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SHOULD DOCTORS BE PAID FOR THEIR KNOWLEDGE?
Should Doctors Be Paid For Their Knowledge?
Lawyers charge for every fraction of every "billable hour" they
spend on a client's case whether talking to the client on the
phone, talking to another lawyer about the case, dictating a record,
or doing research in law books. Plumbers and electricians charge
a minimum "trip charge"; they charge for all time spent on a jobsite,
for travel time to and from the job and usually for additional
travel time needed to go pick up needed parts.
Primary Care doctors (Internal Medicine, Family Practice, Pediatricians)
have traditionally charged only for actual time spent in the presence
of the patient in the hospital or exam room. A doctor is essentially
"giving away" his/her expertise for free every time he/she:
- Talks to a patient on the phone
- Talks to another doctor about a patient's case
- Studies a written report from another doctor about one of his
patients
- Evaluates the results of a patient's lab tests, enters them into
the patient's record, dictates instructions, and conveys that
information to the patient.
- Discusses a patient with the nurse and gives her instructions
to convey to the patient.
- Receives phone or fax messages from a patient and then makes professional
decisions about the patient's care
- Stops to visit with a patient in the office hallway and gives
medical advice.
In the past, when doctors were paid appropriate fees for office
and hospital visits, we could afford to "throw in" all that extra
advice for free. Unfortunately, now that insurance reimbursements
have fallen to absurdly low levels, it's only human nature for
doctors to begin to feel resentful about "giving away" to patients
all the time and services for which we know we will never be compensated.
How Much Should Doctors Earn?
Were They Making Too Much Money Before?
(They sure aren't now)
Consider:
- Most doctors are in training until they're at least 30 and don't
even begin their private practices until after that. Even before
the insurance conglomerates took over recently, a doctor might
still have had to struggle until he was 35 or older before his
practice actually built up to the point that he was taking home
a significant paycheck. Most other people who graduated from college
the same year the doctor did had begun their careers at age 22
and had been taking home steadily higher salaries all that time
from age 22-35.
- Most doctors finish all that training with huge educational loans
which they must somehow repay.
- The overhead (staff salaries, benefits, rent, malpractice insurance, etc.)
in a typical one-doctor medical office averages perhaps $17,000 per month; so a doctor must earn at least that much just to break even
without taking home anything. There is no significant gain in
financial "efficiency" when a group of doctors share one office
because all the same services must be provided to all their patients;
and there are usually added costs for administrators, etc. In
fact, a one- or two-doctor office is probably the most cost-effective
way to "package" health care.
- Most doctors work at least 50-60 hour weeks plus nights and weekends.
- Doctors take on enormous responsibilities for the life and health
of every patient they treat every time they treat them. Even a
"little" mistake by the doctor or any member of his staff could
cost a life or a limb (or a frivolous lawsuit). Doctors are, by
their nature and their training, the kind of people who take those
responsibilities very seriously with every single patient under
their care.
- Most doctors have no employer who is contributing to a pension or retirement for
them in addition to paying them their salary; so if a doctor cannot
set aside a substantial portion of his current earnings for retirement,
he will have no savings on which to retire in later years.
How much should a good doctor earn for working so hard, so conscientiously,
for taking on all those responsibilities? Should he earn enough
that he can afford to set something aside for his retirement?
If you name a halfway reasonable income figure for having all
that responsibility, the odds are that your Family Doctor is earning less than that now; and it's going to get worse unless something is done.
If the income figures drop much lower than they are right now,
it's almost guaranteed that the best doctors are going to begin
leaving the profession in droves (those who can afford to retire).
The ones who can't afford to quit because they've got debts or
kids in college or other long-term commitments will find it increasingly
difficult to avoid resenting their indentured servitude. It's just not worth it to work so hard, shoulder all that responsibility,
then be paid peanuts.
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MEDICAL OFFICE OVERHEAD
A Reality Check For New Primary Care Doctors
Doctor, you've just finished all your residency training in Primary
Care; and you're eager to begin building your private practice.
Unfortunately no one has ever given you the hard facts about what
it really costs to run a medical office. Well, just click here
to see the real facts about medical office overhead. That's right, you must earn more than $17,000 per month before you can take home a dime. Welcome to REALITY.
Managed Care Paperwork Means Extra Staff Expense
Most doctors' offices have been forced to add an extra full-time
employee just to handle all the new insurance paperwork required
to process claims and patient referrals. Who pays for that? Of
course the doctor does, out of his ever-shrinking reimbursements
from the managed care plans whose paperwork the new employee is processing. This extra salary expense takes another major chunk out of the
doctor's total take-home pay at the end of the year.
MORE MALPRACTICE SUITS WITH MANAGED CARE
Most Primary Care doctors have seen their Medical Malpractice Insurance premiums quadruple in the past several years (for less coverage) even though most
of us have never had a malpractice suit filed against us. Why?
Because the malpractice insurance companies fear a flood of new medical
malpractice suits associated with "Managed Care". They are seeing many more malpractice suits being filed because:
- Some patients have had a bad outcome because their managed care
plan refused to allow their doctor to order some needed test or
treatment.
- Some doctors are becoming too rushed and are making mistakes because they are not being as thorough as they
should be. A growing number of doctors have begun taking on many more patients than they should in order to try to maintain a reasonable income in the face of
shrinking reimbursements per patient. That becomes a vicious cycle
for them because increased patient load means more practice overhead
expense for more staff, etc.; and that means trying to juggle even more patients to cover the added overhead cost, etc.
The malpractice insurance companies, who understand the medical
and legal systems very well, know that as insurance reimbursements
continue to shrink, doctors will become ever more rushed and have
less time for their traditionally meticulous attention to detail.
The malpractice companies are raising their premiums because they know that patient care is going to deteriorate.
REDUCED LAB INCOME
Should A Medical Office Make a "Profit" From Lab Work?
As managed care insurance plans are slashing the reimbursements
they pay to doctors for office and hospital care, many are also
insidiously stripping away the only other significant "profit
center" in a Primary Care doctor's medical practice, the laboratory.
Where do you suppose the money comes from to pay that nice nurse
who draws your blood as well all the rest of the overhead cost of having your doctor's entire office operation there ready
to serve you whenever you're ill?
In the past, when a doctor ordered a lab test on a patient, he
would charge a fee somewhat higher than the actual cost of having
the test performed; and it was absolutely appropriate that he/she do so in order to cover the
costs entailed. Suppose, for example, that a patient has a simple follow-up
blood test for cholesterol that doesn't require an office visit
with the doctor. Here's what happens:
- A skilled person in the doctor's office must draw the blood, check
the patient's blood pressure, and perhaps take time to answer
some question from the patient.
- A skilled person must either perform the test in the office or
prepare the specimen for transport to an outside laboratory
- When the cholesterol result is obtained, someone must pull the
patient's chart from the files, attach the lab paperwork, and
transport it to the doctor.
- The doctor uses his professional training and judgment to evaluate
the test result; then he either telephones the patient himself
or writes a note to the nurse with instructions to be relayed
to the patient; perhaps he writes a prescription refill; then
he dictates the cholesterol result into the chart along with his
recommendations.
- The nurse must take time to call the patient, chat a few minutes
about the results and the doctor's instructions, then mail or
phone out the prescription, etc.
- Another employee must type the doctor's dictation into the patient's
chart, document the refill, and refile the chart.
The above procedure is repeated perhaps 20-30 times every day, taking up a great deal of staff and physician time. Every person involved in this entire process expects to be paid
for his/her time, and where will the money come from? It is absolutely appropriate that the doctor should charge a
"markup" on lab work to cover the actual (hidden) costs of providing
these services to his patients, especially nowadays when insurance
reimbursements for Office Visits are in the toilet.
Traditionally lab work done through a doctor's office provided
a small additional "profit center" that helped to underwrite some of the cost of having all those people
on staff, ready to answer the phone and provide all the other little services
for patients such as the time spent doing walk-in blood pressure
checks, refilling prescriptions, fielding telephone questions,
etc.
Many of the managed care plans are either slashing the amount
they pay doctors for lab tests or else refusing to pay doctors anything at all for lab work. Many plans have contracted with huge labs at deep discounts (click) and now require that all test specimens be sent directly
to that particular lab. Sometimes the lab is even partially owned by the insurance company, thus shifting additional profits to the insurance company and away from the doctor who is actually interpreting the significance
of the lab results and caring for the patients.
The insurance companies know that doctors will keep right on doing
the same lab tests because we need that information to take proper
care of our patients. They know doctors' offices must still provide all the services
mentioned above in connection with each test; yet some insurance
plans now deny doctors any compensation whatsoever for these services. The doctor must still exercise his professional training and
judgment to interpret what the tests mean, decide what's next
for the patient, and then communicate and document those facts;
yet he is now being paid absolutely nothing for the entire process.
There is no other profession (lawyers, electricians, plumbers,
veterinarians) that is required to give away its expertise for
free. Each and every decision a doctor makes always carries with it
the enormous responsibility of potential harm to a patient if the slightest error is made
by him or his staff. It is manifestly unfair that doctors are
being denied any compensation for shouldering such serious professional
responsibilities while at the same time being required to have
an office full of skilled and well-paid staff to provide those
very services. Even Wal-Mart must mark up its merchandise and services to stay
in business; yet doctors are now not permitted to do so.
RURAL PRIMARY CARE DOCTORS BEWARE
If you are a doctor practicing in a rural area, you may not yet
have felt too much impact from managed care; since the insurance
companies have been concentrating mostly on dividing and then
devouring the easy prey in the cities. You'd better brace yourselves,
thought; because you're next as soon as the insurance boys feel
they've got most of the city docs and their patients "under control."
I urge you to learn well the lessons on this web site, talk amongst
yourselves "off the record", and agree what sort of fees you need
to earn in order to keep your practice solvent and the joy of
medicine foremost in your work. Hyenas in Africa hunt by cutting
a few weaker animals out of the herd and then all setting upon
those few at once. That's the lesson... Good luck!
SALARIED PRIMARY CARE DOCTORS BEWARE
A small but growing number of Primary Care doctors have left their
private fee-for-service practices and have taken salaried positions
with large HMO clinics, hospitals, and teaching institutions.
This is a one-way trip that some have chosen when offered an "acceptable" salary at
the same time they were watching their private practice incomes
dwindling. In today's medico-economic climate it will be virtually
impossible for these physicians ever to return to private practice.
However, these salaried doctors should not become too comfortable and complacent about the future of their "acceptable" (not great, but OK) salaries,
perhaps feeling they've "risen above the fray". Those new salaries probably won't last long. The only factor keeping these physicians' salaries at their current
levels is the need for the insurance programs to pay enough to siphon doctors
out of private practice, onto their payrolls, and thus under their
direct control. Just as the insurance companies suckered doctors into contracting with their
HMO and PPO programs and then cut physician reimbursements once they felt their position was strong enough to do so, in
the same way will they begin to cut the incomes of their salaried physicians once they have lured enough doctors out of private practice and
onto their direct payrolls.
Some Primary Care physicians are comfortable practicing in very
large groups and argue that this frees them from administrative
headaches and allows them to concentrate on practicing medicine
full time. Further, they argue that being a part of a large group
gives them negotiating power with the managed care companies.
Well maybe, but then why do I keep hearing horror stories about
the Primary Care docs in the big groups taking it in the shorts
under managed care?
Now, guys, I'm going to venture some personal opinions here (I
can do that, it's my web site - smile); but please don't anyone take offense because
what I'm saying is just my own opinion and is not intended to
offend anyone.
In my view, in these days of managed care, "Bigness Equals Vulnerability". To me the liabilities of being on salary with a big group (or
clinic or hospital) far outweigh any potential benefits.
- For one thing, salaried doctors often end up taking orders from
"quality control" nursing personnel and other staff who critique
and even censure them if they're "not seeing enough patients"
per day or are "ordering too many tests". To me, the mere idea
of being forced to take orders from some administrative functionary
about how to practice medicine is unthinkable.
- It is argued that a big group is in a stronger position to negotiate
with the managed care companies, but I disagree. I think that
in the long run large groups are actually in a weaker position to negotiate than
solo practitioners and small groups because large groups are high profile targets
(like lumbering elephants) that cannot turn and maneuver quickly, and they have enormous
fixed resources and operating expenses which must be serviced
no matter what may ultimately happen to their doctors' salaries.
The insurance corporations know how to play hardball when dealing
with a lumbering elephant whose weaknesses they fully understand
(ie., doctors won't strike, doctors need those steady paychecks
to feed their families, the clinic staff and mortgage must be
paid no matter what, groups of doctors can't agree on anything,
etc.) Consensus is difficult to achieve even when you're only
dealing with the concerns of only 2-3 doctors, let alone the individual
concerns and fears of dozens or hundreds of doctors.
- I believe that a well-informed (and that's the key, well-informed) population of doctors in solo or small-group practice can stymie
the managed care companies far more effectively than a few behemoth
groups. Once doctors have easy, open, reliable access to all reimbursement
information at their fingertips (as pioneered on this web site), they are likely to begin making similar, intelligent (but individual)
decisions for the welfare of their practices and their patients, decisions that will likely carry large numbers of Primary Care
doctors down parallel paths, much to the chagrin of the managed
care companies who thrive on stealth, deception, division, and
confusion.
- Individual doctors can turn the direction of their practices on a dime if moved to do so.
- They can drop a health plan or add a plan to their practice with one word to their office
manager.
- They can selectively shift certain selected small groups of their
long-time patients (those with the bad health plans) back to fee-for-service while exposing themselves to relatively small financial risk.
- If doctors are all armed with the same facts about the insurance
companies, they are likely to behave like a swarm of bees, dodging
and weaving, but all moving in the same general direction instinctively, biting only in self-defense when necessary, but never providing
a big, easy, lumbering, vulnerable target that can be taken out
with a single shot the way the elephant can be.
- And to me, the final, biggest liability of giving up the independence
of "small-time" private practice is that if you are a doctor working
for a salary being paid by someone else, even if you are 50 years
old and a superb physician, you can be FIRED... for any number of goofy reasons, :
- If someone in power (often not even another doctor) decides you're
not working fast enough or not churning through enough patients
in a day to justify your salary.
- If someone decides you're ordering too many tests on your patients.
- If someone decides you're writing too many prescriptions (click) for your patients.
- If someone decides they don't like your views on managed care.
- If someone in power doesn't like the way you part your hair.
- If you simply won't "toe the company line"
I feel strongly that any Primary Care physicians who think they
can escape from the woes of managed care by joining a large group
or hospital clinic are making a one-way jump from the frying pan into the fire. The grass is not greener on the other side, and you're probably
going to be much better off staying with your private practice
and fighting the insurance companies from familiar turf, backed
up by your loyal patients.
It is not my intention to criticize physicians who have elected
to practice in large groups. A doctor should be free to select
any type of practice arrangement he or she chooses, but any salaried
physicians who look condescendingly at those of us still trying
to make a go of it in solo or small-group private practice should
instead be thanking their stars that we're still here. If the
insurance industry every succeeds in its unspoken (but very real)
goal of total control of all of medicine, everyone's income (and
perhaps even their integrity for some people) will be going straight
into the toilet together.
ABOUT SURGICAL SPECIALISTS
Like Primary Care physicians, surgeons are highly skilled and
dedicated professionals with very special training that most of
us will probably need from time to time in our lives. Unlike Primary
Care physicians, most surgeons are almost totally dependent upon
a constant stream of new patient referrals from elsewhere in the
health care delivery system; so they have been particularly vulnerable
to takeover of their practices by the managed care insurance programs
who can and do control such referrals with an iron hand.
Surgeons, like Primary Care physicians, have been devastated by
reduced reimbursements from "managed care" and are being paid
far less than their training and skill should be worth. Personally,
if I ever need surgery, I'd want to have the freedom to hire the
best surgeon on town; and I wouldn't want him starting my operation feeling he was going
to be underpaid for his expertise.
This web site is intended mainly to present information relevant
to Primary Care Physicians and our patients. The plight and viewpoints
of surgeons are equally valid but are beyond the scope of this
site; so it will be left to the surgeons to speak for themselves
as they feel appropriate.
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