Carrots for Doctors by Bill Keller

Doctors cite a number of reasons our medical treatments cost more — the high price of malpractice insurance being a favorite, and genuine, culprit. But the main reason everything costs less in other countries is that other countries tend to have one big payer — usually the government — with the clout to bargain down prices. A single-payer system has, so far, proven politically unpalatable in this country. And even Medicare, which has the power of scale and uses it to drive down prices, wields its power sparingly, because doctors threaten to stop serving Medicare patients if the reimbursements fall too low. As hospitals merge into mightier megachains, they may be able to bargain down the payments to doctors and drug companies and device-makers, and create economies of scale by standardizing treatments. (The physician and New Yorker writer Atul Gawande proposed in a provocative August article that hospitals could drastically improve productivity by studying the example of restaurant chains like the Cheesecake Factory.) But that’s not what P4P is about.