Global Fee

Can Utopia happen in healthcare?

I have seen this New York Times articles referenced in a number of blogs and discussion groups. 

Too Many Doctors in the House

Here is some discussion about the article from the New York Times

This guy, Dr. Goodman, is a professor of pediatrics and family medicine at Dartmouth Medical School.  He believes that the current shortage of physicians is driven by doctors who just want to do more procedure and that doctors really do not have much positive effect on healthcare results.  The only real piece of data that Dr. Goodman cites in the article is the 12,000 geezers that they telephone polled.  Surprisingly, the grumpy old people were not happy with their healthcare, whether there were lots of doctors around or not that many.  Are the elderly ever happy with their healthcare?  They generally want to complain that their doctor only spent 8 minutes seeing them (for the $12 Medicare paid the doctor) to deal with their 8 different medical problems and 15 medications. 

Clearly Dr. Goodman is not involved with recruiting doctors for his hospital.  I am and it is a major struggle.  I know quite  a few people in the recruiting industry and it is a tough business and not getting easier.

Sure, if this country were Utopia and we could get all the doctors to practice the best evidence based medicine, have all of our patients follow instructions, have hospitals cooperate with doctors, and all sing songs around the campfire at the end of the day, his theory might just work.  Unfortunately, this is called "socialized medicine" and it has been tried in many other countries without producing the results he speaks of. 

I do agree that our system is faulty and needs major improvement.  From having practiced in the real world (i.e. not academia,) I have found that the best healthcare available is in areas where managed care has made the least impact and reimbursement is higher.  I practiced in Reno, NV and reimbursement was higher, there were better doctors, lower malpractice rates, and better patient care.  I now work in Las Vegas, where pay is lower, we have a much higher percentage of quacks and charlatans, and patient care is sketchy.  I have seen the same effect in other areas of the country.  Paying everybody more will not change the level of care everywhere, but this is a capitalist country.  If the pay is higher, you get better quality.

There is also the philosophic question of "What do Americans really want from healthcare?"   Are we measuring outcomes that the consumer really cares about?  I have seen that most Americans really see doctors as a way to enable their poor health habits.  Most people in this country don't want to change their diet, exercise, quit smoking, or drink less.  Modern medicine allows them to do that by providing bariatric surgery, Nissen fundoplications, Prilosec, advanced spine surgery, Phentermine, and a host of other American-lifestyle-enabling therapies.  They want these therapies and they want them perfect and they want them now.

So long as Americans continue their current lifestyles, the shortage of doctors will continue.  Perhaps Dr. Goodman's vision could someday be realized, but it would have to happen on a micro-geographic level.  A national system would only turn into another government sponsored FEMA-strophe.

Doctors and Taxes

Physicians really get screwed on deductions these days.  It really is not just docs, but anybody who is an employee making between 150k and 500k.  As your income goes up, your deductions get phased out.  Once you cross over about 200k, any deduction gets phased out or lowered.  Most people think that their mortgage is sacred, but this is not the case.  As your income goes up, they steadily decrease the percentage of the mortgage interest you can deduct.

Once you get over your mortgage interest getting phased out, then you have the AMT (Alternative Minimum Tax) to deal with.  Basically, the AMT was devised back in 1970 to catch about 20 people with high incomes who paid no taxes.  The real kicker is that they did not index it to inflation, so what used to be a crazy high income back in 1970  of say, $275,000, is not so crazy high today.  $275,000 a year back in 1970 was gangster type money.  So, as the years have gone by, more and more people have, and will be caught by the AMT.  Basically, the AMT disallows every deduction.  You (or your accountants) have to figure 2 tax forms, one regular and one AMT.  You end up paying whichever is higher.  There are certain things that will get you into the AMT faster, such as living in a state with high state income tax.

We got bit by the AMT this year.  We bought a Prius, it was supposed to get us a $3000 tax credit, not a deduction, but a credit.  What happened?  We crossed the line for the AMT and it was not allowed. Poof.....$3000 bucks just disappeared.  Thanks MR. IRS.

Some doctors think that forming a corporation will help them out significantly on their taxes, don't get fooled.  Most docs end up having to form an S-Corporation, which is really just a professional corporation which helps to shield corporate assets from liability. This is business liability, such as sexual harassment, not medical malpractice.  The tax savings for a doc with their own business set up as an S-corp are that you can deduct part of your self-employment tax and you can get more business deductions, this is becoming especially important with the AMT, as some of those deductions may not be allowed if you set the practice up as a Sole Proprietor.  You will save some money on taxes, but if anybody tries to sell you a plan where you will pay zero tax, save $30 bucks to buy an orange prison jumpsuit.  Doctors are suckers for tax scams.

The only way to really save money on taxes with  a corporation is to have employees and corporate assets, such as real estate.  The basic theme of our tax code is that you have to spend money and generate jobs to get a tax break.   It boils down to the fact that you have to spend money to save money on taxes.  It really is an incentive type plan to get people to start businesses where you hire people and buy supplies and services which lead to other companies having to hire more people.   From the government's perspective, this results in more taxes for the government to spend.  This is a great country, isn't it?

As a physician with a decent accountant, expect to pay about 25% of your overall income to the Feds.  It is sickening to see the numbers, especially when it is going to fund "bridges to nowhere" in Alaska and line vice president Cheney's pockets.

Making money in medicine just keeps getting harder

Making money in medicine, especially as a surgeon is getting harder everyday.  Not only is it a jungle out there, but you have to work your butt off to make it through the jungle.  The rules keep changing and our government facilitates the restriction of doctors' rights.

The global fee is an awful creation by Medicare.  Unfortunately, most insurance companies have picked it up and pay similarly.  Most cases now are a 90 day global fee, where the postop visit and any complications or take-backs are covered under the global fee...in other words, if your hernia patient is a 68 year old, diabetic, obese smoker and you do the best operation you can and they end up pussing out their mesh and you have to take them back to the OR 3 times for various wash-outs and the ever popular wound-vac, you get the same payment as the 40 year old health person that had no problems.  Guess what, I bet many physicians are going to start cherry picking patients as this goes on.  Most of these patients are medicare (who have these complications) so it will probably result in physicians taking fewer Medicare patients, or just unsubscribing altogether.

Office overhead makes a huge difference in what you get paid.  If your overhead is 70% vs 45% and your collections are $700,000 a year, that means the difference between a take home salary of $210,000 vs. $385,000.  Not only is good management important, but you have to be sure your office staff is not stealing money.  I personally know 3 physicians who have had over $500,000 each stolen from their practices by office managers.  Most of the theft occurred over a period of years. 

As far as socialized medicine goes, anybody who wants that should ask themselves whether they want FEMA in charge of our healthcare.  Our Federal Government is a failure in progress.  I thought all of those people carrying around the "Ron Paul for President" signs were part of some kind of cult.  I finally checked out his website and was rather surprised.  He actually has some good ideas, most of which involve limiting our Federal Government and letting free markets decide. Medicine could use some more free market ideas.  I am not the only one who thinks that doctors border on being indentured servants or slaves.

There was just a case in Illinios where a number of primary care docs decided to drop Medicaid  because it reimbursed so poorly. Unfortunately, their group did not have the proper corporate structure and the Federal Labor board determined that what they did constituted "Racketeering" and required them to keep taking medicaid patients, as they were the only primary group in a large radius.  They tried to defend their position by saying this constituted slavery, but of course, it didn't work.  You can read a great summary of the case and ruling at the HollandHart law firm weblog.  Here is the link.

Does Our Government Want to Eliminate Doctors?

The more I get into my website, MDJobexchange.com and recruiting for my hospital, I do wonder if our government really just wants to eliminate doctors.  It is truly mind-boggling.  Medicare persists with cutting physician pay, while pay to hospitals has not been decreased nearly to the same degree as doctors.  Some malpractice reform has occurred, but is really just scratching the surface.  Regulation and irritation continue to increase at an alarming pace.  Credentialing and licensing have become cottage industries unto themselves.  It is nearly impossible to change jobs as a physician without planning 6 months in advance.  Real physician income has dropped significantly over the last 10 years.   Salary surveys report about static incomes, but this has mainly due to increased productivity by physicians.  Federal loan programs are now requiring immediate repayment of loans, whereas they used to allow a grace period of about 4 years.  How does a resident making $40,000 per year make payments of $1800 per month on their salary while also paying their rent, car payment, etc. 

Things that can't go on generally don't.  If things don't make economic sense in this country, they tend to implode (unless you have high friends in our government to toss you some choice contracts.)  It is interesting that medical school applications are up this year, but that may be due to a change in the application process which made it easier for students to apply to multiple medical schools.  Perhaps the numbers may not be changing, as medicine is still a tube career, where if you put in the required number of years, you will be guaranteed to make an above average income.  Nonetheless, if students look at medicine as see that they will be finishing school with $250,000 of debt, only to make $125,000 per year, I don't consider that a good deal and most students will figure that out and go to dental school.

I like medicine.  I enjoy my job, but when I look at it from a college student's perspective, the numbers just don't add up.  This becomes even more so If they knew what I know, that Medicare has it out for them.  It really is amazing that our government will spend $700 to $800 per hour for lawyers to protect Senators and Presidents who commit unsavory behavior, but then they will pay me $60 per hour to administer anesthesia to a Medicare patient, or $1200 to a surgeon to do a radical prostatectomy, which when you consider that is a 90 day global fee, the urologist is getting about $100 an hour when you consider the 50% overhead, preop visit, the 3 hour surgery, rounding,and the post-op visit.  The lack of respect is glaring. 

It is going to be interesting to see how it plays out over the next 3 to 7 years.  Either the number of people going into medicine is going to decrease, or physicians are going to throw off the chains of managed care and Medicare and become nonparticipating providers.  The new generation of physicians might just do it.

OIG ruling on physician call compensation

Physicians have been very successful over the last five years in gaining compensation for taking call.  Many surgeons are getting anywhere from $500 to $3000 for a 24 hour period for taking call.  This usually allows them to collect whatever they can from the patient if they happen to have insurance. 

The creation of this has been secondary to a combination of two factors.  1.  Decreasing profit margins in medicine.  It is much harder to make a profit today and if you are spending a couple nights a week on call taking care of patients that are not paying, that is taking away from time you could be generating income.  2.  The rise of the ASC.  many hospitals tie getting privileges at their hospital with having to take call at that hospital.  ASCs provide a place where surgeons can operate without needing hospital privileges.  They might have one surgeon in the group get privileges at one hospital, so they can have a place to take complications, but they do not necessarily need to have privileges at every hospital in town, which would increase their call responsibilities. 

Most physicians and groups had negotiated their rates independently.  Of course, that is too easy and the government had to get involved.  Some of this stems from the Stark laws and anti-kickback laws which prevent physicians who take care of federally insured patients from receiving any other compensation other than what medicare/medicaid give them. 

So, introduce the OIG (office of the inspector general).  They released a statement recently about an anonymous hospital and the structure they required the hospital to have with their physicians to pay them for call.  I found it to be completely ridiculous.  Here is the general theme of the statement, as well as  links to further reading.

1.  All of the pertinent information, such as naming the hospital or the amounts of the stipends is kept secret.

2.  The physicians were not able to set their rates, they had to be determined by an outside consulting group.

3.   In return for getting paid for 4 calls a month, the physicians had to agree to take 1.5 calls for free.

4.   The physicians had to commit to it for 2 years.  I wonder what happens if they pulled out after 6 month?  Do they have to give all of the money back?

5.  They had to provide 18 days of follow-up uncompensated care to any patient they saw while on call.

    The physicians agreed to the plan, there were evidently many different specialties, so the compensation must have been at least reasonable.  It is hard to say, because they were probably not getting anything to begin with.  The only way this could be palatable, would be if the compensation were reasonably high, such as $2000 for 24 hours of general surgery call. 

     Nonetheless, contracts such as this do not appear to be in physicians' best interest.  I find the whole thing to be very secretive and to the hospital/Medicare's advantage. Here is a link from Medlaw.com further explaining this.  Medlaw.com thinks the whole thing is risky from a legal standpoint and the only alternative is traditional, mandatory physician call.  I think there is another alternative, which is physicians resigning from Medicare and Medicaid, which would release them from some of these legal problems.

Here is another link on a previous ruling by the OIG from the American Academy of Neurosurgery on call compensation. 

The Shortage is Real

The coming shortage of physicians is real and, if not addressed soon, is going to have a serious impact on healthcare in this country.  There are many articles out there supporting this, but interestingly, they all seem to underestimate the different goals  that Generation X and Generation Y have with employment.  I finished residency in 2001 and my wife in 2002.  We have no interest in the lifestyle of Baby Boomer doctors.  Working 80 hours a week just does not do it for us.  We have two small children and don't want to watch them grow up to be typical doctor's kids....out of control brats that end up as delinquents. 

I have done about 30 interviews for my website, MDJobexchange.com  and most of these colleagues of mine agree that having a life is more important than the dollar.  At the same time, people do need to make an income because of the huge amount of debt that medical students are carrying.

I think that physicians need to start thinking about how to capitalize on the coming shortage.  Some already are via call compensation and agreements with hospitals to  pay them for uninsured patients.  Insurance companies are making huge profits and I think it is high time that physicians regain some of their lost ground.  The amount of money America is spending on Healthcare has not decreased, it has gone up significantly, but doctors' income has gone down.  All that has changed, is who is getting the money.  As physicians, if we do not demand to be paid more, we will not  get it.

The AMA has done a weak to poor job of protecting our interests.  I think they are more concerned with generating revenue from CPT.  Most specialty societies get about a C or maybe a D+.  Some specialty societies are preparing a campaign to get Medicare to pay more.  That may have some effect, but what really needs to happen is for doctors to take the attitude that it is the patient's insurance, not the doctor's insurance.  The patient can collect whatever pittance the insurance company is willing to throw them.

I will have  a great deal more content coming to MDJobexchange, as well as more interviews.  I have  a great interview with a guy who does physician contract review, as well as one of the leaders in physician locums tenens and recruiting.  I think these will help give physicians a different perspective when looking at jobs.