Like other enthusiasts of health policy, I spent plenty of time reading and thinking about the Wall Street Journal’s recent reporting on the RUC — the panel that decides how Medicare pays for physicians’ services. The existence of this system was news to many of my classmates, one of whom zeroed in on the hourly wage figures. By MedPAC’s calculation, radiologists would make approximately $193/hr if all of their work was paid at Medicare rates, compared to $101 for primary care physicians and $161 for surgeons.
Why, asked my classmate, should radiologists be paid so much relative to surgeons, given that the training length for diagnostic radiology and surgery is similar, and radiologists arguably play a smaller role in the care of an individual patient, face less malpractice risk (I might quibble with this, but I let it stand), and are able to work “better” hours, doing work that’s less physically demanding?
Now, the WSJ article helps to explain exactly how this situation has come about. The “market” for physicians’ services is one in which nominal and relative prices are set from above. They’ve been set in such a way that the “ROAD to happiness” starts with Radiology. (The “ROAD,” for those unfamiliar with the term, consists of Radiology, Ophthalmology, Anesthesiology, and Dermatology)
This lends itself to an interesting thought experiment. Would diagnostic radiologists fare this well under a market system? I think they would, and here’s why: I think that radiologists are medicine’s superstars, at least in an economic sense.
The reason that major-league athletes and Hollywood A-list celebrities command such high pay is not strictly because we as a society think they are individually more important than, say, an individual teacher or firefighter (or physician). It’s because these athletes and actors are in an industry where the consumer will pay a premium for the “best” (as opposed to minor league teams, indie movies, etc.), and in which many, many consumers can be reached at low marginal cost (cf. television, the internet). The athlete/actor doesn’t have to add a lot of value to a given person, but instead is compensated handsomely because he is able to add some amount of value to a lot of people who are willing to pay for it. Average class size in a public school may be 30, but most sports stadiums can fit tens of thousands, to say nothing of TV and radio audiences.
This strikes me as at least superficially similar to some aspects of diagnostic radiology. The use of medical imaging has exploded in the past 20 years, but it would be bold to claim that none of that increase has to do with the value that it adds to clinical decision-making and patient care (at least when used appropriately). And we as a society have decided that we want the best: that is to say, we want our scans read by radiologists.
What’s more, it’s entirely plausible that a diagnostic radiologist can add her full armamentarium of value to more cases per day than a physician in many other specialties. That it may take less time to read a scan doesn’t lessen the value added by having the scan read. The worth of the information to the patient is independent of the time it takes to derive it (within limits).
So, would radiologists still be on the ROAD in a market-based system of payment? The case in favour looks pretty good. Of course, the challenge facing American radiologists in my lifetime may not be justifying their value in patient care so much as justifying their value over and above their American-boarded Indian-based counterparts. Communications technology has helped make superstars of American radiologists… will it make them overpriced and obsolete as well?
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The Notwithstanding Blog 
From plain film to 3D: radiologists as superstars?
Like other enthusiasts of health policy, I spent plenty of time reading and thinking about the Wall Street Journal’s recent reporting on the RUC — the panel that decides how Medicare pays for physicians’ services. The existence of this system was news to many of my classmates, one of whom zeroed in on the hourly wage figures. By MedPAC’s calculation, radiologists would make approximately $193/hr if all of their work was paid at Medicare rates, compared to $101 for primary care physicians and $161 for surgeons.
Why, asked my classmate, should radiologists be paid so much relative to surgeons, given that the training length for diagnostic radiology and surgery is similar, and radiologists arguably play a smaller role in the care of an individual patient, face less malpractice risk (I might quibble with this, but I let it stand), and are able to work “better” hours, doing work that’s less physically demanding?
Now, the WSJ article helps to explain exactly how this situation has come about. The “market” for physicians’ services is one in which nominal and relative prices are set from above. They’ve been set in such a way that the “ROAD to happiness” starts with Radiology. (The “ROAD,” for those unfamiliar with the term, consists of Radiology, Ophthalmology, Anesthesiology, and Dermatology)
This lends itself to an interesting thought experiment. Would diagnostic radiologists fare this well under a market system? I think they would, and here’s why: I think that radiologists are medicine’s superstars, at least in an economic sense.
The reason that major-league athletes and Hollywood A-list celebrities command such high pay is not strictly because we as a society think they are individually more important than, say, an individual teacher or firefighter (or physician). It’s because these athletes and actors are in an industry where the consumer will pay a premium for the “best” (as opposed to minor league teams, indie movies, etc.), and in which many, many consumers can be reached at low marginal cost (cf. television, the internet). The athlete/actor doesn’t have to add a lot of value to a given person, but instead is compensated handsomely because he is able to add some amount of value to a lot of people who are willing to pay for it. Average class size in a public school may be 30, but most sports stadiums can fit tens of thousands, to say nothing of TV and radio audiences.
This strikes me as at least superficially similar to some aspects of diagnostic radiology. The use of medical imaging has exploded in the past 20 years, but it would be bold to claim that none of that increase has to do with the value that it adds to clinical decision-making and patient care (at least when used appropriately). And we as a society have decided that we want the best: that is to say, we want our scans read by radiologists.
What’s more, it’s entirely plausible that a diagnostic radiologist can add her full armamentarium of value to more cases per day than a physician in many other specialties. That it may take less time to read a scan doesn’t lessen the value added by having the scan read. The worth of the information to the patient is independent of the time it takes to derive it (within limits).
So, would radiologists still be on the ROAD in a market-based system of payment? The case in favour looks pretty good. Of course, the challenge facing American radiologists in my lifetime may not be justifying their value in patient care so much as justifying their value over and above their American-boarded Indian-based counterparts. Communications technology has helped make superstars of American radiologists… will it make them overpriced and obsolete as well?
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