HomeHealth Care NewsRestoring the Patient-Physician Relationship Is the Key to Fixing Health Care -...

Restoring the Patient-Physician Relationship Is the Key to Fixing Health Care – Commentary

By Robert Koshnick, M.D.

Nearly 90 percent of the $4.3 trillion we spend each year on health care is paid by someone other than the person receiving the care.

That sounds like a great deal for health care consumers, but a third-party payer system creates waste and price distortions. Money is directed to the wrong places, and we end up cutting corners where we shouldn’t.

What we have today in health care is a “managed” market, not a free one. If you look at all the successful markets in our economy—retail and tech, for example—none have succeeded in this way.

Promoting ‘Medical Inflation’

When health care consumers are disconnected from payment, they tend to ignore primary care and not seek medical attention until the problem becomes more expensive to treat. There is no disincentive to act in this way, because someone else is footing the bill.

In addition, third-party payments weaken the patient-physician relationship, and when that happens, patients tend not to comply with medical advice, have poorer outcomes, and ultimately are less satisfied. Physicians are equally frustrated. Research from the Mayo Clinic found 62.8 percent of U.S. physicians exhibited at least one symptom of burnout in 2021.

In 1950, health expenditures accounted for 4.6 percent of U.S. gross domestic product. By 2021, national health expenditures grew to 18.3 percent of GDP or $12,914 per person per year. When health care spending began taking up a larger chunk of the economy, physicians became the scapegoats. Enter the introduction of “accountable care organizations,” an attempt to manage physician costs despite not one shred of evidence of greed.

From Bad to Worse

This led to the Health Maintenance Organization (HMO) Act of 1973, which allowed corporations to practice medicine without a license and function as insurance companies outside of state insurance regulations. Health care expenditures soared as third-party payer costs and regulations increased, while patient and physician satisfaction declined.

Managed care then raised costs further and led to massive health care consolidation that reduced competition. Value-based pay and mandated patient satisfaction scores, conceived by the north central states to blunt unfair Medicare payments, further ballooned health care costs without improving quality or patient satisfaction.

Research has long found excessive price, not excessive volume, is to blame for the growth in health care spending.

Goodbye, Marcus Welby

The corporatization of medicine, which added yet more cost, has disrupted the patient-physician relationship. The resulting loss of trust reduces the incremental care that improves health outcomes. Personal responsibility for the consequences of unhealthy living habits, the major factor in individual health outcomes, also declined.

The corporatization of medicine has changed medical practice from a profession to a business, to the detriment of patient care and the patient-physician relationship. Physicians’ loyalty should be to their patients, not the corporate bottom line and rules set by nonphysicians.

This thinking goes back as far as 1933 when he Minnesota Supreme Court stated in Granger v. Adson it is “improper and contrary to statute and public policy for a corporation or layman to practice medicine indirectly by hiring a licensed doctor for the benefit or profit of the hirer.” The court further stated, “What the law intends is that the patient shall be the patient of a licensed physician not of a corporation or layman. There is no place for a middleman.”

The court reaffirmed this in 2006 in Isles Wellness, Inc. v. Progressive Northern Insurance Co., stating, “The related public policy considerations underlying the prohibition on corporate practice of a profession include concerns raised by the specter of lay control over professional judgment, commercial exploitation of health care practice, and the possibility that a health care practitioner’s loyalty to a patient and an employer will be in conflict.”

Repealing the HMO Act of 1973 and allowing states to enact and enforce laws regarding the corporate practice of medicine could return doctors’ sole loyalty to their patients and restore the primacy of the patient-physician relationship.

Expand Direct Primary Care

Another way to rescue the patient-physician relationship from corporate control is to have people directly pay or contract physician services. Contracting with periodic payments is known as direct primary care (DPC), though this could be done for any physician service.

Congress should identify DPC as an allowable medical expense under health saving accounts (HSA), individual coverage health reimbursement accounts (ICHRA), employer health reimbursement accounts (HRA), and flexible savings accounts (FSA). DPC should not be considered insurance that can be regulated by state insurance commissioners.

Residency programs should give their residents training in how to set up and run DPC and specialty practices. States should enact legislation to allow Medicaid patients to opt into DPC. The federal government should allow Medicare patients to use DPC. Employers should emphasize DPC as a good option under HSA, ICHRA, HRA, and FSA accounts.

The ‘Empowering-People Option Act’

I propose an Empowering-People Option Act (E-POA) that would give people the means to pay directly or contract medical care, including DPC.

Empowering People Option Act

E-POA would establish a means-tested, refundable tax credit—$4,000 per adult and $2,000 per child—that could be set aside in an account like a health savings account. The Act also includes a price transparency provision.

By cutting out the middlemen and restoring the direct relationship between the doctor and the patient, we can getter better and more timely care and cut down on that $4.3 trillion annual bill.

Robert Koshnick, M.D. (bob.koshnick@gmail.com) is a retired primary care physician from Detroit Lakes, Minnesota. Koshnick is chair of the policy committee of the Minnesota Medical Association and author of Empower-Patient Accounts Empower Patients!






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