Two-thirds of America’s doctors, had  two reasons to think that the AMA  was in no position to make such a promise. First, they did not belong to the AMA and no one ever asked them if they were willing to essentially work one year out of ten for free because that was what it took for all doctors to do their part.  Second, the AMA, itself, had more to do with increasing medical costs than anything they did because it failed to outlaw certain innovated medical practices in its own membership such as concierge medicine, which, by its very nature,  predisposed to the very thing President Obama condemned, namely equating higher cost with quality care.    

 

Nevertheless, in his remarks, the President, in very general terms, explained how reforms will change the way doctors were paid. “We need to bundle payments so you aren't paid for every single treatment you offer a patient with a chronic condition like diabetes, but instead are paid for how you treat the overall disease. We need to create incentives for physicians to team up – because we know that when that happens, it results in a healthier patient. We need to give doctors bonuses for good health outcomes – so that we are not promoting just more treatment, but better care.” 

 

With these words, the President of the United States essentially pronounced  fee-for-service medicine dead. Insurance companies tried to do this in the past but failed.  Nevertheless, ending fee-for-service mediicine was the centerpiece of  President Obama’s fundamental vision for health reform. Why and from where did he get these ideas?  

 

The ideas probably came from two professors, one at Harvard and one at Stanford. 

 

Michael Porter, at the Harvard Business School,  created a model for  health care delivery in which doctors were organized into integrated practice units, or IPUs.. IPUs were consistent the President’s plan for physicians to team up. Porter argued that because of collective experiences, economies of scale and efficiencies of technologies, teams of physicians, driven by quality, contained medical costs. Care will also be safer because of lower error rates. There were two kinds of IPUs, one for specialies and the other for  primary care called medical homes. IPUs will negotiate contracts with other facilities with which doctors must associate such as hospitals and surgical centers in efforts not to duplicate costs. They may even establish their own facilities. 

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