mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
The Secret Health Care Cabal Bankrupting America


An American Medical Association committee you’ve probably never heard of is enriching doctors at your expense. According to a new investigation by the Washington Post, the AMA designates one committee to determine how much doctors are paid for a given procedure or operation. This committee—at least somewhat unintentionally, it seems—regularly misreports the amount of time procedures take, allowing doctors to make much more per procedure than they should. WaPo has more:

The AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals. […]

In justifying the value it assigns to a colonoscopy, the AMA estimates that the basic procedure takes 75 minutes of a physician’s time, including work performed before, during and after the scoping.

But in reality, the total time the physician spends with each patient is about half the AMA’s estimate—roughly 30 minutes, according to medical journals, interviews and doctors’ records.

The WaPo story does a good job explaining some of the structural features that have lead to these wildly inaccurate time estimates. For example, the AMA uses doctor surveys to figure out how long a procedure takes. The surveys that are sent to the doctors explicitly note that the results will be used to determine pay. It doesn’t take a genius to see that this kind of data collection might, just might, invite abuse. Read the whole thing to get a sense of how deeply flawed the fundamental structural features of our health care system are.

This story is just the latest in a long line of recent investigative journalism pieces that have uncovered serious but hidden health care cost-drivers. Together these pieces suggest that changes that diminish the dominant role doctors play are among the most important ways we could start shaving costs off the system in short order. (These would include ideas like giving nurse practitioners more treatment authority and raising the profile of Big Box clinics.)

This is where a lot of the real action in health care reform is happening. The debate over Obamacare, sadly, seems largely irrelevant to many of these reforms.

[Glove image courtesy of Shutterstock]

Features Icon
show comments
  • Andrew Allison

    One could interpret the widespread fraud within the medical care industry as a perfectly rational response to the fact that neither Medicare, Medicaid nor the private insurance companies are paying what the care costs, thereby requiring institutionalized bill-padding on a vast scale. The problem (surprise!) is the perverse effects of insurance, government or private.

  • wigwag

    This post gets it exactly right. One problem is that specialists, who bill by procedure performed, make too much money while those who purvey primary care often make too little. But its even worse than that.

    The American medical establishment colludes to raise prices in a highly unethical way. Medical schools admit less than half of qualified applicants so the pool of physicians is always lower than the demand for physician services. If the supply of doctors went up, the prices doctors charge would inevitably go down.

    Secondly, medical schools are grossly inefficient; they should be able to educate twice the number of physicians that they do at half the cost that they charge. The only reason they don’t is because the medical establishment is focused on providing a protection racket for physicians compensation. The problem gets even worse when it comes to the secondary training programs provided through hospital residency programs which are paid for almost entirely by Medicare.

    Finally, the medical establishment does everything possible to keep out highly qualified physicians, both American born and foreign born, who trained in medical schools outside of the United States. Often these physicians are as competent or even more competent than physicians who attended American medical schools. These foreign physicians are forced to take a battery of examinations that few if any American physicians would pass if they were required to take them for licensure.

    Why keep out the foreign physicians? The medical establishment is motivated by the same thing that motivates any cartel. The goal is to eliminate competition.

    These problems could be fixed if someone had the guts to take on the medical cartel. Unfortunately the GOP won’t; physicians are by in large Republican voters and the AMA has long had a cozy relationship with the Republican Party. Democrats won’t either. Anything the Deans of medical schools or university presidents want from the Democrats, they get; no questions asked.

    • Anthony

      WigWag, there was a piece in the July/August Washington Monthly that echoed your sentiments.

      • wigwag

        Thanks, Anthony. I will look for it. I am interested in the subject and appreciate the lead.

    • Nick Bidler

      Idiom police, HO!

      It’s “by and large” not “by in large.”

      • wigwag

        Thank you Nick; I’ve fixed it. The idiom police are my favorite constables on patrol.

  • Corlyss

    “the AMA designates one committee to determine how much doctors are paid for a given procedure or operation.”
    Can you say, “Anti-Trust violation,” boys and girls?

  • Bart Hall

    First of all, the AMA represents less than one-fifth of American doctors. Influential, but they haven’t been able to stop surgery centers from following the Oklahoma model of posting all-inclusive sticker prices on the internet.

    Secondly, insurance companies are powerful negotiators. We have $10K-deductible, yet a recent ER visit originally billed at $9,500 came out to just over $1,000 after Blue Cross was finished with them. We still have to pay the final amount, but the original price was meaningless.

    Finally, having “book” for assorted procedures is common in the auto repair business. Those numbers are sort of an educated average of what it takes to replace a completely disgronified deflammulator on any given model. Our garage guy’s policy is that he bills actual labor *up to* “book”, and if it takes longer, he bills “book”.

    This AMA thing is not as important as they might wish to believe it is.

    • cheato321

      “First of all, the AMA represents less than one-fifth of American doctors.”

      A cartel is a group of people that control a market. This control is usually gained by having a majority of the producers colluding together, but in the case of the AMA the government enforces the AMA’s control. This means that the AMA doesn’t require a majority of producers to be a cartel.

      • bpuharic

        Kind of like the fact the richest 0.01% of Americans contributed 28% of all campaign spending…and the right is fine with that?

        • Bart Hall

          And most of *that* went to Democrats. We’re fine with it anyway. That’s what a free country is all about.

          • bpuharic

            Actually it didn’t. Wall Street gave more to Romney in 2012 than it did to Obama.

          • Bart Hall

            The entire west coast leftie-elite (Google, Apple, Mircosoft, Hollywood, their wannabees and so on are *not* “Wall Street”, but they are definitely Dems.And they write big checks.And that’s before we get to Immelt and his nice little GE bank, which “earned” $72 Billion in profits, without paying a cent in taxes. Yet Immelt is an advisor to the President. Hmmm.

            Wall Street did not have to donate so much to Obama, because his Treasury Department are full of them, in positions of power, which is their primary interest.

          • bpuharic

            Apple and Microsoft make stuff. Wall Street doesn’t. As a recent study showed, when financial sector profits hit about 40% of corporate profits, the economy starts to decline as the financial sector starts siphoning off talent from other industries

            Percentage of profits in the financial sector in 2007?


            And the right has a policy of 1 dollar, 1 vote, so it’s no wonder Obama is working under financial constraints

            You people wrote them.

      • Bart Hall

        My in-laws are both doctors with decades of experience. The AMA’s gig is to play the politicians and the academics, but they are *not* a cartel, and they do *not* represent the vast majority of doctors, who get on with their lives and their businesses nevertheless.

        • cheato321

          You have to admit that a lot of the actions that they take are anti-competitive, like the ones described in the article. Industries rarely self-regulate fairly and this one is no exception.

  • TheRadicalModerate

    Any story with the word “committee” and the phrase “how much doctors are paid” isn’t going to end well.

  • MontyBurnz

    Doctors need to make money. Seeing a doctor who has trained on average 7 years after college is not the same as seeing a nurse practioner who has a 2-3 year education and barely understands enough medicine not to kill you. Non doctors have no idea how difficult, time consuming and expensive it is to become a doctor. We sacrifice our young adult life to this profession in order to help people with our expertise and people have the gall to accuse the AMA of being a cabal, incredible!

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service