How to Pay Doctors? A Lawyer Chimes In – Pacific Research Institute

How to Pay Doctors? A Lawyer Chimes In

I have (gratefully) never had to engage a trial lawyer, but I know that many clients are very frustrated by the common practice of charging by billable hours. Writing in Forbes, Mr. Evan R. Chesler of Cravath, Swaine, & Moore, LLP, says that his colleagues should “kill the billable hour”. Instead, Mr. Chesler argues, lawyers should charge like “Joe the Contractor”. If you engage Joe to re-do your kitchen, for example, he gives you an estimate of time and charges. If he finishes ahead of time, you might pay him more. If something unforeseen pops up, both time and charges might increase, but this is not usual.

Mr. Chesler dismisses the notion that legal services are too complex for this kind of treatment. (In fact, not all legal services are charged by billable hour. My U.S. immigration lawyer charged a case-fee.)

Physicians do not charge by billable hour, but they do charge by “piece”. Physicians’ offices have staff who check boxes on forms that refer to billing codes, which they send to 3rd-party payers, who scrutinize them for variance from the norm, and then pay according to a contract that is opaque even to physicians.

This is not the case for medical services for which patients pay directly, such as laser-eye surgery or cosmetic surgery. Also, these procedures have experienced much less price inflation than medical care paid by 3rd parties.

There is a lot of talk these days about how to pay physicians. For example, a number of credible interested parties emphasize the “medical home”, which proposes to pay primary-care physicians a fee to create such a home, as a way to better co-ordinate care. (Skeptics might think it’s another way of re-introducing capitation by another name, and add yet another billing code to increase physicians’ income!)

But there is no perfect way to pay any professional who executes complex tasks. The real lesson of “Joe the Contractor” is not that he has figured out a more efficient way to get paid for work of good quality than physicians can. The lesson is that the homeowner pays Joe directly, and that’s what works best for the homeowner.

Once U.S. lawmakers give health-care dollars back to patients and allow them to decide how to pay doctors, the payment system will change. And not before.

Happy New Year!

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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