By J.C., on September 29th, 2008
One of our readers left an interesting comment regarding the medical profession and its desire to seek profits for its members. I quote from his comment:
The nature of the AMA, a protected and virtually untouchable union, certainly believes in maximizing its members’ profits. It clearly restricts the supply (as all unions do) in face of a steadily growing demand, forcing prices high and higher.
This sheds some interesting light on the medical profession. It is often overlooked by consumers that the medical profession is limited in its numbers and doctors themselves are part of the reason there is a shortage of doctors. In particular, the number of physicians trained in the United States is far less than the need for doctors. As a country full of patients, we are bulging at the seams and in need of more doctors.
However, the number of physicians in this country is limited by the number of U.S.-trained physicians as well as the number of foreign medical graduates coming here to finish training and to practice. The physicians’ lobby in Washington ,D.C., is very strong in limiting the expansion of training programs. In some specialties, there is such a shortage of physicians that you have to wait several months in some communities to see a doctor.
An example of this would be the surgical subspecialty of Ear, Nose, and Throat Surgery, also known as Otolargyngology or Head and Neck Surgery. There are only a few hundred training positions available in the United States each year for this specialty. If these specialists were evenly divided up across the country, that would leave only 3 or 4 per state. However, physicians tend to be concentrated along both coasts and the Midwest, leaving huge gaps in many states across the country. Thus, the demand is very high, and the supply is low. Like many other specialties in medicine, the lobby is strong to limit the expansion of residency positions, keeping the supply low.
Thus, inherent in the system is a type of unionization to prevent competition. The profession protects itself and is profit driven. However, this monopolization and protectionism is not unique to medicine. If you look at almost any other industry, you will find that there is intense national protectionism from offshoring and outsourcing in the form of tariffs, tax credits, and favorable legislation. Similary, in the U.S. the medical profession limits the number of physicians and creates arduous licensing and credentialing requirements to limit supply.
By J.C., on September 24th, 2008
I was reading an interesting article the other day that used the term “cyberchondriac.” I couldn’t stop laughing at the apt description of a patient who used the internet to gather information about their health concerns. Cyberchondriacs have been described in the popular media as ranging from those with neurotic excess to hypochondria. In my experience, it is common to have a cyberchondriac as a patient.
In my practice, I describe a cyberchondriac as a patient who does research on their condition or who comes up with a self-diagnosis based on their reading. They often tote a stack of papers and articles with them in to their doctor’s appointment. They usually take up more than the allotted 20-minute time slot per patient, and they usually have a slew of questions regarding their diagnosis. If your diagnosis of them is not consistent with what they have read, they will ask even more questions. Often these are the types of patients who will call your office wanting to speak with you and leaving messages with specific questions.
Most doctors are not big fans of cyberchondriacs. I actually am a big fan of them but just not in my practice. They tend to take up way too much time and really throw off my schedule. Additionally, they often have unrealistic expectations about their prognosis. With that being said, the reason I am a fan of them is that I think everybody should be a cyberchondriac.
Whenever I have a bump or bruise or ailment, I immediately start reading my textbooks or looking up stuff on the Internet. Patients who have this tremendous resource at their hands and do not utilize it place a lot of faith in the medical system and their physicians. I have been on both sides of the treatment table and know that, the more you know and the more you can take control of your care, the better off you will be. Physicians are not always correct, and the system moves very slowly. At every step of the way, it does pay off to be a cyberchondriac and make sure that no one has dropped the ball.
I like to view the medical system as a logistical pathway that ends with treatment, follow-up, and resolution. It’s kind of like when you order something online. A good online store will have a great logistical system and will email you or allow you to check online the status of your order. If there is a delay, you will get an email notice of it. If your credit card expires and they need updated information, they will notify you of this online. And finally, you get that email saying that your order is shipped and that you can look up the tracking number online.
Unfortunately, there is no logistics feedback in the process of medical care. If you have a problem with your knee that requires an MRI, radiologist read of the MRI, follow-up appointment, surgery scheduling, pre-operative lab work, etc., there is no way you can find out how all of this stuff is going. Did your MRI results come back? The only way is to bug the office and keep asking if the doctor got the result. Were your lab results OK? The only way to find out is to call the office or come back for another appointment.
It’s a real cumbersome system, but the cyberchondriac is the one who challenges and demands that the system works better for his own care. Someday this will all change but not until we have a world of cyberchondriacs that demand change. When an office becomes inundated with phone calls and demands for lab results from cyberchondriacs, it will figure out an efficient way to provide feedback on the progress of medical care.
By J.C., on September 22nd, 2008
In response to my last post regarding health insurance companies, I received a comment from a physician who noted that health insurance companies try to make it difficult for doctors to collect payments. I could not agree more. It is the classic example of a big business trying to take advantage of the little guy.
Any regulation scheme that is added to a system adds additional layers of costs. When health insurance companies demand a certain format for billing submissions, this requires the physician’s office to either outsource their billing to a third party vendor with expertise in billing, or it requires the hiring of a skilled biller in the office. Both of those options essentially add the equivalent of another person to payroll. If you think you can find an administrative assistant or a medical assistant with skill in billing, then you are wrong.
Health insurance companies are aware that they are the 800 pound gorilla and can push around the small doctors. They have several strategies to prevent physician reimbursement. One easy strategy is to simply not pay claims at all or in a timely manner. A large percentage of claims go unpaid this way because doctor’s offices simply do not have the manpower to chase down unpaid bills. Sometimes the insurance company will simply deny payment and request additional documentation. You can imagine that a typical doctor’s office doesn’t have the time and energy or the infrastructure to track down and reconcile their billing.
Perhaps the most treacherous tactic by insurance companies is to pay less than the physician requests. For example, the doctor will bill out $100, and the insurance company will pay $20. There is no recourse for the physician other than to accept the payment or just stop doing that service for his patients. When health insurance companies offer you cheap insurance quotes, don’t be naive and think that they aren’t taking advantage of the doctors.
I like to relate this whole concept as a scam in which you provide service first but do not get paid. In any other industry this would be unacceptable. Non-payers would quickly go out of business because they would get the reputation for not paying and people would cease to do business with them. Unfortunately, there is collusion in the health insurance system, and there are not that many payers. There is no competitive process as everyone is pegged to Medicare rates.
By J.C., on September 19th, 2008
I know this is going to be a controversial post, but I wanted to illustrate how silly our health insurance system has gotten.
Back in the old days, people did not have health insurance. Most hospitals were run on donations, and medical visits to the doctor were not so prohibitively expensive that you couldn’t see the doctor without insurance. But the concept of health insurance evolved to be a benefit for employees, almost like a recruiting perk. It got to the point where employees were needed so badly that it became a standard fringe benefit to get health insurance. To help justify the matter was the fact that medical costs rose so that it was almost prohibitive to see a doctor, let alone get a procedure or go to the hospital, without causing a huge financial setback.
Enter insurance companies. Insurance companies came into the picture to help contain costs. They started making sure that doctors did not order unnecessary tests. They started making sure that patients paid some copayments in order to provide a disincentive for overutilization of healthcare. Basically, they didn’t want you going to the doctor frivolously and wasting money.
In order to be financially solvent and even profitable, insurance companies started raising premiums very high. Thus, health insurance costs so much now that it is a huge percentage of payroll expenditure in the United States. Health insurance companies also started playing both sides – they charged patients more and reimbursed doctors less. Thus, as middlemen, they have found a way to save a lot of money and put it into the pockets of their MBA administrators.
But the problem with the system is that health insurance companies are so profit-driven that they actually penalize you for having pre-existing conditions, even if those conditions are pretty benign. They go through your doctor’s record, and anything that your doctor writes in it they will use against you and charge you a much higher premium.
An example of this is a friend’s son who has mild asthma and rarely uses an inhaler. When applying for insurance on his own, the insurance company wanted to raise his premium 50% higher than someone of the same age without asthma! Similarly, someone who has a resolved condition such as a psychiatric diagnosis can have a higher premium even if his or her disease is in remission.
So what happens if you are currently healthy and you do not tell your doctor that you have had these health issues before? You guessed it – you pay a lower premium.
It’s a really messed up system, kind of like not reporting your car accident to the insurer so your premiums don’t go up. But the difference is that health premiums are expensive and can easily become prohibitively expensive for the average family. I’m not suggesting that you be dishonest in any way. I am just illustrating that the system has some serious flaws that need to be corrected.
By J.C., on September 17th, 2008
Most of you are familiar with the headhunters of the financial world. Bankers and finance people are notorious for migrating from one firm to another. Typically, it is the headhunters that cold call and go after the best and brightest of any firm. It is a lucrative business based on the concept of a placement fee or a commission.
Medicine has its own version of headhunters called placement agents. Typically, these staffing companies target newly minted young MDs and try to place them into an existing practice. For those types of physicians who are in high demand, such as specialists, the placement fees can be astronomical. After all, typically, a physician usually only moves once or twice in his entire career. Some do not ever move from their first job. This is in stark contrast to those in the corporate world who may move every few years for upward mobility. The main difference is that a physician is a small business owner and spends years building up his reputation and practice. Like any small business owner, moving locations is expensive and definitely dings your business for a while.
Thus, placing a specialty physician into a practice can earn the placement agent a fee in the tens of thousands of dollars, if not more. It is a big business that inundates resident and new physicians with mail, email, phone calls, and a lot of schmoozing. If you make the mistake of getting your name on one of these lists, you will never get out from under the deluge of marketing materials.
Unlike the regular corporate world, staff placement agents typically have no medical background. They know a lot about the field from their work, but if you ask them about the scope of any physician’s practice, you will soon leave them with a confused look on their faces. They want to move a very lucrative and highly valuable product – the physician who has gone to school for decades.
By J.C., on September 15th, 2008
While I have posted previously on how various business models in the practice of medicine, there is one business that is actually quite profitable for a physician who does not want the cost or hassle of running a private solo, group, or managed healthcare type of medical practice. That is the job of being a locum tenens.
A “locum tenens” position is a temporary physician position where a doctor fills in a need for a short term assignment. Typically it is a traveling position, and the doctor will register with a locums company. A hospital or practice needing a physician on a short term basis can hire a locum temporarily. It is actually quite similar to the “traveling nurse” type of career where nurses move from one location to another.
There is a small percentage of physicians who work as locums permanently with no home practice. In this day and age of shift work type of medicine, the locum position is probably most similar to an ER physician’s career where the work is shift work: you come to work for a condensed period of time then you relax and take it is easy when not working.
What is attractive for a physician to do locums is that they are filling a need and typically get paid by the day, with travel and lodging included. Thus, that physician does not have to worry about running a medical practice or hiring employees or getting patients or any overhead.
I personally know a handful of friends who do locums work. They are semi-retired and want to travel a bit while also working to make some money. They don’t want to retire fully because they don’t want to lose their skill set.
As far as compensation, you are a “hired gun” and can make good money. It is an eight-hour workday with overtime usually. For those in specialties in demand, a locum position can be several thousand dollars per day. You don’t necessarily get the satisfaction of building relationships with patients or running your own business, but you can have a better life if you set it up right.
By J.C., on September 11th, 2008
I’ve mentioned several times before that doctors are not good businesspeople and that the current state of the health reimbursement system is a mess. One reason it is so messy is that it is all about business and not about care. In this country, the basic teaching of medicine is that “continuous care” is the gold standard. This essentially means that when you see one doctor they are your doctor who knows you and they are the doctor that you will continue to see (if you are happy with your care). This patient-doctor relationship is the rewarding one that allows a physician to see you grow from a child into an adult into an elder. Similarly, it allows the patient to have that one person who they can trust to govern their health. The only thing that could end such a relationship was either the patient or the doctor ending it. Most typically, it lasts until the patient either passes away or the doctor retires and sells his practice to another doctor.
Enter the enemy – the insurance company. Nowadays, that type of relationship is almost non-existent. It is the insurance company who works on the patient’s behalf to enter into the patient-doctor relationship. If your doctor does not have a contract to provide care to that insurance company’s patients, then you cannot see that doctor unless you switch insurance companies. Thus in some respects the insurance company holds the patient hostage. The insurance company owns the patient, and the doctor can only see the patient if the insurance company allows this.
Recently, a doctor in the area was ill and needed to take 2 months off of work. He wanted other doctors to cover his patients and see them while he was gone. Unfortunately, all of those patients had one type of insurance that few doctors had a contract with. Thus those patients could not be cared for.
You don’t have to be a rocket scientist to see how messed up the whole thing is. Curiously, they are still teaching “continuity of care” in medical school. Soon they will be replacing that class with Economics 101 for dummies.
By J.C., on September 9th, 2008
Recently I was aboard an international flight when they asked if a doctor or healthcare professional was on board. It was in the middle of a 12-hour flight, and the cabin was dim, and nearly everyone was asleep. I happened to hear the overhead call that a healthcare professional was needed and, per usual, hesitated for a few minutes to see if anybody was getting up. As I did not see anyone get up, I got out of my seat and informed the stewardess that I was a doctor and could help.
They had not found a healthcare professional yet and asked me to see a passenger in the back cabin. Luckily the passenger was merely having a bout of food poisoning. She had some diarrhea and vomiting while onboard the flight and had stomach pain. She appeared stable with good pulses and had abdominal discomfort. She had no history of prior surgeries and had never had her appendix removed. She made it through the flight with some discomfort until the paramedics greeted her at the gate.
This is not an often occurrence for me. However, these things do happen to doctors everyday. Although there are laws that protect us from malpractice, called “Good Samaritan Laws,” whenever I hear that call for help, my initial reaction is to do nothing. Then I feel guilty that I am doing nothing and someone may be dying or in serious medical need.
Everyday doctors are faced with internal struggle about how best to manage patients and their situations. Although we are all capable of being first responders, we do not necessarily have to be first responders. What we should do is always direct people to emergency responders and to places where they can get their definitive care. When there is a patient who needs emergent medical care, but we are not prepared to give it, we must direct them to someone who can.
Non-medical people might not understand how a doctor can sit by and not get engaged in an emergency situation. If this were the case, then we would not need emergency personnel or paramedics. The emergency response system is there for a reason. If I get into an accident, I certainly would not want some random doctor not trained in emergency care to look after me.
By J.C., on August 21st, 2008
In any small business, including running a physician’s office, the most valuable piece of your business is the real estate. Most people have heard the McDonald’s story of founder Ray Kroc, who believed that the most valuable aspect of McDonald’s was the real estate underneath each restaurant. For small business owners including physicians, getting a piece of the dirt underneath their business is essential.
As I have mentioned in other posts about physician’s offices, the top two expenses in running a business are payroll/benefits and overhead. The most costly part of overhead is rent or leasing of space to run your business. Thus, aside from cutting staff to reduce payroll and benefits, the best thing you can do for your business is to negotiate a better lease or to purchase your office space and pay it off over time. Most retail businesses must choose the best location for their business that generates high traffic and lots of willing customers. Similarly, physicians must also choose locations that are either part of existing hospital medical complexes or are close to large populations and ancillary facilities. Physician’s must also ensure that their offices are accessible to public transportation as many patients must use public transportation to travel.
Many physicians starting out cannot afford to purchase their own space. Thus they must lease space until they have the means to purchase. If you choose not to own your space, then in order to build some wealth you need to invest your income and savings wisely. For when that day comes that you must shut down your practice or your business, it will be the only thing you have to show for all of those years of hard work. If you are able to sell your practice or your business then that is a big bonus. But unlike other retail businesses, most physician’s practices are not sold for much.
One strategy some physicians utilize is to buy larger space than they typically utilize. Then they rent out space to other physicians. This is an excellent strategy for those physicians who have the means to do this. In some respects it turns the physician into a real estate investor rather than just a business owner. Thus for smart doctors who think in advance and invest in their practices, they will have a lasting asset that goes beyond the life of their practice.
By J.C., on August 19th, 2008
We’ve been talking a lot here about physicians and the business of running a medical practice. Lately, I have been seeing a growing number of physicians advertise on television. This makes me wonder – Should physicians advertise for their services?
In some circles many feel that it is unethical for physicians to advertise. It is sort of like ambulance chasing attorneys. More and more I am seeing cheesy ads by Plastic Surgeons on TV. They brag about how you can get a breast augmentation and how no one will even know. They talk about how they stand out above all other plastic surgeons. It all seems so tacky to me, kind of like the lawyers who advertise on TV.
Everybody knows that when you look for a lawyer you don’t find one from a TV ad. In general you find one by word of mouth and referral. The same goes for doctors. If you want to find a good specialist, you see your primary care physician who refers you to who they think is a good specialist. That is the way insurance companies want the business to work. Your primary care physician is the “gatekeeper” who handles and approves the referrals.
Television advertising does appeal to mass populations. However, most lay persons do not know who is a good doctor and who is a bad doctor. Although there are websites out there that now provide patient feedback and opinion on doctors, the truth is that only people who work closely with that doctor know how good they are. Thus one good way to find a doctor is to get in touch with your doctor friends and people who work in the healthcare industry. They will give you the skinny on that doctor you are considering seeing.
So what is the deal with physicians and advertising? Well you will find that physicians who advertise do so because they are in a lucrative field and want to drive up their business. Alternatively it may be the medical center or hospital they work at who would like to advertise a special “center” where that doctor works. For example, a regional cardiac center may want to brag that they have the best heart specialists. Thus they will put up a billboard or TV spot advertising their center with the faces and names of their heart doctors.
In general I believe doctors have the right to advertise their business, but I am not a big fan of it because I don’t believe it places physicians in a good light.
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