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Earlier chapters depict the centrality of physicians in the US healthcare ecosystem. There are many reasons for ascribing them this central role. Put simply, physicians control 85% to 90% of all personal healthcare spending, either directly (through their professional incomes) or indirectly (through their orders and oversight of others).1 How do they exercise such discretion? Physicians have a monopoly or virtual monopoly over most major decisions that drive healthcare spending. These decisions include:

  • Admitting to a hospital

  • Discharging from a hospital

  • Referring to a specialist (for those enrolled in a narrow network plan)

  • Authorizing home healthcare

  • Performing a surgical procedure

  • Performing a diagnostic test

  • Using expensive equipment and tech­nol­o­gies

  • Writing a prescription for a drug

Such discretion did not come the medical profession’s way via legislative fiat. Rather, it came about through a series of political negotiations between the emerging professional organizations (eg, American Medical Association [AMA] and its state medical societies) and state governments. Such negotiations with professional groups were perceived during the progressive era of the late 19th century not only as a vehicle to improve quality amid a range of unregulated practitioners, but also to mitigate and regulate the harmful impacts of competition on the public interest.2 To a limited extent, some nonphysicians like nurse practitioners (NPs) and other advanced practice registered nurses (APRNs) have been allowed some clinical autonomy (eg, to write prescriptions); these exceptions are driven by state-level scope of practice regulations (see Chapter 10).

Physicians occupy central roles for other reasons. Due to their “power of the purse” in controlling healthcare spending and utilization, they are courted by many of the other players in the healthcare ecosystem. Hospitals have courted the physicians on their medical staffs for years since the advent of the Inpatient Prospective Payment System (IPPS) in 1983 to help them control inpatient spending and succeed financially under (1) diagnosis-related groups (DRGs) and then (2) risk-based contracts (RBCs) and value-based payments (VBPs). Pharmaceutical firms have long courted physicians, particularly those treating chronic conditions, to prescribe the drugs they make to treat these conditions. Medical device firms have long courted certain types of specialists (eg, cardiovascular surgeons, electrophysiologists, orthopedists) to select their instruments and implants for surgery. Medical technology firms that make imaging equipment have long courted radiologists to use their scanners. Group purchasing organizations (GPOs) that purchase many of these products on behalf of the hospitals they represent also court the hospitals’ physicians to ascertain and then perhaps shape their preferences for these technologies (in order to concentrate buying and thereby obtain lower unit prices).

Physicians are, thus, squarely in the middle of the healthcare value chain (see Figure 3-9) and occupy the most influential role in most decision making. They are also the only ones who wear white coats around the hospital, physically distinguishing themselves from all other workers.

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