Bureaucrats determine the business model of a doctor’s practice

Dr. Marcus Conant, among the first AIDS specialists in San Francisco, who for decades had one of the world’s largest private practices for patients with AIDS and HIV, has left town and moved to Manhattan.

He has been a physician for nearly 50 years, but like many doctors, in the past decade he has become increasingly frustrated with insurance challenges that made running a private practice unnecessarily complicated and a financial nightmare, he said. He tried to run his practice part time, using his personal savings to keep the clinic open. “The bottom line is, you cannot make a living practicing medicine unless you work at least 50 to 60 hours a week,” he said. “I’m not the only doctor who’s getting to the point where it’s not worth it.”

This is what happens when the business model of a doctor’s practice is determined by bureaucrats in Washington with very little clue about how the practice of medicine really works.

They’ve decided for doctors that we’ll get paid for strictly office visits and procedures when, in fact, being a good doctor is much, much more about good communication and solid relationships than the maximum volume of patients you can see in a given day.

Last year, I wrote a piece showing how Medicare is systematically devaluing primary care in collaboration with the specialists.

Under today’s business model of medical care, it is financially impossible for doctors to be good doctors. And, remember, every month you hand over your insurance premiums to the insurance companies, you are propagating this broken system with your own money. Things will not change until people, like you and me, demand change with our wallets.

Jay Parkinson is a pediatrician and preventive medicine specialist and founder of The Future Well. He blogs at his self-titled site, Jay Parkinson + MD + MPH.

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  • Dennis Tribble

    I couldn’t agree more. Insurance is a highly-profitable business that makes its money by denying patients the care they pay it to provide. Their denial is often passive-aggressive and arbitrary. A family member who is a physician told me that, bad as it is, at least dealing with CMS has rules by which they are forced to live. Not so with private insurance companies. They deny care with no recourse or appeal short of publicly embarrassing the company for their inhumanity. They change the rules at their whim.

    Where did we get the idea that we could somehow have a cost-effective healthcare system predicated on the insertion of an insular, profit-driven bureaucracy between the provider and the patient? Compare the bloated salaries of insurance company executives to those of any primary care physician and decide for yourself!

  • docguy

    can you guys really stop writing that all specialists make 250k and work 40 hours a week and sleep every night and live in a land of rainbows and honey, when in actuality, it’s much less than that, I’m a ob so a specialist and work in excess of 100 hours a week and make a little over 250k, but work the job of 2 docs so i don’t think that’s too bad and see >110 patients a week and have to to pay the bills.

    are we playing a the grass is always greener???

    sure we would all love to get paid like plastics with no insurance and no call, but that’s not what we picked, so stop with the specialists are out to screw the pcps all the time.

    • Nemo

      My husband is a specialist too and I have to agree with you – he works no less than 90-hours a week, out the door around 5:30 AM, not home until 7:30 PM most nights and he works every Saturday and two Sundays a month.

      I’m tired of hearing how doctors are greedy bastards, especially the specialists. He, like you, works more than the equivalent of two full time jobs with life and death his constant companion, risking his entire livelihood each time he goes into surgery – yet we’re tolerating the class warfare that he, or you, shouldn’t make as much as you do…and he makes about what you do, yet that’s too much?

      All these people who think doctors need to make less – how much less? And based on what hours? I’d gladly have DH make less each year to have him working only 40 hours a week….but then, oh yeah, he has a staff of 15 who depend on him to work as hard as he does, so they can work as hard as they do, so they too can earn a living!

      DH’s rent, utilities, malpractice, biz liability, student loans, and other overhead, including his clinical and operational staff don’t want to hear they’ll get less….it seems wishful thinking that only the docs are expected to take the hit and smile doing it!

  • jsmith

    Not to disagree about our broken system, but, in all fairness, Dr. Conant has hit 70. He’s done his time.

    • family doc

      HEY, wait a minute! its not for you or me to say when a doctor should retire. a doc should retire when s/he is ready to reitire and/or feels s/he can no longer provide quality care. im not a senior, actually far from it as i have decades to go before i retire as a physician, but lets be respectful of our senior physician collegues. in addition, i value my older collegues. they are a welcome resource of information, skills, and mentoring. which as a younger physician, i find very valuable.

  • http://fertilityfile.com IVF-MD

    Absolutely agree. When patients and doctors control the interaction, then patients can vote with their wallets on what they want from the doctor whether it be short wait times, quality and quantity of face-to-face conversation, friendly knowledgeable staff, optimal medical outcomes or gourmet chocolates in the waiting room.

    However, when control is turned to some uninterested third-party bureaucrats, then the quality of patient satisfaction goes down as does the satisfaction of the doctor with his/her career.

  • Doc99

    “If you think healthcare is expensive now, wait until it’s free.”
    PJ O’Rourke

  • http://www.medbillingncoding.com Adam Alpers DO

    It is certainly difficult to keep on top of the practice of medicine and stay ahead in the business of running a practice. I believe that it is almost impossible to expect a primary care physician to generate most of his/her revenue solely on patient visits alone.

    The overhead to running a solo practice is staggering and the model that 50% of your income goes towards overhead and the other 50% is yours to keep is not even close to the reality of today’s cost of running a practice.

    As the reimbursements go down all other overhead costs without exception go up. Today I received a notice in the mail that any negotiated prices I have with one of the major labs in the country was going up 2.5% across the board.

    I can’t remember when I had an opportunity to make a blanket statement regarding raising my reimbursements for my office visits.

    The insurance companies dictate what those fees are going to be and if you don’t like it, so be it, you are not on our panel.

    I find it now, more important than ever, to make sure we are maximizing our office visits by learning the “rules of the trade” and making sure we receive every penny we deserve. If we do not do this, the day of the solo practitioner is going to disappear.

  • solo dr

    I am running a solo FM practice. I work six days a week.
    I am stuck with low reimbursements with all but one plan way below Medicare rates. The major health plans have a take it or leave it attitude when it comes to fees. In the last 10 years, copays have gone from $10-$15 to $25-$35, with office visit fees increased by less than 10% despite increases in malpractice insurance, supplies, vaccines, etc. The only way to stay afloat in the current model is to see additional patients each week. In a real business, the increase in overhead would be passed along to the consumer.

    • http://www.medbillingncoding.com Adam Alpers DO

      I found that my biggest mistake in the grand scheme was to not understand the rules. I decided to spend literally hundreds of hours figuring out the best way to maximize my time spent with the patient. Collecting co-pays at the window, online with the insurance companies to see what the deductibles are,etc.

      My most successful learning curve was to understand the E/M codes to their maximum. When I did this, my income started to raise in spite of all the cuts. I realized part of the problem was not capturing all the revenue we deserved and that was when I started to write about it…

      If you really want to capture some of the lost revenue like I did, visit my blog as well, I am sure when you put the training to use, you will see your revenue increase almost overnight.

      This is probably, in my opinion, one of the best ways to fight back, leave nothing on the table for the insurance companies to laugh at..

  • Michael F. Mirochna, MD

    Maybe doctors could be better if we could spend our time learning, reading and practicing medicine rather than learning the in’s and out’s of billing. I can’t stand spending time on figuring out or asking our billing department about what the right code is for this joint or that joint, right or left, 1 or 2, 2-15, V codes, contraception counseling, so on and so forth. As a resident physician I’m not sure why anyone would think this system is reasonable and would have went along with it, ever. Does anyone know about whether the AMA owns the E&M codes or ICD-9 codes?

  • Alina

    “not sure why anyone would think this system is reasonable and would have went along with it, ever.”

    Crazy, right. AMA gets about $70 million in annual revenue for their CPT directory, so we can see why they like it.

    CPT (E/M) is AMA. ICD-9 is not.

  • http://healthtrain.blogspot.com Gary Levin

    Yes, the AMA holds the copyrights to the entire CPT code book…not just E/M codes.
    Read my blog today at http://www.healthtrain.blogspot.com

  • Donald Green MD

    The present bureaucracy is not of the government’s making. To believe so is to swallow misinformation from insurers and hospitals. The latter two’s eagerness to make special deals or grab market share has created this Rube Goldberg system. Doctors need also to take some responsibility since they sat on their hands and let it happen. All these parties kept the public clueless by doing this all behind closed doors and plunking the premiums onto employer’s and individual’s desks getting no resistance until now when it has just become too high a price to pay. The coming solution will have to involve the government in some fashion to reshape the payment system. How providers approach this will determine in large part if it will be successful. Some entity has to convene all the stakeholders to outline what the solution looks like and not let them move away until something is created that serves the public well. The real suffering is the patients with bankruptcy, more severe illness, and even death because of a broken payment plan that begs for overhaul. It is time to examine the big picture and put aside shortsighted self interest.

    Carping about your income that is in the top 20% of earners in this country falls on deaf ears for the general public. It also doesn’t help your image.

    • Nemo

      Carping about your income that is in the top 20% of earners in this country falls on deaf ears for the general public. It also doesn’t help your image.

      When you take pay to hours worked to be paid, doctors are not top earners – yes, they work the equivalent of two full time jobs and that is why they “earn” as much as they do…..but if you look at it as two full time jobs, what it really is, then all of a sudden it’s not so rosy.

  • Tom

    Dr. Green, it would appear that you are not fully cognizant of how government reimbursement works to affect other 3rd party reimbursement. Let’s review:
    1. Medicare sets a price for a service, often arbitrarily, on a take-it-or-leave-it basis
    2. Due to many physicians relying on Medicare for a large part of their revenue, monopoly power rules the day, and physicians swallow the price cut.
    3. Insurers, seeing physicians accepting reimbursement less than what they pay physicians, slash their rates accordingly. Medicare has thus “set the market rate”, though the market had little say in the initial cut.
    4. Due to reimbursement for a given service being too low by all 3rd party payers, physicians no longer offer the service, or offer decreased value for that service.

    This is how you get less of what you want doctors to offer cheaply; by debasing the price of the service to where it is no longer economical for the provider to provide that service. See primary care…

    One must deplore your derision of financial matters. It is indeed legitimate to raise valid concerns about the viability of one’s business model. To declare otherwise it to declare oneself blind to the reality of business. One wonders how the image of doctors will improve if said doctors cannot sustain themselves in practice.

  • Donald Green MD

    Gee Tom, Give it a rest. I practiced over 35 years and made a good living with over 25% of my practice from Medicare and 5% from Medicaid and 10% from cash on the barrelhead.

    The insurers do not have to follow the lead of Medicare but they do since it is what easiest for them to do. They talk out of both sides of their mouth. They claim extra expense because they have to set their pricing but then turn around and dove tail on the government model.

    If the status quo is maintained and physicians do not take some control of their profession, this is what will ruin private practice. It is a failing of medical schools who have not advised their students properly on how to set up an efficient practice that can sustain itself under most circumstances.

  • Tom

    Is that “practiced” in the past sense? If so, why are you trying to tell the current generation how to practice? Not to belabor the obvious, but things are radically different today than they were 35 years ago. the younger generation has to make a living going forward, while you have already made your living and can retire at will. You truly have no understanding of the younger generations point of view on this. Do you seriously think that we will be able to make a good living with 60-70% patients government funded, as they surely will be? Wake up and smell the coffee, Dr. Green. Things are changing dramatically, and you are not. Your business model is obsolete.

    By the by, your statement, “The insurers do not have to follow the lead of Medicare but they do since it is what easiest for them to do”, betrays a further lack of understanding of the market. When a competitor pays less for a service than you do, you are at a competitive disadvantage. They would be foolish, and do a disservice to their shareholders, to pay more than the minimum (except in some very narrowly defined circumstances). It is not “easier” for them, it is necessary.

    • Donald Green MD

      Tom, I see you are pretty set in your ways. It is you who is resisting change. I’m semi-retired now and practiced privately until 2007. I was a regular member on my IPA’s contract committee. I was president of a contract management corporation for our coverage group and participated heavily in contract negotiations with insurers. Successful contracts were the outcome from both these organizations and paid us well.

      Trying to square the round hole of the so called free market to provider payments will always lead to frustration. You can continue to play their game and stay on the downward spiral. Here in Massachusetts 85% of insurance coverage is non profit and still costs rise. I am trying to point out that a major cost is the administrative expense to support the payment system we now have. It helps no one, discourages doctors like you from earning a better living, and screws the public by producing exorbitant premiums, co-pays, and deductibles.

      Because I have a different viewpoint than you is not a reason to use ad hominems to make points. I might also add I introduced a successful self made emr into my practice and used it for five years before I semi-retired. I used NPs for years and electronic billing for over 30 years. I attended at the hospital, nursing homes, and made house calls. My office load with the NPs help was 35 to 45 patients a day. I finished in time for dinner and was fully engaged with my family and friends. My income was in the top 1% for my specialty in the country. I sold my practice in the high 6 figures+. Contrary to your perception I would say I was more cutting edge. Maybe there are still some lessons to be learned before rejecting someone’s experience. Time will tell my friend.

  • http://www.BocaConciergeDoc.com Steven Reznick MD FACP

    As physicians while we were busy working 80-100 hour weeks we allowed the private practice of medicine to be picked apart. We allowed surgeon to compete with medical doctors for available dollars. We allowed specialist to compete with generalist for available health dollars. We allowed the AMA and ACP and ACS to hide behind the white coat and Hippocratic Oath and act professional while employer lobbyists and insurance company and pharmaceutical company lobbyists rolled in the mud and played back room politics to protect their interests at our patients and our expense.
    We allowed Medicare to become the gold standard for payment with insurance companies setting up panels and discounting deeply in states where Medicare payed well and the majority of patients were Medicare age. In states where there were few Medicare recipients it became a benchmark used by insurance companies to attract doctors to their panels as well with fees a percentage higher than Medicare.
    We sat back and let hospitals decimate our bylaws rendering our practicing community medical staffs impotent and leaving the real power in the hands of the hospital employed physicians creating a conflict of interest that threated community healthcare.
    We allowed the growth of physician extenders origin
    ally intended for primary care but watched them shift to specialty care so that we could stay in the procedure room and generate more income while they dealt with the day to day care problems of the patient population.
    We fragmented longitudinal care and created new specialties like the hospitalist and tried to convince our colleagues through a jaundiced eye that their care was better and more cost effective in the hospital setting than the care provided by their general doctor.
    We set ourselves up for the bureaucrats by failure to compromise , failure to work together , failure to communicate and greed. That is not to say that practicing individuals are not extraordinarily caring , competent and concerned about their own area of expertise. With training being so goal directed and doctors having so little exposure to what the other doctor does in the other specialty, we have no way of understanding or sympathizing with the unique problems of each area of medicine and give those practicing in other areas little understanding and support. The stewardship of medicine requires far more compromise and communication between doctors practicing in different settings. Until we stand as one , medicine will be run by business people, insurance companies, lawyers and politicians not doctors.

  • http://www.BocaConciergeDoc.com Steven Reznick MD FACP

    The discourse between Tom and Dr. Green is fascinating. I am not sure what specialty Dr Green practiced but I do believe he is correct in that we as a physician community allowed this to happen to ourselves. We created the void that employers and insurers stepped into and watched them kidnap medicine from patients and physicians. Employers and for the most part patients watched it happen and did not care as long as the insurance premiums were affordable and paid first dollar coverage or a minimal co pay. No one at any level considered the fact that as health care costs rose and became a more significant part of the GNP we might not be able to afford to continue to practice in the current disorganized style.

  • Donald Green MD

    Thanks Dr. Reznick for your support for a view I have watched for a long time. As for my specialty I am a boarded FP but also boarded in Pediatrics. I held a Geriatrics subspecialty from 1994 to 2004. Due to the end of my career I chose not to retake this exam. I also hold an MPH in Maternal and Child Care form Univ of Cal, Berkeley. I stake this all out to show I have had an opportunity to see medicine from various vantage points. My take is we must reform our payment system and remove excess bureaucratic baggage. It is only after this is done can we tackle making our system work more rationally.

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