Education and debate

The emergence of "boutique medicine"

Uwe E Reinhardt, professor of economics and public affairs. 

Princeton University, Princeton, NJ

reinhard{at}princeton.edu

From BMJ USA 2002;August:468

The January 26, 2002 issue of the BMJ featured a news report by a Florida doctor, Fred Charatan, raising concerns about the emergence in the US of "boutique medicine," ie, practices that offer premium service for patients willing to pay large fees (http://bmj.com/cgi/content/full/324/7331/187/a). This generated a letter to the editor of the BMJ by Uwe Reinhardt, a professor of economics at Princeton University, which in turn set off an exchange of Rapid Responses (see http://bmj.com/cgi/content/full/324/7331/187/a). Among the entries in that exchange was the following (abridged)EDITOR

Physicians pursue a variety of objectives, among which income quite legitimately ranks high. In the economist's book, there is nothing wrong with the pursuit of income. Furthermore, economists believe that persons who have accumulated the human capital that physicians have ought to earn commensurately high incomes.

The problem is that an informal etiquette among physicians precludes them from ever admitting that income matters to them at all. I learned this during my nine-year stint as commissioner on the Physician Payment Review Commission, a body of experts that advised Congress on the payment of physicians under Medicare. In discussions of fees, when income quite properly should have been uppermost on the physician representatives' minds, they always camouflaged it behind some argument over "quality." The cynicism and snickering this comportment begot was palpable. In fact, I recall admonishing a representative of organized medicine that his facile linkage of fees and quality could be described as libelous of practicing physicians.

The refusal of stakeholders in the American health system ever to discuss openly what is on the table is one of the system's major shortcomings. It begets confusion, hypocrisy, and cynicism all around.

To illustrate, it is clear by now that the politically dominant elite in America would like to see health care rationed by income class, even though they would never admit it openly. The fees paid physicians under public insuranceespecially those paid under Medicaidclearly connote relative values and do imply rationing by income class. At the same time, the general public expects physicians to practice egalitarian medicine, and physicians themselves are educated and trained to act that way. The press has a field day if they catch a physician or hospital treating poor patients differently than they do wealthy patients. This permanent dissonance triggers disillusionment among American physicians, and rightly so. They are caught in the middle of a giant national lie told every year, at budget time, by the nation's federal and state legislators, on behalf of the tightfisted American taxpayer.

I consider boutique medicine for the upper income classes a harmless, almost playful fringe phenomenon. It is practiced by a handful of physicians who, I believe, do hide behind the shield of "quality" to protect their income. Let them. Not much harm done. The boutique medicine implicit in the Medicaid program strikes me as far more harmful and, indeed, inherently fraudulent. It strikes me as fraud when federal and state legislators pay physicians and hospitals a pittance for hard work under the Medicaid program and then pretend to God and country that they have looked after the poor. After all, what is a state legislator really saying to a pediatrician when, through the legislator's own insurance, he or she is willing to pay the physician $80 for a patient visit, all the while paying the physician only $20-$30 for the same visit accorded the child of a poor family? Economists believe that the relative prices buyers offer signal relative values. The state legislators' relative valuation of the treatment of their own children and that of poor children is crystal clear.

This system works only because many kindly American doctors are willing to absorb the losses implicit in Medicaid fees and treat Medicaid patients anyhow, or are able to shift those losses to paying patients. But a large number of physicians in America refuse to accept Medicaid patients at all. Is that not a much more serious form of boutique medicinebarring large numbers of poor Americans access to large numbers of physicians? Yet for some 40 years this disparity has been as American as apple pie, and from the middle classes there came not a peep! That form of boutique medicine is neither a fringe phenomenon nor playful. It is a national disgrace.