Doctors going broke

iVillage Member
Registered: 02-05-2011
Doctors going broke
22
Fri, 01-06-2012 - 2:00pm

Wasn't Obama's health care reform law not supposed to destroy our medical care system? If so, Obama needs to step up his game. There won't be many doctors treating patients if doing so requires perpetual losses. Substantial cuts in Medicare payment are required by the Obama health reform law to keep it in line with CBO projections at the time it was passed. So far, Obama has sought to increase payments and avoid required health reform cuts in physician payment. If the Obama health insurance dream is to come true, it looks like most doctors will be out of business. How useful is an insurance card if there aren't any doctors to accept it?

From - http://money.cnn.com/2012/01/05/smallbusiness/doctors_broke/index.htm?hpt=hp_t3&hpt=hp_c1

Doctors going broke

Doctors in America are harboring an embarrassing secret: Many of them are going broke.

This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists.

Industry watchers say the trend is worrisome. Half of all doctors in the nation operate a private practice. So if a cash crunch forces the death of an independent practice, it robs a community of a vital health care resource.

"A lot of independent practices are starting to see serious financial issues," said Marc Lion, CEO of Lion & Company CPAs, LLC, which advises independent doctor practices about their finances.

Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors' lack of business acumen is also to blame.

Loans to make payroll: Dr. William Pentz, 47, a cardiologist with a Philadelphia private practice, and his partners had to tap into their personal assets to make payroll for employees last year. "And we still barely made payroll last paycheck," he said. "Many of us are also skimping on our own pay."

Pentz said recent steep 35% to 40% cuts in Medicare reimbursements for key cardiovascular services, such as stress tests and echocardiograms, have taken a substantial toll on revenue. "Our total revenue was down about 9% last year compared to 2010," he said.

"These cuts have destabilized private cardiology practices," he said. "A third of our patients are on Medicare. So these Medicare cuts are by far the biggest factor. Private insurers follow Medicare rates. So those reimbursements are going down as well."

Pentz is thinking about an out. "If this continues, I might seriously consider leaving medicine," he said. "I can't keep working this way."

Also on his mind, the impending 27.4% Medicare pay cut for doctors. "If that goes through, it will put us under," he said.

Federal law requires that Medicare reimbursement rates be adjusted annually based on a formula tied to the health of the economy. That law says rates should be cut every year to keep Medicare financially sound.

Although Congress has blocked those cuts from happening 13 times over the past decade, most recently on Dec. 23 with a two-month temporary "patch," this dilemma continues to haunt doctors every year.

Beau Donegan, senior executive with a hospital cancer center in Newport Beach, Calif., is well aware of physicians' financial woes.

"Many are too proud to admit that they are on the verge of bankruptcy," she said. "These physicians see no way out of the downward spiral of reimbursement, escalating costs of treating patients and insurance companies deciding when and how much they will pay them."

Donegan knows an oncologist "with a stellar reputation in the community" who hasn't taken a salary from his private practice in over a year. He owes drug companies $1.6 million, which he wasn't reimbursed for.

Dr. Neil Barth is that oncologist. He has been in the top 10% of oncologists in his region, according to U.S. News Top Doctors' ranking. Still, he is contemplating personal bankruptcy.

That move could shutter his 31-year-old clinical practice and force 6,000 cancer patients to look for a new doctor.

Changes in drug reimbursements have hurt him badly. Until the mid-2000's, drugs sales were big profit generators for oncologists.

In oncology, doctors were allowed to profit from drug sales. So doctors would buy expensive cancer drugs at bulk prices from drugmakers and then sell them at much higher prices to their patients.

"I grew up in that system. I was spending $1.5 million a month on buying treatment drugs," he said. In 2005, Medicare revised the reimbursement guidelines for cancer drugs, which effectively made reimbursements for many expensive cancer drugs fall to less than the actual cost of the drugs.

"Our reimbursements plummeted," Barth said.

Still, Barth continued to push ahead with innovative research, treating patients with cutting-edge expensive therapies, accepting patients who were underinsured only to realize later that insurers would not pay him back for much of his care.

"I was $3.2 million in debt by mid 2010," said Barth. "It was a sickening feeling. I could no longer care for patients with catastrophic illnesses without scrutinizing every penny first."

He's since halved his debt and taken on a second job as a consultant to hospitals. But he's still struggling and considering closing his practice in the next six months.

"The economics of providing health care in this country need to change. It's too expensive for doctors," he said. "I love medicine. I will find a way to refinance my debt and not lose my home or my practice."

If he does declare bankruptcy, he loses all of it and has to find a way to start over at 60. Until then, he's turning away new patients whose care he can no longer subsidize.

"I recently got a call from a divorced woman with two kids who is unemployed, house in foreclosure with advanced breast cancer," he said. "The moment has come to this that you now say, 'sorry, we don't have the capacity to care for you.' "

Small business 101: A private practice is like a small business. "The only thing different is that a third party, and not the customer, is paying for the service," said Lion.

"Many times I shake my head," he said. "Doctors are trained in medicine but not how to run a business." His biggest challenge is getting doctors to realize where and how their profits are leaking.

"On average, there's a 10% to 15% profit leak in a private practice," he said. Much of that is tied to money owed to the practice by patients or insurers. "This is also why they are seeing a cash crunch."

Dr. Mike Gorman, a family physician in Logandale, Nev., recently took out an SBA loan to keep his practice running and pay his five employees.

"It is embarrassing," he said. "Doctors don't want to talk about being in debt." But he's planning a new strategy to deal with his rising business expenses and falling reimbursements.

"I will see more patients, but I won't check all of their complaints at one time," he explained. "If I do, insurance will bundle my reimbursement into one payment." Patients will have to make repeat visits -- an arrangement that he acknowledges is "inconvenient."

"This system pits doctor against patient," he said. "But it's the only way to beat the system and get paid."

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iVillage Member
Registered: 05-03-2011
Fri, 01-06-2012 - 2:13pm
Hmmm...I don't feel too sorry for a doctor who bought $1.5 million worth of drugs per month and sold them at much higher prices and now he can't do it.

I don't think that reimbursements should be reduced. Let me make that clear first.

I do wonder how much of the trouble these specific physicians are in are based on bad financial decisions...One of them said he has halved his debt...makes me think that he had a pile of debt in the first place, something he should have thought about before overextending himself.

I think part of the problem is that doctors' offices have to hire so many people just to stay in business and get paid...people for the front desk, people savvy about billing and insurance companies to jump through all the hoops in order to get paid. It's ridiculous.
iVillage Member
Registered: 02-05-2011
Fri, 01-06-2012 - 3:58pm
I feel sorry for doctors who can't afford to practice medicine, for ill people who can't find doctors, and for a government that lies by promising cuts that if made would destroy our national medical care system. The current Obama medical reform laws require cuts which would get rid of most private care physician groups and put many if not the majority of doctors out of business. Somehow this is an improvement.

This is why Congress should hold hearings, why legislation should be read before being past, and why it's a good idea to bet bipartisan support.
iVillage Member
Registered: 11-13-2009
Fri, 01-06-2012 - 7:17pm
I don't think reimbursements should be cut, either.

R3, Medicare cuts aren't solely to blame, nor the health care bill. The article says insurance companies follow suit. I'm not sure why. Greed jumps to mind. I dunno....

 

iVillage Member
Registered: 04-09-2011
Sat, 01-07-2012 - 10:48am

I'm pretty sure a bill to resolve this will come up, but here is how it will work: the right will demand something - tax cuts made permanent, deficit cuts to an entitlement programme - to go along with it. Even if the right doesn't object to something they try to make it a big deal just to gain something in return.

Except health reform doesn't go nearly far enough. I'm not sure why the right objected to a government insurer. Let it compete after capitalisation, lets see if it is true government is inefficient vs private entities - if what the right is correct, why be afraid of such a creation? (Maybe because they don't believe their own rhetoric, and they actually fear government demonstrating it can efficiently handle health care, which means their wealthy contributors will no longer be able to suck profit out of the system.)

iVillage Member
Registered: 02-05-2011
Sat, 01-07-2012 - 11:45am
Nell,
Part of the problem is Obama's reform counts on cutting payments to providers. A bill that increases payments means the Obama reform will greatly increase costs for health care, and for Medicare, not cut them. Yet cutting payments means providers leave the field.

Instead of lowering costs, we are increasing costs, and reducing choices.

That isn't progress last time I checked. Is hope and change giving way to despair and failure? Is that the Obama 2012 ticket, despair and failure??
iVillage Member
Registered: 03-03-2009
Sat, 01-07-2012 - 7:43pm
Gee, this brings back memories. George W. Bush with his usual adroit command of the English language bemoaning, long before ACA, that "Too many good docs are getting out of the business. Too many OB-GYNs aren't able to practice their love with women all across this country."

There was a time when doctors didn't make much more than teachers. Or firemen. Or policemen. Then the AMA took over and while some of its activities were geared at improving medical standards, others were aimed at reducing supply and increasing salary for members.

I was, and still am, unconvinced that they deserve outsize salaries, and are being forced out of BUSINESS (and let me be abundantly clear that while it may be a calling for some, for others the choice of medicine is not altruistic at all) by ACA.

Jabberwocka

iVillage Member
Registered: 02-05-2011
Sat, 01-07-2012 - 10:31pm
Why would someone spend many years learning to practice medicine if the goal was to make the same income as someone who spent 4 years or less?

My thought on the subject has changed due to your post, if your hope was to see medical providers get much less compensation, and your change was to have fewer medical care providers, then Obama is your guy and he's doing a wonderful job.

iVillage Member
Registered: 05-03-2011
Sat, 01-07-2012 - 11:38pm
For the same reason that teachers spend so many years going to school instead of parking cars for more money.
iVillage Member
Registered: 03-03-2009
Sun, 01-08-2012 - 9:14am

Interesting that you view the investment in higher education as a justification for making a big salary.

Jabberwocka

iVillage Member
Registered: 05-03-2011
Sun, 01-08-2012 - 10:58am
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I completely agree with this. It's the same bottleneck for physician assistants, as well. I seriously considered trying to get in the school here after taking the requisite science courses, but at my age, I decided not to do it since there was no guarantee that I'd be able to get into the school in my city. There were thousands of people vying for 26 spots per year. It's really too bad because it's something I would have loved to do and I would have been excellent at it.

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