, from doctor to lab tech, is happy there and would not go back to the "outside" world of medicine.
I agree with all your points. However, malpractice, when combined with other factors, has a compounding effect on overtreatment. I can’t tell you how many times when I have talked to colleagues about scientific evidence on a particular medication/procedure, it eventually boils down to “you are playing with fire and will get sued.” Put that in the context of an anxious patient, and you have overutilization.
The other reason why I don’t think FFS is the big culprit here (and yes, there are some bad actors) is because doctors (at least in my generation) were trained to think that before we order a test, we need to know how it will change treatment (and this is what I try to teach all my medical students). The consolidation into large healthcare conglomerates (hospital systems and pharma) has captured academia, created “guidelines” and quality measures, and changed the profit incentive structure. ACOs just accelerated the consolidation by dumping TCOC and SDOH on us (which should be the government's responsibility). Doctors who want to practice nuanced medicine are not allowed to do so as it reduces profits for large companies, and all the good ones are burning out.
For DEXA, I tell all my patients the data, and they don’t need it, similar to what your doctor probably told you. However, just USPSTF published new guidelines that everyone needs DEXA over age 65 (https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/osteoporosis-screening). NCQA will make it a quality measure in the next couple of years. Given the new standard of care and heightened malpractice risk, the use of DEXA and treatment for osteoporosis will explode, leading to higher costs. That is not a FFS problem. This is systematic hacking of the healthcare system while shifting blame to front-line docs.
Also, you can remove the incentive for overtreatment in FFS by reducing the prices for high-cost treatment that has minimal benefit by modifying the RVU scale, which, for some reason, no one wants to touch.
I 100% agree that everyone forgets that over-treatment can cause harm—everyone is an optimist including doctors. There is fascinating data from behavioral science on how everyone systematically overestimates benefits. However, once you put doctors in a system without enough time and malpractice risk, it does not matter which payment model they are in — they will overtreat. The lawyer's tagline is, “You don’t get sued for doing more; you get sued for doing less.” It takes me 5-15 min to convince a patient that they don’t need antibiotics for viral upper respiratory infection and less than 1 min to prescribe antibiotics. The time required to convince someone they don’t need an MRI for back pain or other expensive treatment is much longer (and then people call after their office visit again and want to talk to the doctor, while we are busy with other patients).
We are all enamored by Kaiser, which, per my reading, does a fantastic job. However, trying to replicate Kaiser is trying to replicate Apple. Each company, when founded, develops its culture and grows by attracting and grooming people who fit that culture. It is very hard to transpose that culture into other existing large organizations. The VBC disaster occurred because the ACA tried to create a Kaiser culture for the country without understanding how cultures are formed. As the old saying goes, “culture eats strategy for lunch.”
I guess my biggest issue about framing this as a FFS problem is that the message is simplified to “doctors are the bad actors becuase they make more money, so we need to pay them differently.” As long as we push that rhetoric, doctors will keep burning out, exiting healthcare or consolidating. This will not solve the healthcare problem but make it worse.
A request for clarification in case I'm not understanding something: My thinking is that "fee-for-service" applies to and motivates HOSPITALS to drive providers to do more. The providers themselves could even be on salary or other system. Don't hospitals bill Medicare and insurance companies on the bases of the CPT/RBRVS? So isn't that FFS? If so, then global budgeting + salaries would work hand in hand. Right?
Peter, you are correct in that FFS applies to both hospitals and doctors, and doctors may be salaried. However, global budgeting and salaries will partially work when the entity controlling the budget can also make policies (aka government) to ensure people have the tools to remain healthy.
The current rhetoric of FFS lumps both large hospital systems and doctors in the same boat, which is not correct. Furthermore, the way the system is structured to “do more” is much more complicated than can be explained by FFS.
- large conglomerates (academia, pharma etc) influence disease definitions and guidelines to do more
- approval of expensive therapies with minimal benefit
- medical malpractice (both direct and indirect costs) leading to defensive medicine
- patient expectations that doctors/hospitals “need to do everything”
- advertising increasing patient demand (couple that with malpractice risk!)
Even with all this, if you compare healthcare utilization in US vs other OECD countries, it is about the same - but is skewed much more towards specialty visits and procedures - which is a function of RVU system (and yes that is related to FFS). We can achieve cost reduction by modifying RVU system, without creating another layer of administration which will just create more financial shell games to hide profits.
I would encourage you to read (or watch the videos) of my 5 part deep dive series on PCP Lens on how value based care has been distorted into a shell game https://www.pcplens.com/t/value-based-care
Given the need for a lengthy analysis, your headline (“stupid”) seems overheated. Clickbait issue? Attempted humor? The topic is too serious for either, IMHO.
The “tedious work” of rooting out unnecessary care requires a hospitable policy environment. I will address a forthcoming post to that issue.
I’m convinced the only way to control overuse and prices is with global budgeting. Maryland is doing global budgeting lite, but it’s a start. That said, it’s not a panacea. The VA is budgeted and its doctors are salaried and there’s still a lot of overtreatment — but at least it is less than the rest of the system.
It’s not a ploy. It’s a documented, sad reality that a significant amount of medical practice is not based on medical evidence, but is influenced by unscientific forces ranging from outside commercial entities (drug and medical device companies, mainly), physician incentives under fee for service medicine (the more you do the more you make), and individual physician beliefs based on their own experience, which is by definition a limited sample. Universal coverage by a single government entity (Medicare for All) would solve our coverage and excessive administrative costs problems, but wouldn’t undo those perverse incentives incentivizing unnecessary care.
Yup! You said it.
Agree wholeheartedly. Now if we could only convince the Medicare for All folks that Medicare’s fee for service system and physician compensation systems need reforming, too, if we are going to achieve AFFORDABLE health care for all.
Good luck with that! Medicare for All founders think I’m evil because I think fee for service is a big problem that needs fixing.
Thanks for this walk through memory lane -- a very nice summary of our decades-old debate about the causes of geographic variation in health care cost. All along, the main purpose of studying cost variation by geographical areas has been to use lower cost areas as the existence proof that achieving lower cost is possible. The idea was to find out what works in those areas, and try to do the same elsewhere -- or the reverse, finding out what does not work in the high utilization areas and trying to stop doing those things.
But, it is always useful to step back and realize that when you care about improving our health care system (including improving both health and economic outcomes -- i.e. "value") and you study cost variation, you are implicitly limiting the scope of your search for cost saving opportunities to the structures and processes that already exist in some geographic areas. Cost variation studies do not identify opportunities to reduce cost (or, more importantly, to improve value) through innovation and optimization.
Innovation can take two main forms: (1) improvements in clinical decision-making processes (e.g. superior practice guidelines and protocols that can be determined through modeling, cost-effectiveness analysis, and consensus-building) and (2) improvements in care delivery processes (e.g. the fruits of CQI, TQM, 6 sigma, etc.).
As a fellow traveler in the health care improvement field, I lament the decline in interest in the admittedly tedious work of improvement, optimization and innovation. And I also lament the distraction from that tedious work caused by the continued focus on debating the relative strength of prices or utilization in predicting the cause of existing geographic variation.
I expanded my comment to a post in my blog: https://rewardhealth.com/archives/3740 . Thanks again for your insightful work...
A play on the headline on the Health Affairs article from 2003 by Gerard Anderson & Uwe Reinhardt: “It’s the prices, stupid”. If it was good enough for the late, great Uwe, it is good enough for me to draw attention to a finding that goes against current conventional wisdom, which is that our high health care costs are mainly driven by high prices.
“It’s the profits, stupid.”
The late Uwe Reinhardt and his wife May Cheng designed a non-profit single payer health system, free at the point of service, for Taiwan that provides more care for less cost to the whole population.
He advised them not to allow insurance companies from the start, saving 1/3 of every health care dollar from going to bureaucracy. (Making people “choose” plans makes the patient at fault if they choose wrongly. That’s not health care, its domestic violence)
They pay doctors fee for service. It’s not perfect but beats the alternatives. We all know “there are many ways to pay doctors, none of them very good”.
Instead of overutilization, its oversupply in some sectors driven by the need for profits, and undersupply in some sectors driven by the need for profits.
Drug companies raise their prices because they can. Private equity raises prices and reduces quality because they can. Insurers are not working for patients.
I submit it’s the profits distorting every aspect single aspect of health care.
U.S. "utilization" of expensive (and often unjustified) procedures, etc. is much higher than elsewhere. I have some data on that. I bet that's true across US regions. Wennberg showed it way-back-when across Vermont. So it's not just volume of a given basket of services, but variations in the baskets.
I agree that global budgeting and less FFS would help tamp down use of the expensive, low-value stuff. It would be interesting to see if variations across Germany or elsewhere in procedures and expenses are lower than here. As I understand it, there is still FFS in Germany, but only for outpatient work by office practitioners. Physicians in hospitals are paid salaries, and the hospitals have budget limits. And the regional medical societies that handle FFS payments have fixed budgets, so they monitor utilization and withhold payments to overusers to economize.
The belief that variation was driven by price led to simplistic thinking about spending — all you gotta do is bring down prices! But that approach was doomed in a system where a provider could keep revenue from falling by increasing utilization. (Which is a misleading term because it implies the patient, as “user” of medical services, is the one driving what services get paid for.) it has also led to the simplistic notion that increasing the number of doctors will bring down prices and therefore curb healthcare inflation. Mote doctors equals more utilization, without necessarily improving health.
I have some small experience here being a retired internist who worked in academic, public health and private-practice medicine. Excess utilization is probably 85% due to for-profit, fee-for-service medicine and 15% anxious patients and doctors. A doc who gets paid by the procedure be it skin biopsies, appendectomies, cardiac catheterizations, etc. Will look for opportunities to perform more procedures if he/she sees a chance or if he/she is employed will be ‘strongly encouraged’ by the employer to perform more. A well thought out national healthcare system could provide truly great healthcare for about 60% of what we spend now and cover everyone.
But lots of people are making bank on the current system and they don’t want to see a 40% haircut. Hence the persistence of our wasteful, irrational system.
Universal health care and an end of for-profit insurance companies would greatly reduce this problem for us, as it has for decades in civilized countries.
Kindly stop the "overutilization" ploy.
It’s not a ploy, it’s a fact that has been documented over and over and over again. And just because there’s massive underuse of effective treatments doesn’t mean there isn’t overuse and lots of just plain ineffective stuff.
Canadian here, 50 years in the health policy/health services research wars. We, too have variations in cost and utilization, although the way our system is funded makes it pretty much impossible for there to be as much population-level cost differences as between Medicare regions in the US.
There are remedies to all of the perverse incentives and completely unjustifiable practice variations and absurd price variations, but as Shannon Brownlee says (I'm paraphrasing here), we should not sane-wash the story. It's money and politics (now identical in the US), purely and simply.
But as noted, sub-systems like Kaiser and Intermountain Health do manage to deliver good care prudently. They have practice cultures that support it; physicians self-select into such cultures, and therein lies the hope and the problem. It is impossible to change physician practice cultures from the outside; the motivation, and importantly both the authority and accountability, must come from within. I've been in sessions countless times in Canada where some physicians are genuinely curious about practice variations and are worried about being an outlier, and others couldn't care less, some actually proud of their outlier status. Choosing Wisely has done fabulous and sadly ineffective work; medicine seems to require a rethinking of Rogers' Diffusion of Innovation theory because it is devilishly hard to get beyond the early adopters. The vanguard remains the vanguard.
As for malpractice, the evidence suggests that two things are true. One, it is a factor for some physicians, influenced (to some extend understandably) by anecdotes and personal experience. But the whole field is rife with false positives and false negatives, so the one certainty is that there is almost no justice. Second, all of this is remediable: a no-fault system. Of course no-fault is imperfect, but it is infinitely less imperfect than the status quo.
As for pricing, no observation could possible match the plain facts of the American experience. I suspect the quality of care and patient experience would improve if there were simply massive payments - about 5% of GDP - to providers and pharma and technology companies on the condition that they not induce utilization. It would be the equivalent of paying farmers not to grow crops, only by doing so in health care you would get more food.
It’s mostly inadequate taxation.
Over-utilization? By whom? Why?
By providers. Because they can. And it makes money.
Gooz is apparently not retired military. You see, we military retirees are part of the only true national healthcare service in the country. What Medicare B does not pay, DOD Tricare pays. Even my medication is free or deeply discounted. Oh, and no insurance clerk denies may care - with the exception of cosmetic treatments, of course.
As for long-standing access to care arguments against a national healthcare system, that is gaslight. I am the guy sitting next to you in the waiting room to see that specialist at MAYO Clinic. I get the same medical treatment as you do, and I have to sit and wait to see my doctor just as long as you do. However, my surgeries and other treatments are free while yours are pricey - with deductibles and co-pays at every turn.
My spouse is European - they all have free national healthcare in Europe - have since WWII. Of course, private care is an option for rich Europeans. It costs EU governments far less than we sucker Americans pay. And, as Gooz pointed out, them ferriners live longer than we Americans do. A big contributor is way less bureaucratic overhead due to layers of insurance company staff, and healthcare provider staff who have to understand what each insurer will pay for, revise claims and re-submit them, etc. in addition to providing treatments.
So it is ironic, that there already exists all the computer networks and software needed to implement a national healthcare system in the USA - including limits on BIG Pharma price gauging. We just lack the political will to implement a national health insurance agency within HHS (damn those DOGE people :-).
Political will is not exactly the problem. Healthcare makes a lot (a lot!) of money for a lot of people and the healthcare industry has bought and paid for the Congress we have. (If you think high tech has a stranglehold on Capitol Hill, think again.) As long as you can buy elections, healthcare will not change, no matter how many policy people write smart, insightful papers about what’s wrong and how to fix it. (Said a person who has written many smart, insightful journal papers, not to mention magazine articles and opeds.) Campaign finance is the fundamental problem and until we fix that, nothing else will change. Healthcare makes too much money for too many people.
The sad covert message in what you correctly assert is that Democrats are in this corruption as deep as the Republicans. Biden did nothing to get Congress to reverse CU much less impeach some of the corrupt scumbags on SCOTUS who enabled it.. Trump is part of the oligarchy trying to eliminate democracy, so he will not lift a finger to kill it either (Said a retired Deep Stater).
I partially agree with this view. While there is certainly a difference in utilization in different geographies, it is an open question of how much medical care is overutilization or necessary utilization.
Here is a quote from the JAMA article ((https://jamanetwork.com/journals/jama-health-forum/fullarticle/2829955)) that was used as a reference:
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Our study should not be misinterpreted to suggest that variation in spending and utilization levels is bad. To the contrary, we show that disease prevalence and age of a county contribute to differences in spending. States like Utah and Florida stand out for relatively extreme spending levels (low and high, respectively), but given that these are the youngest and oldest states (and that spending increases with age), it is clear that neglecting to consider the age of the population results in a distorted perspective when evaluating the spending and comparing across states and time.
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Furthermore, plenty of data show that healthcare utilization in the US is very similar, if not lower, than in other OECD countries on average—especially doctor visits (https://www.commonwealthfund.org/publications/issue-briefs/2023/jan/us-health-care-global-perspective-2022).
I agree that indiscriminately cutting costs will cause more harm than good. Our utilization is geared towards high-cost procedures, drugs, and devices, some of which have questionable benefits. This points more towards regulatory capture by AMA, pharmaceutical, and medical device bodies that create the incentive structure to perform high RVU services (e.g., why do we approve a high-cost biologic drug based on surrogate criteria showing minimal benefit).
The current value-based care model puts the onus of cost control on ACOs/PCPs, which has led to consolidation in healthcare and large systems using PCPs as an entry point for these high RVU services along with a whole new class of administrators.
I wrote about this phenomenon in my article "Value-Based Care and Illusion of Shared Savings" (https://www.pcplens.com/p/value-based-care-the-illusion-of-improvement).
While it may be an open question <<exactly>> how much is overutilization, it’s not a stretch to say there’s a lot of it. Yes, the JAMA paper took pains to point out that Utah and florida are at the extremes in terms of population age. But even if you only look at Medicare data, where everybody is over 65, you still see tremendous variation in utilization.
ACOs were a dumb idea. Let’s face it. They haven’t worked because we haven’t changed the fundamentally fragmented structure of the system.
I agree there is over-utilization but there are also pricing problems, and they are linked. The challenge is to identify and correct for both. For e.g., we have drugs/devices that are approved which cost tens/hundreds of thousands of dollars that have minimal benefit and then add them to clinical guidelines — creating an environment (forcefully) guiding doctors hand.
Over-utilization is more complex than FFS incentives:
- an anxious patient (or doctor) will lead to over-use of resources
- malpractice leads to defensive medicine (e.g. we are still ordering PSAs for prostate cancer screening and breast ultrsounds for dense breasts in breast cancer screening without any data because of lawsuits - these lead to high downstream costs)
- large for profit systems will create incentive structure to promote procedures that make the most money
- what is over-utilization is generally determined in retrospect (and may have been appropriate “in the moment”)
- we create quality metrics that have high false positives and force downstream treatment (see my latest article on depression screening https://www.pcplens.com/p/the-depressing-reality-of-depression-screening)
People are not as litigious in other countries as us. Most other countries also have a “no fault” system in case of bad outcome. Our biggest issue is, we want a scapegoat. In today’s climate, the scapegoat are doctors in fee for service ordering unnecessary tests.
Let’s take an alternate world — where we require all-cause mortality benefit or QALY (or other similar measure) outcome before approval of any expensive drug/device/procedure that costs over a certain dollar amount. A lot of expensive over-utilization would disappear, but we would have people (backed by large corporate interests) in pitchforks and knives asking that government agencies be dismantled (this is a true story—AHRQ abandoned Comparative Effectiveness Research under lobbying pressure and patient interest groups, AFAIK).
And yes, creating ACOs was a dumb idea. It has just to consolidation and dissappearance of small practices.
I know the AHRQ story very well. My old pal Jack Wennberg was part of it at the time. Back surgeons were right in there screaming about taking away their pedicle screws, along with the manufacturers and the patient groups that were underwritten by the manufacturers. And we all know PCORI hasn't done the job either. The only things we have are ECRI (does it even exist any more?) and ICER. Which have no power except good data.
I once created a list of all the factors that incentivize overtreatment. It was a very long list and yes, FFS was just one item, but so was malpractice worries. Doctors think malpractice worries is the most important factor in overtreatment. It isn't.
And you're so right, patients would come with their pitchforks if big bad government were to try to take away their god given right to get unnecessary MRIs and back surgeries. But that's partly because these groups are awash in pharma and device industry cash and highly conflicted. Just look at the Alzheimer's Association's recent support for the new drugs, all of which are harmful and worse, ineffective. (Shameless self promotion: https://jacobin.com/2025/02/alzheimers-drugs-approval-regulations-death)
Depression screening metrics are also heavily influenced by pharma as are many of the practice guidelines created by the specialty societies. (Thanks for the link to your article.)
But I think there's one aspect of overtreatment that's often overlooked and that's the fact that if an intervention is useless or unlikely to help you, the patient, it can still cause harm. Patients and doctors forget this simple fact. The risk of harm exists even when there is little chance of benefit. Overtreatment has been talked about incessantly as a cost problem, but it's also a harm problem. Here's our paper estimating severe harms due to inappropriate colonoscopy https://pubmed.ncbi.nlm.nih.gov/39698330/
RE ACOs, I'm a member of Kaiser (Medicare Advantage) and as a patient who is alert to stuff I don't need or don't want, I'm impressed at how little junk they want to throw at me. Yes, I get nagged about doing a DEXA scan, but my PCP (I actually have one! She's great!) instantly agrees when I say I don't want one because I'm already doing everything I need to do to keep my bones as strong as possible and what's the point of a screening tool that can only worry us. And my cardiologist actually knows the literature extremely well and doesn't want to overdrug me or overtest me.
If there were a way to organize the rest of medicine into multispecialty group practices that actually pay attention to science, a lot of overtreatment would go away, along with the disorganization and lack of attention to the whole patient. But the Kaisers and Geisingers and Marshfield Clinics of the world have had a very difficult time expanding into areas where physician practices are entrenched and don't want the limitations that a group practice imposes. They don't know what they're missing. Every single person I talk to at Kaiser, from doctor to lab tech, is happy there and would not go back to the "outside" world of medicine.
I agree with all your points. However, malpractice, when combined with other factors, has a compounding effect on overtreatment. I can’t tell you how many times when I have talked to colleagues about scientific evidence on a particular medication/procedure, it eventually boils down to “you are playing with fire and will get sued.” Put that in the context of an anxious patient, and you have overutilization.
The other reason why I don’t think FFS is the big culprit here (and yes, there are some bad actors) is because doctors (at least in my generation) were trained to think that before we order a test, we need to know how it will change treatment (and this is what I try to teach all my medical students). The consolidation into large healthcare conglomerates (hospital systems and pharma) has captured academia, created “guidelines” and quality measures, and changed the profit incentive structure. ACOs just accelerated the consolidation by dumping TCOC and SDOH on us (which should be the government's responsibility). Doctors who want to practice nuanced medicine are not allowed to do so as it reduces profits for large companies, and all the good ones are burning out.
For DEXA, I tell all my patients the data, and they don’t need it, similar to what your doctor probably told you. However, just USPSTF published new guidelines that everyone needs DEXA over age 65 (https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/osteoporosis-screening). NCQA will make it a quality measure in the next couple of years. Given the new standard of care and heightened malpractice risk, the use of DEXA and treatment for osteoporosis will explode, leading to higher costs. That is not a FFS problem. This is systematic hacking of the healthcare system while shifting blame to front-line docs.
Also, you can remove the incentive for overtreatment in FFS by reducing the prices for high-cost treatment that has minimal benefit by modifying the RVU scale, which, for some reason, no one wants to touch.
I 100% agree that everyone forgets that over-treatment can cause harm—everyone is an optimist including doctors. There is fascinating data from behavioral science on how everyone systematically overestimates benefits. However, once you put doctors in a system without enough time and malpractice risk, it does not matter which payment model they are in — they will overtreat. The lawyer's tagline is, “You don’t get sued for doing more; you get sued for doing less.” It takes me 5-15 min to convince a patient that they don’t need antibiotics for viral upper respiratory infection and less than 1 min to prescribe antibiotics. The time required to convince someone they don’t need an MRI for back pain or other expensive treatment is much longer (and then people call after their office visit again and want to talk to the doctor, while we are busy with other patients).
We are all enamored by Kaiser, which, per my reading, does a fantastic job. However, trying to replicate Kaiser is trying to replicate Apple. Each company, when founded, develops its culture and grows by attracting and grooming people who fit that culture. It is very hard to transpose that culture into other existing large organizations. The VBC disaster occurred because the ACA tried to create a Kaiser culture for the country without understanding how cultures are formed. As the old saying goes, “culture eats strategy for lunch.”
I guess my biggest issue about framing this as a FFS problem is that the message is simplified to “doctors are the bad actors becuase they make more money, so we need to pay them differently.” As long as we push that rhetoric, doctors will keep burning out, exiting healthcare or consolidating. This will not solve the healthcare problem but make it worse.
A request for clarification in case I'm not understanding something: My thinking is that "fee-for-service" applies to and motivates HOSPITALS to drive providers to do more. The providers themselves could even be on salary or other system. Don't hospitals bill Medicare and insurance companies on the bases of the CPT/RBRVS? So isn't that FFS? If so, then global budgeting + salaries would work hand in hand. Right?
Peter, you are correct in that FFS applies to both hospitals and doctors, and doctors may be salaried. However, global budgeting and salaries will partially work when the entity controlling the budget can also make policies (aka government) to ensure people have the tools to remain healthy.
The current rhetoric of FFS lumps both large hospital systems and doctors in the same boat, which is not correct. Furthermore, the way the system is structured to “do more” is much more complicated than can be explained by FFS.
- large conglomerates (academia, pharma etc) influence disease definitions and guidelines to do more
- approval of expensive therapies with minimal benefit
- medical malpractice (both direct and indirect costs) leading to defensive medicine
- patient expectations that doctors/hospitals “need to do everything”
- advertising increasing patient demand (couple that with malpractice risk!)
Even with all this, if you compare healthcare utilization in US vs other OECD countries, it is about the same - but is skewed much more towards specialty visits and procedures - which is a function of RVU system (and yes that is related to FFS). We can achieve cost reduction by modifying RVU system, without creating another layer of administration which will just create more financial shell games to hide profits.
I would encourage you to read (or watch the videos) of my 5 part deep dive series on PCP Lens on how value based care has been distorted into a shell game https://www.pcplens.com/t/value-based-care
Given the need for a lengthy analysis, your headline (“stupid”) seems overheated. Clickbait issue? Attempted humor? The topic is too serious for either, IMHO.