$71,000 for 300 bariatric surgeries on Medicare patients

A glaring example of how a practice cannot live on Medicare patients alone:

After paying for clinical staff salaries, practice costs and malpractice insurance, a bariatric surgeon who performs nearly 300 laparoscopic gastric bypass procedures on Medicare patients makes just over $71,000 annually””and that’s before taxes, according to a recent report.
That is $20,000 less than the average pharmacist earns in a year, $50,000 less than the average dentist and about the same as the median salary for physician assistants, based on figures from one Web site, www.salary.com.
“Being paid $71,000 for 292 gastric bypasses a year””that’s just not practical,” said study author Atul Madan, MD, director of the bariatric surgery program at UT Medical Group, Inc., in Memphis, Tenn. He presented the study at the 2006 annual meeting of the American Society for Bariatric Surgery.

Comments

Elliott
He was not paid 71k for 300 bariatric surgeries. He’s a lousy businessman is the story. Medicare reimburses more than 10k per bypass so he generated some 3,000,000 in revenue for someone. I am certain he got North of 500k for his part so where did all the money go? Lousy businessman should give up his dream of becoming rich by running his own practice and go to work for someone else.
DBR
Elliott should get his facts straight before commenting on something he obviously knows little about…
Medicare approves payment of $1,300 TO THE PHYSICIAN for a laparoscopic gastric bypass – a little more than 10% of what Elliott claims.
Then, using its standard payment formula, it PAYS 80% of that, or about $1,067. The secondary insurance might (or might not) pay the additional 20%, up to but not exceeding the $1,300 they’ve “approved” for the procedure.
Now the HOSPITAL’s reimbursement is entirely another story – but even if the hospital DOES get paid $10,000 per procedure, that doesn’t affect the physician’s income – or expenses – at ALL.
I have to wonder if Elliott read the story….it says: “Using reimbursement rates based on the 2005 Medicare fee schedule, Dr. Madan performed a cost analysis of a hypothetical bariatric practice.”
I don’t know who Elliott’s accusing of being a lousy businessman, since the doctor in question is hypothetical….I smell a little class envy in Elliott’s completely erroneous cost data and attitude….
Anonymous
Elliott, where did you get the $10,000 Medicare reimbursement figure for a gastric bypass? That sounds pretty high for a surgical fee on any Medicare schedule. Citiation, please. And that citation should be original source, not some hambone article that quotes in round figures without separating surgeon’s procedural fee from hospitalization, or OR charges or other fees charged but not paid to the physician.
Tell me which Medicare distirct is paying $10,000.
I’ll make it easier or you: CPT 43847.
Anonymous
In my field, neurosurgery, we are reimbursed about that amount for a medicare laminectomy or discectomy. We might get 2,000 for a craniotomy for a brain tumor. I do about 320 surgeries a year. If they were all medicare patients, I could not pay my rent (90,000 per year), my malpractice (120,000), my computer costs (50,000) and the cost of my three employees (250,000, incl benefits)and take home anything at all for myself.
Anonymous
The MN Hospital Association just came out today with a report that pegs the cost of Medicare reimbursement in 2005 at $916 million less than the actual cost of providing care.
At this rate, the entire health care system is going to go belly up.
Michael Rack, MD
No one gets rich off of Medicare. Specialists take Medicare patients for 2 reasons
1) primary care physicians aren’t going to send their privately insured patients to you unless you also take their Medicare patients and
2) A reasonable proportion of Medicare patients helps cover overhead and maintain a stable cash flow.
20-25% Medicare is a reasonable figure for a typical specialist practice (including sleep medicine)
Anonymous
Also, don’t forget what he has to do for that 1300:
See patient every day in the ICU and hospital, order appropriate lab tests, consultations, interpret and act on them, write chart notes, answer all nursing questions and phone calls (regardless of the hour), speak to family members and patient, see the patient at least monthly for 90 days, answer all questions, phone calls, fill out disability and FMLA paperwork and handicap parking, renew prescriptions, deal with any complications, keep referring physicians informed, and keep detailed records, ideally in an EMR.
All of this is included in that price. He doesn’t get to send another bill for 90 days.
Also, if the results are not perfect, he can worry about being sued for 2 – 3 years.
Oh, and he won’t get that 1300 for anywhere from 30 to 180 days. He may never get it, or he may have to spend a few more hours on the phone and writing letters to beg for payment for care he has already provided.
Those of you who are the beneficiaries of medicare ought to think about other services you use, and how far 1300 would get you. Auto repair, roof repair, veterinary care, yard work, etc. Last week we had a storm that took out a few trees at my house. Its going to cost me about 1200 to have them chopped up and hauled away. I’m pretty sure that has to be paid up front, and nothing else is included.
Anonymous
Im a doctor and Im on medicare. I sure hope that in my time of need someone will be willing to help me. I have worked in the past and unfortunately, I am partially disabled and have been unable to find a position. Theres more to life than the money.
Mother Jones RN
This is sad. I know nurses who went to 2 year programs who make more than $71,000 a year. I don’t know what the answer is, but something needs to happen before we loose all of our good docs.
MJ
Elliott
I smell people who can’t read. The hypothetical doctor got over 500k. The hypothetical costs are representative of a case study designed to support the whining of the real doctors. The total reimbursement by Medicare is above 3,000,000 for the entire procedure.
Anonymous
I see Elliott cannot read. In the example given, surgery fee revenues are $407K, or roughly the $1,300 per case that other posters have mentioned, not $10,000.
And Elliott, it isn’t a matter of being a “bad businessman”, the remainder of this $10,000 you have yet to substantiate isn’t just for the negotiating to better pay the doctor who is a better businessman. The Medicare rates are fixed. As to whether a bariatric practice has other procedural sources of revenue, that isn’t said. The staff salary figure is reasonable for a small private practice. Class A rents for a small office can easily top $50K per year.
So Elliott, do you have any reliable information to refute the example or are you merely trying to troll?
From what you have posted, you seem to be out of your depth.
Anonymous
Some doctors do manage to get rich off of Medicare patients – specifically gastroenterologist and cardiologists who can do EGDs, colonoscopies, nuclear stress tests etc, in their own offices and reap the entire payment.
Elliott
For people who can’t read:
“Table. Surgeon Reimbursement For 292 Bariatric Patients Under Medicare
Total reimbursement $516,158 “
This number is fixed as people have observed. The other numbers are fact-based, but fictitious. For any of those expenses, there is a range, and the numbers chosen by this study are designed to make sure that the bottom line is sufficiently low to justify a lot of whining about how bad things are. For example, why would a 100% Medicare practice need class A real estate.
I do drop by here once in a while just to see if the environment has changed; it hasn’t. One thing I have noticed is that my respect for doctors in general goes up when I am not reading this site and plummets when I do.
Elliott
By the way, you doctors are so F***ing selfish that whenever you see the phrase reimbursement, you think you should get 100% of the money. When I stated that Medicare pays over 10k per bypass, I was talking about the total reimbursement for the procedure. Show me a surgeon that generates 300 non-emergency surgeries for a hospital and can’t figure out how to leverage that into some benefit and I’ll show you someone who can’t figure out how to run a business. (Spare me the BS about how there are regulations against this and it never happens because there are many ways to skin that cat. I have personally seen 4 different ways, only one of which was probably illegal.)
Rich, MD
Elliott,
…there are many ways to skin that cat…
That’s what they thought at UMDNJ.
My impression and recollection is that you are an academic (Economist?) Do you have to deal with overhead, cost-of-living increases for employees, struggling to meet your payroll expense, dealing with time-sapping bureaucracy designed to discourage otherwise profitable acitivities in your business, and harangues from economists (and lawyers!) who have never run a business?
Why are you so angry with physicians? You have said that as a group they are one of the highest paid, but you fail to acknowledge that the means are skewed by outliers at the high end. The bulk of us make scarcely more than the average PA (Surgical PAs often make more than Internal Medicine MDs). Do you browse blogs aimed at attorneys or small retail business owners and criticize them for complaining about the cost burden of the regulations they have to meet? Are they whiners, too, when they do? When the owner of the local McDonalds franchise complains about increasing minimum wages, do you harass him? He makes more than most physicians.
And why shouldn’t a Medicare practice have a nice location in a nice building? Medicare patients live everywhere and come from every walk of life. Why do you think they deserve less than anyone else? Do you not think the physician has to compete for business? You say they are bad businessmen, but when they do smart things to compete for business you claim they don’t have to because you perceive their customers as something less than deserving. Why does any business need class A real estate? If I live in a high demand area, and the nearest cheap real estate is 15 miles away, why would I travel for the doctor, when there is a closer one who happens to be in class A real estate? Nice straw man.
I understand your criticism of the article, and you do make some good points. But please don’t forget that you are not viewing it through the clearest of lenses either.
Anonymous
That’s why I continue to visit Kevin’s site — insightful, pleasant discourse with folks like Elliott, who seem to have an innate ability to provide a give and take conversation without reverting to name-calling and obscenities.
Elliott
Rich,
Some valid concerns. Yes, I have dealt with running a business. No, I do not frequent lawyer sites and criticize because I’m not interested so much in judicial policy as I am in healthcare policy. If I did, I’m sure that I would have some comments that were less than complimentary. With regard to minimum wage debates, I can’t recall specifically saying nasty things to a MacDonalds owner about it although I have commented about opposition to minimum wage in rather harsh terms. If you point me in the right direction, I’ll gladly take potshots since I think not wanting to raise the minimum wage is pretty egregious for people like that specifically and bad policy generally. As for competing for business, if someone specialized in Medicare reimbursed bariatric surgery, I imagine that word would get out quickly and that this would be a marketing niche that would require very little additional effort to attract patients. (Finding your niche is part of being a good businessman.) Finally, the “study” is ridiculous because of its basic dishonesty in trying too hard to be propaganda. Instead of the rather ridiculously low number of $71,000, the result could have been a much more realistic and honest $121,000 and proven the same point that Medicare alone was not renumerative enough to be attractive to your average surgeon. That’s a different argument and one that this doctor did not want to have. (Even 121k is a good living, I have no illusions that it would not represent an economic sacrifice vs. an alternative type of practice on the part of the surgeon who chose that route.) What riles me is the hypocrisy of the doctors who poor mouth on the one hand, but want to have some special social status because they provide healthcare. I get upset at teachers, police, firemen, and nurses who make similar arguments, but I don’t hear that consistently from these professions (except during union negotiation times and then much more mildly than the BS thrown around here).
Anonymous
“Show me a surgeon that generates 300 non-emergency surgeries for a hospital and can’t figure out how to leverage that into some benefit and I’ll show you someone who can’t figure out how to run a business. (Spare me the BS about how there are regulations against this and it never happens because there are many ways to skin that cat. I have personally seen 4 different ways, only one of which was probably illegal.)”
You might leverage into good will, equipment, prime OR time, positions within the hospital, shared advertising, or other similar perks. However, any hint that the hospital is paying you directly for this business is completely illegal. Both the hospital administrator and the physician are open to whistleblower claims which reward the reporter with a percentage of the government’s take. Heavy fines, dismissal from medicare, and jail are the potential penalties. Just because some are willing to skirt around this point and take these risks doesn’t mean that we are all “bad businessmen” if we choose to obey they law. I’m sorry, Elliot, but you are being ridiculous.
Anonymous
“Show me a surgeon that generates 300 non-emergency surgeries for a hospital and can’t figure out how to leverage that into some benefit and I’ll show you someone who can’t figure out how to run a business. (Spare me the BS about how there are regulations against this and it never happens because there are many ways to skin that cat. I have personally seen 4 different ways, only one of which was probably illegal.)”
You are an idiot Elliot. Do you know what fraud is? How about the Stark Law? Collusion anyone? Whistleblowers? Skirting the law is asking for the end of your practice and license revocation. You know nothing about the business of medicine and you are showing it right now.
Anonymous
Hospitals can pay for your time though and that is not a Stark violation. Hospitals use Stark laws as an excuse, because paying for your time is not a violation. They can pay you for call, you can be the director of bariatric surgery, they can reimburse you for no pays, they can pay you to run an indigent clinic, they can pay you to speak to potential patients on bariatrics. They hire have a P.A. for you that rounds and assists in surgery. So yes you can use the leverage of 300 cases and do nothing illegal.
Jon Mikel
Why don’t they pay for Laparoscopic Gastric Banding? It’s cheaper and safer than LGBP

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