The nation's doctors, despite their popular image as wise, paternalistic healers of the sick, may be responsible for some of the skyrocketing cost of health care. This is the tentative conclusion of Federal Trade Commission investigators, who are quietly probing the medical profession for possible violations of antitrust laws.
Some doctors, in the opinion of the federal investigators, have been engaging in illegal practices aimed at reducing the number of their competitors and ensuring high prices for their services. They have also taken control of many large insurance firms that obligingly foot the bills.
The basic problem, one top FTC official explained, is that "the more services doctors provide, the more money they make." In some diagnostic situations, therefore, it is in the doctors' financial interest to recommend more tests or a costly hospital stay. The patient, meanwhile, has little incentive to shop around for cheaper care if his health insurance is picking up the tab.
Yet the doctors have virtually guaranteed that Blue Shield, which serves 40 per cent of the medical insurance market, will pay their bills with few questions asked. "Most Blue Shield plans are significantly controlled by doctors or medical societies, "a top FTC official told our associate Howie Kurtz. "They can't be expected to crack down on costs." One Blue Shield group in Ohio, in fact, is actually owned by the Ohio Medical Society.
At Blue Shield headquarters, a spokesman conceded that doctors make up 59 per cent of its local boards, but said that public representation has been growing in recent years. He insisted that Blue Shield has held its cost increases below the national average.
The FTC, however, is skeptical of these claims. The commission is taking a closer look at various ways in which doctors have limited competition. Investigators have already discovered for instance, that the medical establishment is putting intense pressure on alternative insurance plans called health maintenance organizations (HMOs). These are group that pay doctors a flat salary to care for HMO-insured patients, whether they say healthy or become ill.
Explained one federal authority: "The traditional doctor makes more money if people get sick. Doctors at HMO's make more money if their patients stay healthy." The HMOs stress preventative medicine and efficient care and tend to lower health-insurance costs in their localities.
Many medical organizations are trying to drive the HMOs out of business, sources say. Doctors who serve HMOs have been threatened by their colleagues or local medical socities. They are frequently told they will be black-listed.
Doctors who ignore these warnings quickly discover that other doctors no longer refer patients to them. This can destroy the careers of specialists who must rely on referrals. These intimidation tactics often force young doctors to quit working for HMOs, which in turn, have trouble finding replacements.
One of the worst offenders has been the prestigous American Medical Association which the FTC is now suing for alleged anticompetitive practices. The AMA as long as three decades ago, the AMA was convicted health plan in Washington, D.C. And last year, Blue Shield officials in Spokane, Wash., agreed in court to stop boycotting doctors who deals with HMOs. But investigators believe such illegal practices are still widespread. Perhaps the worst culprits are hospitals that bar HMOs doctors from using their facilities.
Federal investigators also believe that some medical societies have made it nearly impossible for HMOs to obtain malpractice insurance. In addition, these medical organizations have restricted advertising by doctors and dentists, thus keeping the public in the dark about prices and services.
The commission also suspects the AMA may have too much influence over admissions to medical schools. Half the members of the committee that accredits medical schools are from the AMA. Thus the doctors have the power to dictate the future supply of physicians. "It shouldn't be handled by people whose own interest may be to limit their competitors," an FTC lawyer complained.
Meanwhile, some doctors have been colluding over the prices they charge. Many of them use a "relative value scale." This is a list of medical procedures that are numerically rated according to difficulty. If the numbers are multiplied by a agreed-upon dollar figure, however, it becomes a price list. "It's pretty blatant price-fixing," a government investigator told us.
Other methods are more subtle. Simple procedures that could be performed by nurses or aides often require a doctor's presence, thus driving up the cost. Expensive specialists may be called in for relatively simple operations. While an individual's health insurance may initially absorb these costs, he winds up paying higher premiums and medical fees.
The Carter administration, meanwhile, is desperately trying to hold down the rising cost of health care. White House officials believe that Medicare and Medicaid have sent health costs through the roof because medical practitioners know the government will pay the bills. They are trying to develop a national health-insurance plan that will prevent Americans from being bankrupted by serious illness without inflating the cost of health care even further.