Kenneth Arrow, a Nobel Laureate in Economics, commented in 1963, “The marketplace for medicine is characterized by uncertainty, and its functioning essentially represents exchanges of information.” Where professional skills are complex, and only attained after many years of intensive study, the relationship between that professional and their client is unbalanced. In other words, the client cannot hope to have the depth and extent of specialized knowledge that the expert will have. It follows therefore, that the client must trust the professional to give appropriate and honest advice, which is in the best interests of that client. This imbalance is “information asymmetry”. In respect of the relationships between physicians and patients, the vast majority of patients have little alternative other than to trust that his or her physician’s advice is solely motivated by the physical and mental well-being of the patient and tailored to the needs of the individual. This paper will look at the influences and pressures placed upon physicians in the United States, and will show that patients have strong reasons to be gravely concerned about the motives and rationale behind much of the medical treatment (or lack thereof) from the medical profession.
It would be idle, and very wrong, to say that all treatment decisions offered by all physicians are based on a desire to increase their own income or some other self-interested motive. Having said that, it would be equally irresponsible to maintain that all physicians always resist temptation to acquire additional revenue from easily performed (but maybe unnecessary) procedures and treatments, or that additional financial, or other, incentives from pharmaceutical companies never have an influence on prescriptions written.
If taking a section of tissue during a colonoscopy is but the work of a few more seconds, and means another $100.00 for the physician’s bank account, will the physician weigh the costs and benefits in his or the patients favor? What will the decision be when, prescribing a drug for high blood pressure, the physician chooses between a tried and trusted generic product and a new more expensive treatment that will earn a little financial or other incentive? Further, how many physicians subconsciously carry out unnecessary procedures or treatments with an institutionally ingrained pocket-lining motive, when a more conservative program could be equally efficacious and more cost-effective for the patient? Conversely, where there is a motive to limit or downgrade available and necessary treatments, how many practitioners withhold treatment for financial gain? Many physicians employed by health maintenance organizations have a financial incentive to limit and reduce treatment. Put another way, they make more money if they do not treat their patients, than if they do.
There is a natural tendency to take a cynical stance in looking at the consequences of information asymmetry. Many would contend that human nature is such, that any opportunity to get additional payment for services with a little “bending of the truth” or some judicial “withholding of information” is perfectly acceptable. It is after all the “American Way” - caveat emptor represents almost the whole gamut of consumer protection available in the United States. An exaggeration of course, but with malpractice lawsuits against physicians severely curtailed in some states, not entirely without justification.
Many professional people, including those involved in health care, do their jobs in an entirely honest and appropriate manner. They can show sensitivity to the means and situations of their clients or patients and will make sensible and balanced judgments out of respect for those parameters. However, there will always be those that cynically pillage their clients without mercy and without conscience. Almost certainly, there will be a statistical distribution; sadly, it is probably not going to be a “normal”, bell-curve distribution.
The Journal of the Royal Society of Medicine, a United Kingdom publication, looked at the subject of information asymmetry in 2003. The UK does not a have an open market-place system of health care, but some of these issues are still very pertinent.
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When there is uncertainty, information or knowledge becomes a commodity. Like other commodities, it has a cost of production and a cost of transmission, and so it is naturally not spread out over the entire population but concentrated among those who can profit most from it...”[1]Succinctly and eloquently put! From the same article and more directly about health care,
“The market for healthcare is characterized by uncertainty and exchange of information… Sources of uncertainty include the classification of the patient in terms of disease condition or initial health status, the effects of treatment for a given condition and the preferences of patients.” The article emphasizes that in an ideal doctor-patient relationship, the physician should be the perfect agent. In other words, the physician would have no objective other than ensuring the physical and mental well-being of the patient. The article then goes on to explain what can and does go wrong in this relationship, “Doctors have interests of their own—income, leisure, professional satisfaction, which are partially congruent and partly in conflict with that of the patient…consultations between doctor and patient often do not follow the classic agency pattern.” That is, the doctor makes most of, if not all, the decisions and patient, almost invariably, just goes along with it based on trust.
As an example, group practices or local physicians will occasionally pool resources to buy an item of specialized medical equipment and the capital expenditure necessary for such items can be high. Therefore, it will be necessary for the utilization of such equipment to be sufficient to allow the physicians to pay for the equipment over the period decided to amortize the value. Put another way, the doctors will have to use the machine on enough patients to generate enough income to make the payments. The temptations are obvious and the potential earnings, once the machine is paid for, can be enormous.
David Blumenthal M.D., MPP, is the Director of the Institute for Health Policy and a Physician at the Massachusetts General Hospital. He also lectures at Harvard Medical School. In a 2002 article in the Milbank Quarterly
[2], Blumenthal describes information asymmetry as “an asymmetric competence between doctor and patient.” Blumenthal and others in the profession are concerned at the amount of information that is becoming available on the internet and how that might affect their “ownership” of specialized knowledge.
Blumenthal emphasizes that physicians have two main areas of responsibility. Citing another work
[3], he includes these observations in the article,
“In the case of physicians, these skills enable them to diagnose, treat, comfort, and (on occasion) cure. The second attribute is moral. Professionals commit themselves to using their cognitive abilities for the benefit of those they serve. In the case of physicians, this means putting the interests of their patients ahead of their own. The moral basis of professionalism creates trust in the profession, which is crucial to the physicians' status in society and to the success.”
All very high-minded, but Blumenthal goes on to identify a third area of responsibility, which is collegial,
“A collective commitment to ensure the competence of the profession's members by means of self-monitoring and self-discipline…The collegial element of professionalism is essential because laypersons lack the competence to judge professionals' performance. In medicine, this attribute takes the form of peer review, which is recognized in statutes excluding from torts the proceedings of peer review from discovery.”
In effect, Blumenthal first acknowledges the professional obligations of physicians, but then endorses self-regulation, which among other things, ensures that any documented, self-regulation information cannot be made available for attorney discovery in lawsuits.
Repeatedly, in such industries as banking, air transportation and energy, “self-regulation” develops into “no regulation”, In other words professional entities are extremely unlikely to stop themselves doing things they like doing or that improve their overall income. There is no reason to suppose that the medical profession is any different in this respect. Almost all of the professions, including legal, the judiciary, financial, educators and medical have a tendency to believe themselves to be “above accountability” and this is understandable to a degree. However, all these professions protest vehemently at the very idea of their practices being open to outside appraisal or evaluation. They all, without exception, claim that outside agencies or lay people could not possibly understand the intricacies of their work and are therefore incompetent to make sound judgments about their profession. The suspicious unanimity of their protests, suggests that there is very good reason to open these occupations to the public gaze by both lay and peer-review. Cartels invariably act against the interests of the consumer – that is, after all, the intended consequence of a cartel.
Many commentators are critical of what they see as a commercially incestuous relationship between the main players of the medical industry – physicians, insurers and pharmaceutical companies. Physicians and insurers openly indulge in price fixing -seemingly immune to anti-trust legislation. Physicians routinely over-estimate the cost of procedures to compensate for the fact that medical insurance companies will expect a significant discount on these costs. Naturally, these costs are charged in full to uninsured patients who have no power to negotiate the fees (other than by declaring bankruptcy). Clearly, there is a need for a governing body to represent the interests of patients and physicians.
The American Medical Association (AMA) claims as its mission: “To promote the arts and science of medicine and the betterment of public health”. Unfortunately, the AMA represents only the interest of physicians in general. The AMA has stood, foursquare, in the way of any initiative that had the slightest possibility of reducing physician income. The AMA has systematically fought against the establishment of any form of national healthcare, early insurance schemes and Medicare. The AMA has used lobbyists and political donation to kill legislation with which it disagreed. The AMA has surcharged its members for a war chest against national health insurance and the AMA has threatened to expel members who do not follow their directives. This organization, although purporting to represent doctors and patients, has consistently favored physician income over the establishment of better health care for all. In effect, the AMA is a cartel of medical professionals. Perhaps the AMA would do better to look at the, sometimes murky, involvement of physicians in drug promotion.
In a refreshingly, honestly titled article, “Dr Drug Rep”, Dr. Daniel Carlat speaks frankly about his retention by Wyeth Pharmaceuticals as a promoter of the antidepressant drug “Effexor XR”. Dr. Carlat is an assistant clinical professor of psychiatry at Tufts University School of Medicine and the publisher of The Carlat Psychiatry Report. His article shows quite candidly, what can happen to a physician’s ethics when he or she is flattered and well compensated.
[4]Dr Carlat and his wife were entertained at a luxury, New York hotel by Wyeth Pharmaceuticals who also provided meals, lavish receptions, a Broadway show and a cash payment of $750. During the stay, Dr Carlat attended presentations by recognized experts in the field of psychiatry and psychopharmacology where the qualities and attributes of Effexor were promoted. Following his recruitment by Wyeth, Carlat spent several years presenting the drug to medical practices within his designated area. Carlat freely acknowledges misgivings from the start. He eventually became very uncomfortable with what he saw as poorly conducted research. Carlat indentified selective conclusions that both exaggerated the benefits and understated the side effects of Effexor. Dr Carlat confesses thus,
“Was I swallowing the message whole? Certainly not. I knew that this was hardly impartial medical education, and that we were being fed a marketing line. But when you are treated like the anointed, wined and dined in Manhattan and placed among the leaders of the field, you inevitably put some of your critical faculties on hold. I was truly impressed with Effexor’s remission numbers, and like any physician, I was hopeful that something new and different had been introduced to my quiver of therapeutic options.”
Note the use of the word “remission” rather than “response”. In medical jargon, “remission” signifies a degree of “cure”, Medications of this nature are usually said to have a “response”.
Specifically, Carlat came to realize that the benefits reported by Wyeth were based on atypical research subjects and that the side effects of hypertension and the potentially dangerous withdrawal symptoms were statistically significant. When Carlat attempted to highlight these characteristics of the drug, as a caveat in his presentations, Wyeth Pharmaceuticals immediately dropped him as a presenter. It is worth noting here that Federal Drug Administration (FDA) places no requirement upon physicians to report adverse side effects of drugs they prescribe. The FDA considers such a requirement to be an unacceptable reporting burden upon doctors.
Carlat admits to earning around $30,000 a year from Wyeth and confesses that the additional income encouraged him to gloss over discrepancies, which he justified as “not being lies”. He also suggests that one in four physicians in the United States become involved in commercially promoting pharmaceutical products – naturally all primary care physicians are exposed to focused sales presentations from all major pharmaceutical companies. He also notes that these pharmaceutical companies are armed with comprehensive data that illustrates physicians’ prescribing habits. Carlat remarks, “Naïve as I was, I found myself astonished at the level of detail that drug companies were able to acquire about doctors’ prescribing habits…”
In case there is any doubt, in the New England Journal of Medicine of June 29, 2006, Robert Steinbrook M.D. wrote in an article headed, “For Sale: Physicians’ prescribing data”,
[5]“Pharmaceutical companies monitor the return on investment of detailing[6]—and all promotional efforts—by prescription tracking. Information distribution companies, also called health information organizations (including IMS Health, Dendrite, Verispan, and Wolters Kluwer), purchase prescription records from pharmacies. The majority of pharmacies sell these records; IMS Health, the largest information distribution company, procures records on about 70% of prescriptions filled in community pharmacies.”
Using this information, drug companies’ target, particularly high-prescribing, physicians for concerted efforts at persuasive presentations to try to ensure their company is getting its share of the spoils. Some of these companies (including Wyeth) grade doctors according to the number of prescriptions they write. Carlat also notes that, “The
American Medical Association is also a key player in prescription data-mining… The A.M.A. makes millions in information-leasing money.” These practices also make a good argument that the adverse effects of information asymmetry are present within the industry, between peers, as well as in the doctor-patient relationship.
In a May 2000 article entitled, “Is Academic Medicine for Sale?”
[7] Marcia Angell M.D. broadened the issue to medical research and encapsulated the problem thus,
“What is at issue is not whether researchers can be "bought," in the sense of a quid pro quo. It is that close and remunerative collaboration with a company naturally creates goodwill on the part of researchers and the hope that the largesse will continue. This attitude can subtly influence scientific judgment in ways that may be difficult to discern. Can we really believe that clinical researchers are more immune to self-interest than other people?”Decisions and opinions about the prevalence of unnecessary treatments or procedures or treatments withheld, are difficult to make and to quantify, if for no other reason than the people with definitive answers are those that may well stand accused. Reduced or induced treatments may be applied for reasons as diverse as uncertain diagnoses, group practice targets, a fear of litigation, the desire for a new car, paying kids’ college fees or simply professional avarice. In the areas where a degree of quantification is possible, all the evidence suggests that the medical profession is at least as likely to take advantage of information asymmetry as any other industry.
Patients have proven reasons to be suspicious of a health care system that perpetuates an environment where physicians are freely able to use their specialized knowledge to systematically modify their treatment programs for patients who place their trust them. Clearly, there is a price on the head of Hippocrates!
[1] Maynard, Alan DSc, Karen Bloor PhD. "Trust and performance in the medical marketplace." Journal of the Royal Society of medicine. November 2003.
[2] Blumenthal, David. "Milbank Memorial Fund." The Milbank Quarterly. Vol. 80, No. 3 (2002).
[3] Mechanic, D. 1996. Changing Medical Organization and the Erosion of Trust. Milbank Quarterly Vol. 74: 171-89.
[4] Carlat, Daniel. "Share and Discover the best of NYTimes.com." New York Times Magazine. November 29, 2007. http://www.nytimes.com/2007/11/25/magazine
[5] Steinbrook, Robert. "For Sale: Physician Prescribing Data." New England Journal of Medicine. June 29, 2006
[6] Detailing is the euphemistic name given to these training sessions at medical practices
[7] Angell, Marcia. "Is Academic Medicine for Sale." New England Journal of Medicine. May 18, 2000.
