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Obama's Challenge to Doctors

As the health-care debate heats up in Congress, the President addresses the AMA, reiterating the need to change the way physicians are paid

President Barack Obama has decided to use his immense popularity to take on a group that may be even more popular with the voters—their doctors.

On Monday, June 15, Obama went to Chicago to speak at a meeting of the American Medical Assn., the nation's largest physician organization. It was the first time in 26 years that a President has addressed the group. Obama's message: Any health-care reform bill will have to change the way doctors are reimbursed. That is, they could end up making less money.

The President has made health-care reform a centerpiece of his domestic policy agenda. He wants a bill passed this year. The Senate is likely to issue a draft bill in the week before the July 4 recess, and Congress will then spend the summer debating its provisions, which are sure to be controversial. Democratic congressional leaders have said they would like a bill to come up for a vote in October.

Obama's speech came just days after the AMA said it opposed the creation of a public insurance plan fashioned after Medicare to cover the uninsured. That's an option favored by Obama and many Democratic legislators. But Obama did not back down—a sign that the AMA may no longer have the clout it once had to control the health-care agenda.

Although insurers, pharmaceutical companies, and medical-device makers are popular targets of Democratic legislators concerned about the high cost of health care, it is doctor payments that consume one-third of the nation's $2.4 trillion in health-care spending. Hospital payments eat up another third, and both are increasing faster than the rate of inflation.

fee-for-service inefficient and wasteful

Obama wants to change that math. He has made it clear that he expects doctors to sacrifice along with insurers and drug companies. Although the President made no significant new proposals in his speech, he strongly reiterated his position that the current payment system, in which doctors are reimbursed for every service and office visit, leads to waste and inefficiencies and must be changed.

"It is a model that has taken the pursuit of medicine from a profession—a calling—to a business," said Obama. "And a lot of people in this room know what I'm talking about."

If they did, they didn't show it. The 500 delegates in the room met this portion of his speech with a deafening silence. Only his call to reform malpractice laws met with sustained applause, though Obama quickly followed up that statement—quieting the room—by saying he would not impose caps on malpractice awards, something doctors have long fought for. Nor was there much enthusiasm for his call to use Medicare reimbursements to reduce the number of patients readmitted to a hospital within 30 days of release, which would almost certainly lower hospital revenues. Likewise for the President's call to adjust Medicare payments to reflect medical advances and productivity gains, which would almost certainly lower payments to doctors.

only 25% of U.S. doctors are in the AMA

In the past, such statements would almost certainly have set the AMA on a collision course with any reform attempts. The group has been able to block significant health-care reform efforts dating back to President Theodore Roosevelt's Administration. In 1948, when President Harry S Truman tried to enact universal health insurance, the AMA urged its members to "resist the enslavement of the medical profession." The group tried to stop the creation of Medicare until it was outmaneuvered by President Lyndon B. Johnson. And in 1986, President Ronald Reagan failed to persuade the AMA to support a Medicare freeze. Reagan was the last President prior to Obama to plead his case directly to the group.

But medicine has splintered into dozens of specialties in recent decades, many of them with opposing interests. The AMA now represents 245,000 doctors, about one-fourth of the nation's total. The second-largest group, the American College of Physicians—or ACP, with 126,000 internists as members—looks much more favorably on a public plan and a payment model that rewards different specialists working together as a team to provide care for an individual patient rather than the piecemeal approach that now typifies American medicine. "We think changing the system that simply rewards volume rather than value is very important," says Dr. Joseph W. Stubbs, president of the ACP. In fact, a survey of U.S. doctors last year found that 59% support federal legislation to establish national health insurance.

Moreover, doctors are no longer seen by the public as infallible or untouchable. An influential article in the New Yorker last month by Harvard-trained surgeon Dr. Atul Gawande laid out the huge regional disparities in U.S. health-care spending and pinpointed the main cause as overtreatment by doctors who seek to boost their earnings. The article has become a rallying cry for health-care reformers. Obama made it required reading in the White House, and it is regularly referred to by legislators on Capital Hill.

As a result, the discretion of doctors to order any treatment they think fits a patient is no longer unquestioned, says Paul Keckley, executive director of the Deloitte Center for Health Solutions. "That's not anything my Marcus Welby generation ever heard," he said. "Doctors may still be regarded as a trusted source, but consumers no longer accept at face value everything they say."

Arnst is a senior writer for BusinessWeek based in New York.

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