If American Doctors Are Going Broke, Who Is Really Responsible?

 

An interesting CNN Money article, written by Parija Kavilanz and entitled “Doctors Going Broke” is making the rounds of the internet and getting some well deserved interest.

While there is considerable truth to be found in Kavilanz’s piece, a deeper analysis is in order given the knee-jerk reaction by the many who are too quick to place the problem and the blame at the feet of the federal government.

First off, it is important to recognize that not all physicians in the health care system are facing financial crisis. About 50 percent of the nation’s doctors are employed, typically by hospitals, and receive a salary in exchange for their service. So far, these practitioners do not appear to be in any significant financial danger.

The financial problems are typically experienced by a portion of the remaining 50 percent who wish to operate their own private practices and, as a result, find themselves suffering from the financial stresses faced by so many small businesses in these difficult times.

Yet, even among this 50 percent, not all private practices areas are in trouble. For example, surgeons and dermatologists seem to be doing just fine while cardiologists and oncologists, whose business models necessarily make them more susceptible to trouble, are feeling the pain.

Why them?

Part of the blame does rest with changes in Medicare and Medicaid payment policies. Certainly, cardiologists and oncologists, whose practices naturally bring them into contact with more senior citizens, are the most likely to feel the pain when it comes to reduced government payments. Last year, the Centers For Medicare & Medicaid Services (CMS) took a hatchet to what is paid to cardiologists for performing important tests such as echocardiograms, stress tests and other ‘machine’ based testing. But what you may not know is that these reductions were based on a survey conducted by the American Medical Association, at the request of the CMS, that seemed to go out of its way to omit cardiologists in private practice from the survey participants. Why? Because private practice cardiologists have, by and large, dropped out of the AMA and the AMA’s interest was in getting more money set aside for those medical practitioners in other areas of medicine who remain members.

The result of this unreasonable and unfair data collection process has hit cardiologists in private practice particularly hard. When coupled with ever declining reimbursement rates from the government, these docs find themselves in very real financial jeopardy.

As Kavilanz points out in the CNN article, oncologists are also suffering as a result of receiving payment for cancer treating chemotherapy drugs that often does not  even cover their out-of-pocket costs when purchasing the drugs they give to their patients. Certainly, this is a recipe that leads to a very unhappy ending.

But, it is not all about the government. Indeed, it is not even mostly about the government.

What is too often missed in the equation are the payment practices of private insurers who are quick to adopt changes in their own payment structures by modeling what they pay on what Medicare pays – especially when the government payment rates are heading south. Private insurers also put a bite on physician compensation by denying treatments recommended by physicians which the insurers deem to be too expensive. This leaves consciencous physicians, bent on doing what is best for their suffering patients,  to assume the financial risk of providing life-saving care knowing that there will be insufficient payment from the insurer and that their patient may never be able to pay the difference for the drugs administered. Then there is the ‘granddaddy’ of the private health insurance industry’s impact of physician private practices – a system of codification and nomenclature required when submitting claims that leave doctors having to employ far too many people to manage the insurance billing system and punishes doctors for dealing with a variety of patient problems in one visit. Indeed, a physician who refuses to discuss or treat two different patient complaints in one visit, thereby requiring the the patient to return for another session to discuss the  problems separately, will likely be paid twice as much by the insurance company.

How does that make any sense?

Anyone who has ever operated a small business knows that, for the business to flourish, overhead must be kept to a minimum. And yet the private insurance reimbursement model is literally built on a system of foisting huge overhead on small medical practices.

It does not have to be this way. And were it not for the desire of health insurance companies to hold onto premium dollars for as long as they can so that this money can be invested to grow an insurance company’s profits, it would not be this way.

What also must be considered is the increase in the numbers of uninsured and underinsured patients – people who have lost coverage through losing their jobs but do not qualify for Medicaid or those who earn just enough to be left out of the current government assistance program but too little to afford acceptable health coverage. This, by the way, is a problem addressed by Obamacare through the expansion of Medicaid to include more of these people who are stuck in the no-man’s land of health insurance coverage.

The good news is that there is something government can do about its part in this problem.

The CMS can take a more realistic approach to understanding the challenges that come with specific types of medical practice groups and react in a way that will help these doctors stay in business. What is the point of cutting back on what Medicare pays cardiologists if the result is going to be forcing these people out of the profession, leaving Medicare beneficiaries stuck when they need a heart doc? Meanwhile, if other specialties are flourishing under the current payment system, maybe the CMS can take a look at how we allocate our available Medicare and Medicaid funds to make things work in a more reasonable fashion.

As for private insurers, I would suggest you not hold your breath waiting for them to raise payments to physician practices in danger. The overly-complicated codification system serves to increase the time between the formation of a claim and the time the insurance company must reimburse a physician on the claim. As noted, this gives insurers more time to make money on the money they are holding instead of paying it the physicians when they should. What’s more, a world where it takes an insured patient longer to see a doctor works to the benefit of the health insurance companies. Patients continue to pay their premiums each month whether they see a doctor or not. But for every month a doctor visit is delayed due to insufficient doctors in the system, that is a month that insurance company gets to hold onto those premium bucks and invest them to the insurer’s benefit.

It is worth remembering that without the doctors there is no health care system. Thus, to ignore their problems is to threaten the health of a great many Americans.

But it is also worth remembering that it is not always the government who is responsible for all the bad things that happen in our health care system.

There are many culprits at work here. And the sooner we recognize that fact, the sooner we can pressure the changes required to make it better.

By Rick Ungar- Contributor to Forbes.com

Read Rick’s political column at washingtonmonthly.com