To avoid conflicts of interest, pay doctors a salary

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A new study outlines the problems associated with the fee-for-service arrangements under which most doctors currently operate. These compensation schemes, argue researchers, often create incentives for physicians to order more, and different, services than are best for patients.

“Fee-for-service payments have adverse consequences that dwarf those of the payments from pharmaceutical companies and device manufacturers that have received the lion’s share of attention in the conflict of interest literature,” says George Loewenstein, professor of economics and psychology at Carnegie Mellon University.

“Paying doctors to do more leads to over-provision of tests and procedures, which cause harms that go beyond the monetary and time costs of getting them. Many if not most tests and procedures cause pain and discomfort, especially when they go wrong.”

One commonly proposed solution to the problem involves requiring physicians to disclose their financial interest for a given procedure. However, disclosure of conflicts has been found to have limited, or even negative, effects on patients.

In a Viewpoint article in the Journal of the American Medical Association, researchers argue that the simplest and most effective way to deal with conflicts caused by fee-for-service arrangements is to pay physicians on a straight salary basis.

Several health systems, such as the Mayo Clinic, the Cleveland Clinic, and the Kaiser group in California pay physicians salaries without incentives for volume of services performed.

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Moving more physicians to straight salary-based compensation might have benefits not only for patients, but also for physicians themselves.

“The high levels of job dissatisfaction reported by many physicians may result, in part, from the need to navigate the complexities of the fee-for-service arrangements,” says coauthor Ian Larkin, assistant professor of strategy at the University of California, Los Angeles Anderson School of Management.

“Instead of focusing on providing patients with the best possible medical care, physicians are forced to consider the ramifications of their decisions for their own paychecks.”

Source: Carnegie Mellon University