Why your doctor is struggling to stay afloat

[disneysteve]

I spoke to a friend tonight who is a gynecologist. She told me that she just finished all of the year-end reports for her practice. For 2017, she saw 200 more patients than in 2016. Despite that increased productivity, her gross income dropped by $30,000 due to lower reimbursement from insurance companies. Add in higher overhead costs, supplies, staff salaries, insurance premiums, etc. and she probably had a net loss of more like $50,000 or more for the year.

Doctors are working harder and harder and making less and less. And this didn't just happen in 2017. It's been going on for years. It is one of many reasons that I left private family practice back in September. I was busier than ever but making progressively less with each passing year.

Thanks to being frugal and careful with our money, we made it work for a long time but eventually it became unsustainable. My friend isn't quite at that point yet but she's getting there. If she didn't have two kids in college, I'm sure she'd be thinking about hanging it up or finding something else to do rather than continue her practice. If her income drops another 30K in 2018, she may get to a point where she just can't hang in there any longer.

I have a cousin who is also a Gyn who left practice a few years ago when she was in her late 40s because it was just no longer financially feasible to keep doing it. Fortunately, her husband has a high-paying Wall Street type of job so they could afford for her to stop working, but here's a brilliant and dedicated physician with years of training and experience who was forced to walk away due to these issues.

I don't think the general public has even the slightest clue of how bad things are in the medical field.

[TexasHusker]

One of my closest friends will be interviewed today, 2/11, on Fox Business News’ “Earth with John Holden” at 430CST. The topic is the state of healthcare finance in America and what his company is doing to help change it.

Check it out - Alex knows his stuff!

[james.hendrickson]

Texas,

Youtube or it didn't happen.

[disneysteve]

Texas,

Youtube or it didn't happen.

I would imagine the show is online somewhere, like at their website. I'll look it up later.

[TexasHusker]

Texas,

Youtube or it didn't happen.

I’m not real up on YouTube, so I better catch it on my living room tube or I’ll miss it.

[TexasHusker]

Good interview.

Overriding theme is this: healthcare is the only commodity where the buyer gets no seat at the table to help determine the price.

If you build a home, the purchaser gets the price in writing. If you buy an insurance policy, you get the premium amount in writing. If you have your carrier cleaned, you know what that’s going to cost.

With healthcare, the buyers (ultimately the employer in most cases) gets no seat at the negotiating table. They have to rely on a third party (Aetna, Cigna, etc)
to do their negotiating for them. And the hospitals devise various ways around those negotiations in order to get more payment.

At least at the hospital level - and that’s where the bulk of expense is anymore - there is no transparency. Pricing is cloaked in a shroud of complicated - and sophisticated- contract and pricing schemes crafted by the hospital systems.

The phenomenon is breaking the back of our economy.

[MooseBucks]

Good interview.

Overriding theme is this: healthcare is the only commodity where the buyer gets no seat at the table to help determine the price.

If you build a home, the purchaser gets the price in writing. If you buy an insurance policy, you get the premium amount in writing. If you have your carrier cleaned, you know what that’s going to cost.

With healthcare, the buyers (ultimately the employer in most cases) gets no seat at the negotiating table. They have to rely on a third party (Aetna, Cigna, etc)
to do their negotiating for them. And the hospitals devise various ways around those negotiations in order to get more payment.

At least at the hospital level - and that’s where the bulk of expense is anymore - there is no transparency. Pricing is cloaked in a shroud of complicated - and sophisticated- contract and pricing schemes crafted by the hospital systems.

The phenomenon is breaking the back of our economy.

I agree there is limited choice but there isn’t no choice. I have several hospitals/outpatient clinics that I can choose from. I can go online and compare different costs for procedures. In terms of an emergency I know who is cheaper for most services so I know where I’m going if something comes up.

[JoeP]

The system is rigged against the consumer. As Texas said, we do not get to exert price pressures on the goods and services; all we get to do is buy "insurance" and rely on those for-profit companies to negotiate the best deal.

In any other line of business, consumers would scoff at a $10k cell phone, buy from a vendor who can do it for $300, and call it a day...the expensive vendor would be out of business.

But in health care, the consumer doesn't really have too much choice. Are you going to shop around for the best price for a set of x-rays, or for a colonoscopy, or an MRI, or an orthopedic surgeon for a broken leg, or for blood work? No, you're at the mercy of those who provide the treatment, set the prices, and pay their part.

It really is a very broken system, and I think we all know where the money is going. I can certainly tell you where it is coming from!

[disneysteve]

But in health care, the consumer doesn't really have too much choice. Are you going to shop around for the best price for a set of x-rays, or for a colonoscopy, or an MRI, or an orthopedic surgeon for a broken leg, or for blood work? No, you're at the mercy of those who provide the treatment, set the prices, and pay their part.

The patient has little if any incentive to shop around. If someone has a $50 copay for x-rays, why would they shop around? It's going to cost $50 no matter where they go. They don't particularly care, or even comprehend, that Site A might be billing the insurance $150 for that x-ray while Site B might only bill $95 for the same study. All the patient sees is the $50 copay.

When the patient does have an incentive to shop around is when there is a deductible or a co-insurance amount to be paid. The problem then is actually getting an accurate answer to "How much is this going to cost?" It seems like a simple question but good luck getting someone to answer it.

I work in healthcare at an Urgent Care facility. Most of our patients have insurance but some don't and someone occasionally asks how much something will be. I can't tell them. I don't have access to that information which is insane. If I'm recommending an x-ray or a strep test, I should be able to tell the patient how much that will cost but I can't.

[TexasHusker]

The primary payor of healthcare costs is not the patient; it’s the health plan, and most of the time, the health plan is a self insured employer. That employer is ultimately the one paying for the vast majority of health care costs. The employer is not getting a seat at the negotiating table.

Hospitals are generally arrogant. It is beneath them to talk price with a purchaser. The purchaser is expected to pay as the hospital pleases, minus some token discount.

[TexasHusker]

As a side note, the hospitals increasingly have the docs by the throat: They have bought many of them out. They use their leverage to squeeze the other doctors. The doctors then become high paid slaves. The hospital encroaches on their practice in too many ways to even list here.

[disneysteve]

As a side note, the hospitals increasingly have the docs by the throat: They have bought many of them out. They use their leverage to squeeze the other doctors. The doctors then become high paid slaves. The hospital encroaches on their practice in too many ways to even list here.

As a doctor, you're damned if you do and damned if you don't. There's no good choice.

If you stay independent, rising overhead and decreasing reimbursement makes your practice less and less profitable with each passing day. Government and insurance company regulations suck up more and more of your time giving you less time to actually treat patients, except that's the only way you actually generate income. It's a vicious downward spiral.

If you join a hospital-owned practice, you surrender control and have to answer and justify everything you do to a higher power, including many who are not physicians. However, you gain the benefit of having someone else take care of all of the government and insurance company BS so that you can get back to actually caring for patients. Also, you typically get higher pay and better benefits. So yes, you lose control but you're pretty well compensated in the process.

2015 was the last year that I was only in my private practice.
2018 is the first year that I am only in urgent care (hospital-owned).

For 2018, I will earn at least $75,000 more than I earned in 2015 (and that's just salary, not total compensation package).

Am I a "high-paid slave"? Perhaps you could view it that way, but I've got to tell you I'm the happiest I've been in the 25 years I've been doing this.

[creditcardfree]

I've been hearing more and more about direct primary care doctors. They charge a monthly fee, it's like a membership to a gym, and you also pay a copay for a visit. These practices are private thus they can charge far less for tests too. This is just one article that came up when I did a Google search...I'm more in favor of this type of thing for everyday care, partly because then my doctor can work with me to heal me rather than just provide the sub par standard of care that insurance directs for every body that walks in.

We need doctors to be paid their worth and that is not happening as Steve points out with his friend's story. Getting insurance companies out of the way of directing care is a good first step. We can't have all doctor's leaving practice and end up with no one!

[TexasHusker]

As a doctor, you're damned if you do and damned if you don't. There's no good choice.

If you stay independent, rising overhead and decreasing reimbursement makes your practice less and less profitable with each passing day. Government and insurance company regulations suck up more and more of your time giving you less time to actually treat patients, except that's the only way you actually generate income. It's a vicious downward spiral.

If you join a hospital-owned practice, you surrender control and have to answer and justify everything you do to a higher power, including many who are not physicians. However, you gain the benefit of having someone else take care of all of the government and insurance company BS so that you can get back to actually caring for patients. Also, you typically get higher pay and better benefits. So yes, you lose control but you're pretty well compensated in the process.

2015 was the last year that I was only in my private practice.
2018 is the first year that I am only in urgent care (hospital-owned).

For 2018, I will earn at least $75,000 more than I earned in 2015 (and that's just salary, not total compensation package).

Am I a "high-paid slave"? Perhaps you could view it that way, but I've got to tell you I'm the happiest I've been in the 25 years I've been doing this.

I’m glad it’s working well for you. Unfortunately, hospital ownership of physicians is a huge part of the problem. Hospitals figured out that if they can employ the doctors via a 501A, they have built-in feeders for all their outrageously priced services.

[TexasHusker]

I've been hearing more and more about direct primary care doctors. They charge a monthly fee, it's like a membership to a gym, and you also pay a copay for a visit. These practices are private thus they can charge far less for tests too. This is just one article that came up when I did a Google search...I'm more in favor of this type of thing for everyday care, partly because then my doctor can work with me to heal me rather than just provide the sub par standard of care that insurance directs for every body that walks in.

We need doctors to be paid their worth and that is not happening as Steve points out with his friend's story. Getting insurance companies out of the way of directing care is a good first step. We can't have all doctor's leaving practice and end up with no one!

Insurance companies are not the issue, and neither are the doctors:

The average hospital stay in 1994 at a hospital here cost you $5400. That was about 15% of median household annual income. Today, the average charges are about $53,000, about 89% of median income.

So prices have gone up 10 fold in 24 years. Have costs gone for hospitals ? Well, are nurses and techs making 10X more? No. Are supplies 10X more? No. Pharmacy ? No.

Profit? Hmmm. In 1994, we were all getting bonuses because the hospital earned $8 million. Today, if they don’t turn $60 million, heads roll.

Bingo!

The hospitals have been on an unabated grab for cash since the early 90s. It’s bankrupting all of us and we don’t even know it.