The Government's move to defuse the medical card row and lower the fees paid to GPs will not provide savings, argues Sean Byrne
THE CONTROVERSY over the provision of medical cards for all people over 70 drew attention to the very generous capitation payment made to GPs for providing free care to people over 70 who had not held means-tested medical cards.
When the scheme was introduced, the IMO, whose then president was Dr James O'Reilly, now Fine Gael spokesman on health, extracted a payment for provision of free care to the over-70s who did not already hold medical cards that was four times the payment for other medical card holders.
The IMO argued that the over-70s would use GP services more intensively, though they adduced no evidence for this, but the Government, eager to introduce the scheme to garner votes in the 2002 election, acceded to the IMO's demands.
The scheme's cost was seriously underestimated and has escalated greatly due to the large payment and the increasing numbers of over-70s in the population.
In the early 1990s, the then government changed the system of payment to GPs from a fee-per-service to a capitation scheme. It was argued that the fee-per-service system encouraged doctors to have patients consult them unnecessarily in order to maximise their income.
The fee-per-service versus capitation conundrum results from the phenomenon of "supplier-induced demand" in medicine. Patients do not know how often they should see the doctor so the doctor can, if he/she wishes, have the patient return for repeat consultations even when such consultations are of little benefit.
Apart from the desire to gain additional income, there are different opinions among doctors on the treatment of even common ailments. Doctors differ on the question of how often a patient with diabetes or hypertension should have a check-up. If a doctor prescribes antibiotics, should he/she call the patient for follow-up consultation or ask him to contact them if he feels worse?
As the fee-per-service and capitation payments are used in different countries, there is considerable evidence of the effects of each scheme on patient care and overall cost of primary care. Fee per service often leads to more consultations, more tests and higher drug use than a capitation system.
Capitation systems, on the other hand, lead to shorter (and sometimes careless) consultations and greater referral rates to consultants and hospitals.
The actual treatments which Irish GPs now provide are very limited which is partly due to the capitation system and partly due to fear of litigation. I am always amused by GPs' plates that describe them as "physician and surgeon".
In the 1930s my father assisted a rural GP to amputate the leg of a man crushed in a farm accident. In the 1990s, when my 10-year-old son cut his finger in a football match, a GP referred him to the National Children's Hospital to have a plaster put on the cut!
Two studies of GP behaviour in response to different remuneration systems from Norway and Denmark show the problems and advantages of each payment system.
In Norway, where some doctors were paid salaries, while others were paid a fee per service, it was found that those who paid fees had more frequent and longer consultations than salaried doctors. It was clear that these doctors had a target income in mind and were compensated for having fewer patients by seeing them more often.
In the late 1980s, the system for payment of GPs in Denmark was changed from capitation payments to a mixture of fees and capitation.
A study of the effects of the change found that contact rates per patient rose after the change, though they fell back a little within a year. More significantly, examinations and treatments that attracted additional remuneration rose significantly and referral rates to secondary care fell.
When the system of payment in the Republic was changed from fee per service to capitation, it was hoped that this would result in a less costly and more effective system but this has not occurred. The cost of the General Medical Card (GMS) has increased greatly but the actual level of care provided has improved little.
Under the capitation system a GP has an incentive to have many medical card patients but to give them minimal attention, as frequent or lengthy consultation with public patients reduces the time available for fee-paying patients.
This results in some GPs receiving very large payments for medical card patients. In 2006, one Dublin GP received more than €700,000, and 17 received more than €500,000. These doctors received a substantial proportion of these payments for patients they may not have seen even once during the year.
It is hardly surprising that doctors' incomes in Ireland are four times GDP per capita, second only to the US and twice the levels in Sweden and Finland.
The capitation system also makes it difficult for young GPs to establish a practice as most medical card patients will already be in the hands of established GPs and the HSE finds it easier to allow established GPs to add patients to their lists than to develop new lists.
Another problem with the capitation system is that it results in large numbers of people being referred to consultants and hospitals who could be treated by GPs. While there are additional payments for procedures such as minor surgery, these payments do not cover costs, so few GPs undertake them.
Patients needing minor surgery may then have to endure months of pain waiting for a hospital appointment where the cost of treatment is much higher.
Providing a good GP service to medical card holders at a reasonable cost to the Exchequer requires a more sophisticated system than either simple capitation or fee per service. In the US, health maintenance organisations accept a fixed annual capitation payment for each enrollee and pay doctors a salary and a payment based on volume of service provided.
In Denmark, GPs receive 75 per cent of their earnings on a fee-for-service basis and 25 per cent as capitation. Denmark has been one of the most successful countries in Europe in containing healthcare costs.
If the system of paying GPs in the Republic is not changed to one that provides incentives to GPs to provide more services to patients for a realistic payment, the cost of the GMS will continue to escalate and the pressure on secondary care will continue to be intolerable.
• Sean Byrne is a lecturer in Economics at the Dublin Institute of Technology