We Must Change Course Now

To avoid the worst consequences of the nightmare health scenario we’re on the road towards, we need to start making changes — now.

Incentives, in various forms, are key to that.

The previous article talked a lot about incentives and how they influence behaviours. They include straightforward financial incentives but also things like peer pressure and enlightened self-interest. Examples included “cleaning up your own mess” when it comes to patients you’ll see again or are shared with a small network of colleagues. Or being able to do more of the work you love.

Bad things happen when incentives become misaligned. That’s what’s happened in today’s healthcare system. But it also points the way to solutions — realigning incentives. Better encourage desirable behaviours and discourage less desirable ones. Incentives are powerful and effective tools that come in various forms.

Intrinsic Motivation

Incentives can influence behaviour, but there’s a baseline motivation that serves as a starting point. For doctors, what attracted them to medicine? To help? Money? Status? Where do they get their satisfaction?

What’s the motivation for those who choose family medicine as a specialty (as opposed to those who use it as a fallback because they couldn’t match into ophthalmology)?

Most choose it because they find the idea of doing what we think of as “traditional family medicine” to be fulfilling. They value being a part of their patients’ lives, the continuity, the relationships, and the variety they know will come with every day.

They know it will be hard work compared to some other areas of medicine. They certainly know other areas will pay better. They expect to be able to make a reasonable living at it, given the amount of training, accumulated debt, and responsibility. They expect to command some degree of respect. But not super-rich or high status. They would consider that a reasonable tradeoff for the satisfaction the profession brings.

Increasingly, that idea of what they hoped for in their careers is vanishing. With the current fee structure and overhead, they can’t make a reasonable living doing traditional family medicine. They can’t afford it. That’s pushing them to do things they don’t want to do, give up all their dreams of being part of their patients’ lives, the relationships, and the fulfillment and satisfaction they went into family medicine for.

Nobody chose to specialize in family medicine to be a cog in an assembly line, working alone and dolling out prescriptions for antibiotics and heartburn meds to an endless series of strangers. That’s about as far away from their dreams as you can get.

As this reality becomes more entrenched, so does the inevitable result. Fewer medical students are choosing family medicine as a specialty. More family medicine spots are left unfilled after the first round of the CARMS match than ever before. Many who eventually fill those spots do so because they couldn’t match into their desired specialty. They’ll be the first to take jobs as hospitalists, open cosmetic medicine clinics, do insurance assessments, anything but traditional family practice. Why would they? The work isn’t something they’d get much satisfaction from, and the rewards to compensate for it aren’t there.

All those family medicine residency spots were carefully allocated to meet societal demands for traditional family practice doctors. But that’s not what they’re producing. That leaves a big hole.

We have all these people who really want to do this very high value work, and we’re driving them elsewhere. Nobody is happy.

They’re highly motivated to practice as full-service family doctors and will jump at the opportunity if we just stop penalizing them for it.


If we’re still producing the same number of family doctors (even if they’re doing something else), they’re still contributing to the system. So, in the end, shouldn’t we still be okay?

When we consider how to best use a finite set of resources to achieve a desired outcome, we’re talking about productivity. In healthcare, we can think about productivity as delivering the best, most important health outcomes with the least resources. The value they contribute to the system. But what does that look like?

Let’s consider a traditional family doctor providing longitudinal care to patients they know. They treat for most things, bring in specialists only when their expertise is required, juggle followup and prevention, and more often make smarter decisions because they know their patients’ histories.

Let’s assign them a “productivity factor” of 1.0 (call it “1.0PF” for short).

A family doctor working in episodic care (walk-in or telehealth platform) may sometimes deliver higher productivity (simple presentation that turns out to be a simple problem fixed by a simple treatment, all with less overhead). More often, they’re still contributing to healthcare outcomes, just not as productively as a traditional family doctor. In particular:

  • their patients are more likely to require multiple visits to achieve the same outcome
  • visits with multiple different providers for the same problem leads to unnecessary redundancies
  • being unfamiliar with full histories, it’s less likely the optimal path to the solution will be found
  • with less solved in primary care, more use of specialist resources is demanded
  • less follow-up and preventative care leads to more and repeated treatment
  • serious problems are identified later when they are more difficult and require more resources to treat or result in worse outcomes

The net result is that episodic primary care contributes to improving health outcomes but not as efficiently as longitudinal primary care. That means a lower productivity factor. We don’t know the actual number, but it will not be a small hit, e.g. 0.9PF. Let’s say it’s 0.5PF.

If so, every time a family doctor moves from full-service family practice to environments offering exclusively episodic care, they’re contributing 50% less to health outcomes. That’s huge. Even if the actual difference is only 10% (which I think is far less than reality), with a resource as scarce as doctors specialized in family medicine, that has an enormous impact. Which, of course, is what we’re seeing today.

Making Things Worse

The main issue right now with traditional family practice is that it’s financially unsustainable. It’s contributing very highly productivity-wise. But, given the overhead, the unpaid work, the stagnant fees, and everything else, it’s just not providing family doctors the minimum they need.

Instead, they’d been gradually shifting toward the assembly line of episodic care. Less overhead and responsibility, same $30 per visit. Less job satisfaction, but less personal downsides. But providing less value to the system than that same doctor working in longitudinal care. Maybe up to 50% less productivity. By any measure, that’s an inefficient use of scarce resources.

And then, we take a bad decision and make it even worse. Two examples: telehealth platforms and UPCC’s.

The telehealth platforms are even more attractive to family doctors than bricks-and-mortar walk-in clinics. Low overhead, less ownership, lower responsibility, less structural pressure that encourages people to do a good job. Do the work, take the pay, and logout. And they’re compensating for things like no-show appointments that would otherwise be unpaid. Hell, the telehealth platforms are probably losing money doing this right now. But in various ways, they’re building demand to offer for-fee premium services down the road. And we’re incentivizing them to do it.

The second example is the UPCC’s. By any measure, providing episodic care that is both frighteningly more expensive than would be provided in other settings and removing all incentives to be more efficient and help more patients. So way worse productivity… 0.25PF perhaps? If they weren’t so poorly managed that nobody wanted to work there, they’d be hollowing out traditional family medicine even faster.

The sad thing is that you need fewer incentives to get people to do what they want than what they don’t want.

We’re paying the most for the lowest productivity when it would cost us the least to sustain the system proven to deliver the greatest contribution.

Traditional family medicine offers the greatest bargain by a wide margin, and we’re stomping on it.

Fix the Primary Incentives

So the first thing we need to do to solve this is to fix the main incentives.

Government has to stop trying to compete with independent family doctors, which they’re failing at miserably. They need to work to get the incentives right and then get the hell out of the way.

I’m not a small government absolutist, but what we’re doing now is insane. Now the reward is the same to provide lower-value care, which takes less time and resources, than higher-value care. Of course that’s going to drive people in the wrong direction. And increasingly, amoral bad actors will step in and take advantage of the situation.

Adjust fees so that care provided in longitudinal family practice is better compensated than lower-value episodic care. There are many ways this can be done; we’ve been hearing them for years.

That will shift people away from lower-value work towards the higher-value work they really want to be doing anyway. It doesn’t mean we get rid of all episodic care or ban the telehealth platforms. But adjust the incentives to closer approximate need and value, and the market will adjust accordingly.

Despite protests to the contrary, government has the power to do this. Yes, physicians are a party to this, and infighting, particularly between family physicians and other specialists has contributed to this problem. But the government is responsible for providing value on behalf of its citizens and needs to seriously step up.

Yes, there will be mistakes, we’ll overcompensate, there will be unintended consequences, but that’s not an argument for sitting on our ass and doing nothing.

Stop throwing away good money and complaining you need more money.

Job one is to rebalance the incentives. Now.

Service Level Agreements

Adjusting incentives directly to the service in question are the most obvious lever and often the fastest to apply. They’re certainly the most applicable to the primary care mess. But there are others.

Service level agreements (SLA’s) are another. They can provide incentives to do things people otherwise might not do or where they might prefer alternatives.

A simple example: if you don’t finish your dessert, you can’t go out to play. Another: I’ll pay you two dollars every day you keep your room clean and an extra ten dollars if you keep it clean the entire week.

In the healthcare realm, it would be governments saying to large providers like healthcare authorities: if you want us to pay you to do expensive surgeries, you have to do all the cheap ones too. Or: we’re paying you to provide psychiatric consults, but for every week people have to wait longer than an agreed-upon wait time, we’ll pay you 1% less.

Right now, health authorities have little motivation to deliver services at a given level. It’s not like there’s extra profit if they do more. So why bother to build capacity? This is why there’s so little effort towards recruitment and retention.

There’s one colossal obstacle that needs to be overcome. This strategy depends on actual accountability for results. Ideally, public. Part of the whole reason for health authorities in the first place is to separate them from governments and thereby provide some political cover. Mandate reporting. Make it part of the SLA. One of the few advantages of our dozens of health systems is it allows us to draw comparisons across them — recognition (or shame avoidance) is another incentive. But needless to say, actually being open with metrics, whether good or bad, has not been a strength of our healthcare system.

These are bigger contracts and take longer to sort out, but will increase productivity and help stem the waste.

Common Infrastructure

Sometimes, direct incentives or SLA’s aren’t appropriate. Fee codes are a fairly blunt tool and can’t capture all the complexities of delivering care. Sometimes there are things that would benefit everyone, but the costs to any one individual would be too high to justify the benefits they receive.

Roads are a great example. Infrastructure that benefits everyone but are prohibitively expensive for any individual entity to create and maintain. Their value increases as more people use them, even those that don’t directly contribute resources, which we call network effects.

Governments can play a valuable role in building common infrastructure that everyone benefits from. With good roads, the costs of delivering services for everyone decrease. They (literally, in this case) reduce friction. They’re an indirect incentive.

Government can do that in healthcare, too. They already do. The whole MSP system. Pharmanet. They’re slowly trying to get there by tying together a common backend for health records. The more people use it, the more benefits everyone gets. Having anyone else responsible for them wouldn’t make sense.

What other infrastructure would ease healthcare delivery? More work on the records front. More tools to help centrally identify referral resources system-wide and even help manage pooled referrals, etc. There are many more examples. These investments reduce the disincentives to providing certain services, which sounds a whole lot like boosting the incentive.

These are massive projects and will take longer. But they’re examples of places where government can positively contribute in ways that others can’t.

Bottom Line

Government has some responsibilities it must shoulder.

Get the structure of the system right, including incentives of all forms, to reflect value.

Put in place contracts and regulations to enable effective service delivery and protect the public interests.

Level the playing field for providers.

Provide common infrastructure when the net benefit is positive, but the individual payoff is prohibitive.

There needs to be more of those things and less trying to compete with others who can do a far better job far more efficiently.