About Healthcare Costs and Providers

Read virtually any healthcare publication and you read about shortages. These mean providers of all types—doctors, clinics, midwives, pharmacists charge whatever they can get away with.  If you’re a health professional in America you live well. But you can’t afford to get sick. And because prices are out of control, people are seriously talking about price controls and robotic doctors.

These are draconian steps to a law-made problem.  Instead of giving people a pay cut and having robots do their work why not change the laws? For example, according to federal law most medical services have to be performed “under the direction of” a physician or a nurse.  Hospitals and clinics have to be certified by private entities named in law.  These private certification entities mandate that health organizations employ a certain number of licensed health professionals.

This leads to shortages and high salaries.  A physician assistant makes (on average) $101,480 per year, a doctor makes (on average) $208,000 per year, a registered nurse makes (on average) $68,450 per year, a nurse specialist makes (on average) about $107,460 per year.  It also means that health organizations can charge whatever they want because their costs are so high.  In 2014, the average cost of one day in the hospital was about $2,000. I have every confidence that price has gone up.  Part of the reason for these ridiculous prices is that hospitals have to pay expensive staff.  And they never have enough of them. Some of the reasons for that are: how people get licensed, what we allow different clinics and hospital to do and when, and how people get paid.

There is surprisingly little literature that systematically deals with licensure.  However, what literature exists suggests that requirements students must meet to get licensed often result in fewer licensed professionals.  For example, by 2008, of the Californians who earned qualifying degrees between 2002 and 2004, only 17% were licensed as social workers and only 31% were licensed as a Marriage and Family Therapists.

Part of the problem is that few licensed professionals are willing to supervise.  In order to get licensed, people have to work a certain number of hours under supervision to make sure they learn their trade.  However, licensed professionals are paid, in part, based on their productivity standards.  These are  based in part on whether the patient is served by a provider with a specific license. If a licensed provider oversees but does not directly provide the service, they get paid at the pre-licensed rate. So licensed professionals can lose money supervising.

There is no magic solution.  But there are some common-sense steps we can take.  We can ask whether folks need quite so many supervised hours before they can be licensed.  Also, can some of those hours be supervised remotely? I should note that some states have already begun to do this.

We should also consider allowing people to work their hours in more settings.  It’s not the setting that counts; it’s what people are doing there.  And we need to make it more attractive for people to supervise.  That may mean changing productivity standards.

Those small changes may increase the number of licensed professionals and that alone may help stabilize the price of healthcare.  But we should also consider the whether licensed professionals have to do or oversee pretty much everything.

Take intake.  Patient intake means filling out a form about your allergies and exercise, getting on a scale, and having your blood pressure checked.  There are companies that put forms online for patients to fill out before their appointments.  Yet, by law, patient intake has to be performed under the direction of a nurse or social worker. Or take labs.  Lab technicians run the tests and make the diagnoses but a nurse has to provide the results to the doctor and patient.  Or drugs. If a patient needs medicine, a nurse can furnish it, a doctor can prescribe it, and a Physician Assistant can order it.  But all a patient wants is a piece of paper that allows them to get their drugs; they don’t care if the drugs were prescribed, ordered or furnished.  However, since a doctor can charge twice as much for prescribing a drug, these terms matter to their bottom line.  We saw this when, in 2012, the Food and Drug Administration proposed letting pharmacists prescribe medications without a doctor’s oversight.  The American Medical Association killed that idea. Very quickly.

I am not saying that we don’t need licensed healthcare professionals and nor am I saying that we need to change the way people experience healthcare.  I am suggesting that we codify the expanded responsibility nurses and physician assistants have already taken on, especially in general practitioner settings. This is not a new suggestion.  The recent Budget deal, for example, allows Physician Assistants to take the place of doctors in hospices in rural areas.  This makes sense.  We have a large and growing shortage of physician services.  We are not, however, short of Physician Assistants because millennials are overwhelmingly choosing to become P.A.s rather than doctors.  And Physician Assistants and nurses have been taking the place of physicians in general practitioner settings for a long time so the Budget deal simply recognizes the reality on the ground.  At least in rural areas.  Shouldn’t we do that everywhere?

And if we change the law to recognize what healthcare professionals are already doing, we may also be able to change healthcare organizations’ staffing requirements.  This may make it cheaper to open and operate a hospital or clinic and would control costs.  And that will, in turn, make it a little more difficult for providers to charge whatever they want.

It’s worth a try.  And if that doesn’t work, we can control costs and see robots.



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