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The Business of Medicine

September 4, 2008

Dr. Rob has an excellent post regarding the economics of his practice’s after-hours clinic.

Understanding the economics of practicing medicine is an important part of a physician’s life.  Obviously, medical practices must be at least marginally profitable to continue providing services to their patients.  If a doctor can’t pay their electicity bill, then they can’t turn on the lights to see patients.  Additionally, the general public understands that doctors have families they must provide for and student loans to repay.

However, people are prone to financial incentives.  Does my doctor order the blood test because she really thinks I may have a particular disease or because she knows I am a well-insured patient and she can bill at a higher rate because she did a blood test?  Does my doctor refer me to the newly constructed surgical center across the street because he thinks those are the best doctors over there or because he has a financial stake in the surgical center and will receive a payment for his referral?  Did my doctor prescribe me this drug for my hypertension (and restricted it to the branded version only) because it is the best drug for me and my particular condition or because they just received a free lunch while listening to a drug rep pitch that drug?

These questions have become commonplace when discussing physician’s ties to pharmaceutical companies.  Research results are regularly questioned when it is disclosed that the investigator was a paid consultant to a pharmaceutical company which stood to benefit from the study results.  Several academic medical centers have banned (or tightly restricted) gifts from pharmaceutical companies.  These actions are the result of a growing realization of the effect of economic incentives.

It is time to take this discussion beyond the impact of pharmaceutical companies’ influence on prescribing practices to generally questioning the impact of our “fee-for-service” system on medical decisions.

For private physicians, opening an evening clinic is an excellent way to provide a much needed service for their patients and generate extra revenue for their practice.  Being aware of this potential revenue stream is vital for keeping practices profitable.  But how cognizant should physicians be of how their medical decisions impact the economic life of their practice?

Here is Kevin, MD’s brief take on the issue.

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