Bailout?

Remarkable as it seems, 2008 is coming to a close. It amazes me that health, health care, medicine, people who get sick, people who are for the sick, and all else that makes up our health care system remains nothing more than a sound bite on campaign trails. Is anyone really confident that meaningful actions will be done on behalf of patients? I am not.

For three years I have had the pleasure of writing, analyzing, and listening to comments within this WebMD Community. During this time I have straddled a number of "jobs". I left a private practice in 2008 to do something I have longed thought of - devote my time, energy and hopefully whatever creativity I have left after 20 years in medicine, to be involved in the development of a medical delivery system in a deeply poor and underserved area of this country - the South Bronx.

During this past election, there was a popular pundit, Nate Silver, a statistician and election guru who has a website called www.fivethiryeight.com. This stands for the 538 congressional districts in this country. As it turns out, the hospital where I am the Chairman of the Department of Orthopaedics, services Congressional District 538, the poorest congressional district in the country. I also think we have the highest percentage of HIV/AIDS patients (although don't quote me on this last fact). The hospital is run by a leadership and board that already have their tickets to heaven. Through careful and tireless work, the hospital has pushed through nearly one million ambulatory care visits, quite a lot of free medical and surgery services; and has done so without marble staircases, grand pianos in lobbies, and without the help of slick donors who rush to donate their names to buildings that sit on major highways and get to shine in US News and World Report ranking. For their efforts they happened to be ranked number 1 by... but more importantly, we are ranked number ONLY by the people we service as it is unlikely anyone else would step up to the plate on these patients.

Clearly, though, there is something in the water that is affecting the minds of people of power in this country, whether they are those in business or government. Maybe it's LSD, maybe it is lead poisoning. I don't know. The end of this year saw two different actions - Wall Street bonuses and hospital cutbacks. Wall Street gets bailed out and hospitals are getting bombed out. New York State has an approximately 41 billion dollar budget deficit. Governor Patterson has an extraordinarily difficult job. He needs to balance the budget in a scenario where there is no liquid money except in social services.

According to ABC News:

"Money in, Money out

Goldman Sachs and Morgan Stanley are accepting a combined $20 billion in taxpayer money under the federal economic stabilization plan or the TARP.

According to SEC filings, Goldman Sachs and Morgan Stanley have set aside a combined $11 billion for bonuses in the first nine months of this year, down more than 25 percent compared with last year."

Let me try to understand this: Goldman Sachs and Morgan Stanley are accepting 20 BILLION in our taxpayer dollars and giving out 11 BILLION to their private employees as "bonuses". Somehow I always thought that bonuses were for jobs well done. Where I come from, taking money like this and giving out bonuses on taxpayers shoulders is called theft. They are stealing taxpayer dollars to give to their private employees. It is lunacy.

Later in the article, ABC News quotes:

"The same banker said that, in recent years, an average managing director at an investment bank may have made $200,000 in salary but received a $1 million to $4 million bonus. It is the bonus, he said, that motivates bankers."

Motivates bankers???? Motivate them to do what - lose money? There are quite a lot of auto workers who are motivated by something else - milk for their family. Who wrote this script - company asks for billions so it can give the money to its already entrenched millionaires.

100,000 jobs were lost in December. This means that 100,000 families do not have health insurance. Don't worry, because a Goldman Sachs and a Morgan Stanley banker will still be able to drive a BMW. I understand that they can't their wives of husbands get the matching 750iL BMW at $110,000 and due to the 25% decrease in bonuses will have to settle for the $80,000 BMW 5M, but I am sure we all appreciate this unique sacrifice.

So in this holiday season let's see it we can find better uses for the 20 BILLION given (I mean given) to Goldman Sachs and Morgan Stanley.

1. Urban hospitals will see a revenue decrease of 25-50 million dollars this year. Let's give 50 urban hospitals in this country 50 million dollars apiece. Make a list - LA County, Cook County, Bellevue - the list can be as many as fifty hospitals. That money will do more good than another luxury car for another stockbroker.


2. Allow all the people who lost their jobs in 2008 to be automatically eligible for Medicaid. No questions asked.


3. Go back ten years and add up all the bonuses for Goldman Sachs and Morgan Stanley and have them give it all back up to the twenty billion they are getting in bailout.

While we are at it, let's also take a look at Citibank and other bailout recipients. The chairman of that bank gave enough money to Cornell to have them change the name of its medical school to his. Maybe Cornell should now be called "Taxpayer School of Medicine" since he essentially is giving the money on the shoulders of taxpayers.

If you want the country to be healthy, invest in health care and not paper companies like Goldman Sachs and Morgan Stanley.

Related Topics:

• Health Care a Victim of Sick Economy
• Your 9-Point Health Bailout Package

Is Anyone Coming Up with Healthcare Solutions?

Foxes and chickens are still not friends...neither are lemmings

There is a great Far Side cartoon showing a pack of lemmings going over of a cliff. One of the lemmings is wearing a life preserver. For those who do not get the irony of this: there is a science legend that lemmings have a ritual of running across the prairies to jump over a cliff and swim to their death. Reasons unknown. Maybe to thin the herd- it gets rid of the older and weaker lemmings I guess. One lemming in this cartoon gets it and is wearing a life preserver.

When it comes to healthcare, we are quickly all becoming lemmings going over the cliff. Currently I am glad I am not a lemming - I would be long gone... I don't have a life preserver and presumably you don't either.

(As a footnote, there is a nice description of where this scientific legend started; but either way, the metaphor is ingrained in our culture.)

While we are soon becoming lemmings, we currently are chickens. The problem is that the politicians are really foxy when it comes to describing their view of change in healthcare. That of course makes us chickens because we are not holding them to task. We must be afraid. Cluck. Cluck. Unfortunately when the foxes watch the chickens we all know the sad results.

Based on what I read about health plan solutions presented by hundreds of experts across the country I can only come up with a few conclusions. They generally stink. I know that is an eloquent and careful analysis of the plans put forth and that I usually stick to four letter words when describing the so called "experts" trying to develop health plan solution for us. But I figured I would expand my horizons and move onto a five letter word this time only.

Here is the problem. No one wishes to solve any of the problems.

I have culled many websites (and garbage cans in my neighborhood) to find a variety of tidbits of what makes up what the "people in position" call healthcare solutions. I will list some of the top ones. Some are good but most stink (five letter word again if you were not paying attention). I will be mixing them all up in any order- you make your own decisions.

Health Solution That I Read #1: Provide health insurance coverage to every American, through both public and private means.

Comments: This is, of course, the goal. If anyone has a healthcare plan and it does not include this sentence then they do not have a plan. If they have this in their plan- then they have a plan. The trick will be to pull this off. What could be the barriers to this plan? Some people say we do not have the money. Wrong. Unless of course your head has been either in the sand or in an ice hole you must have been following the government's bailout of Wall Street. Specifically AIG, the large insurance giant. As I am not a finance dude I cannot comment on the wisdom of this but money people I know inform me this bailout is important, critical, and a necessity. I respect them so I will assume it is true. While I am not a finance dude, I am a medical dude. I will tell you that bailing out the healthcare problems of 40 million Americans is also important, critical, and a necessity. On Wall Street, AIG tanked in a day and had a solution in under a week. Healthcare has been in the crapper for years and we are still talking. Stop saying you will provide healthcare coverage to every American and do it. It should take no longer than one week. Maybe 8-9 days - tops.

Healthcare Solution That I Read # 2: Provide a variety of insurance choices - nationwide and across state lines - for people to choose from.

Comments: This is what we have now. This is not a plan. This is leaving everything as it is. No change. No reform. We already have a variety of insurance choices big deal. 45 Million Americans have no insurance choices which make them uninsured. Anyone that has this as their plan does not want a change in healthcare; they want to keep the insurance companies rich and the country sick. This as a policy is foolishly lame.

Healthcare Solution That I Read # 3: Provide either a tax credit of a fixed amount to individuals or families who are purchasing insurance (the number I have seen is $2500 for individuals or $5000 for families). Alternatively, in the same solution mode one can offer a tax credit to employers of a certain percentage of the premium (the number I have seen is 50%).

Comments: Both of these have some merit. I like the second one better because it speaks to the concept of percentage of premiums rather than a fixed number. A fixed number still depends on the final premium amount so if the average premium (according the the Kaiser Family Foundation) is $12,706.00/year, then the tax credit leaves a final number that is over $1300.00 a year difference. The fixed tax credit gets even worse as premiums increase.

Healthcare Solution That I Read # 4: Offer a new federal public health insurance program available to individuals and businesses who don't have any other coverage.

Comments: This is the home run idea. The federal government is used to supplying free insurance programs like Medicaid which is an amazing program because it insures the poorest and most elderly in our country. A federally sponsored health plan that can be purchased with premiums based on a sliding scale according to income would be subsidized but not fully paid by the country. This would be in addition to standard federal and state programs and private insurance. The benefit package can be based on the same benefits available to Medicare or Medicaid recipients so no further rules need to be argued about. Failure to develop a new federally developed insurance product and depending on the "private sector" to do this is absolute fantasy as they will not do this.

What are your thoughts?

Dr. K

Related Topics:

• Barack Obama on Health Care
• John McCain on Health Care

What Happened to Healthcare Problems?

It seems that we have quite a lot of problems in this country. We also have no memory for these problems. In the wake of a very exciting Olympics we need to get back to the table on the health debate. I can assure you that while we were busy watching Michael Phelps win eight gold medals and the US Men's and Women's B-Ball teams go for glory, the insurance executives had scores of underlings working feverishly to deny claims, delay treatment, and collect more of our hard earned money.

Here is a brief summary of the issues that we have made absolutely no progress on in 2008:

1. There are still tens of millions of Americans with no health insurance.


2. Insurance companies can continue to deny payment for claims even after they pre-certified the claim prior to treatment.


3. Insurance companies still have the power to deny a service that a doctor prescribes using non-doctors and using arbitrary questionnaires.


4. Pharmaceutical companies continue to pound the public with advertisements of useless medications.


5. Despite data showing a shortage of general medical doctors there is no plan in place to address this.


6. There are real differences in the treatment of the rich and the poor, and further in the way certain ethnic groups get treated.

If you comb the national papers you will see little or nothing of this important debate.

What happened?

Dr. K.

Related Topics:

• Health Matters in the 2008 Election
• Compare the Candidates' - Health Care

Technorati Tags: health care, health insurance

Amende Honorable

Formal apology for an injury to the reputation and honour of another.

In old French law the term was once used to describe a public confession made by persons guilty of crimes coming under the head of public scandals, and was accounted an infamous punishment.
The Free Dictionary by Farlex

AMENDE HONORABLE - Ob. English Law. A penalty imposed upon a person by way of disgrace or infamy, as a punishment for any offence, or for the purpose of making reparation for any injury done to another, as the walking into church in a white sheet, with a rope about the neck, and a torch in the hand, and begging the pardon of God, or the king, or any private individual, for some delinquency.
-The 'Lectric Law Library's Lexicon


I think it is about time to come clean. I am sorry. Since the entire medical establishment has failed to apologize to all of you patients I will take it on my shoulders and do it. Amende honorable.

I would add that I am not alone because we all are responsible for the colossal mess that health care is in- not only in America but in the world. We are seeing an unprecedented decline in integrity and respect for quality care. All we can do now is beg the pardon of whoever will listen. No one is actually listening to solutions offered so maybe an apology will get some attention. The crimes against medical humanity have been so egregious that there are no laws, no punishment strong enough- we must look to a higher power and simply grant forgiveness.

Forgive the insurance companies for:

• Negatively affecting more people in a day than the Civil War did in 5 years by denying care to patients who needed it.
• Delaying care through tedious and unnecessary barriers to care such as precertification of tests.
• Calling regular treatments like bone marrow transplants "experimental" so they can just avoid payments.
• Taking money from the health care system and calling it earned profits when the only thing that was earned was encouraging patients to purchase insurance policies.
• Hiring executives with no hearts (a modern medical miracle I assume but I guess that a heart can be replaced by another body part and the organism can still live). Executives who make decisions like making chemicals for heparin in China where the FDA has no regulatory control and possibly causing the deaths of four Americans.
  

Forgive the drug companies and device manufacturers for:

• Telling us we may be sicker than we are and might need all their products all the time.
• Downplaying valuable medical data that is not supportive of their products
• For not using some of their gargantuan profits to offset the price of medications for those who can't afford them
• Gross irresponsibility to the international community, especially Africa who needs their help in the worst way.

Forgive the government officials (President, VP, Senator, Congressmen, etc) for:

• Being totally beholden to the insurance and drug company lobbies
• For not having the guts to do meaningful malpractice reform
• For not having the brains to develop meaningful healthcare insurance reform

But do not forgive the candidates yet. They have yet to wreak their havoc. Give them time. By the way, I think what they say in the campaigns about health care reform is an empty promise. They won't do it. The smart money says no way.

Forgive the hospitals for:

• Attracting the rich payers and clients and ignoring the time-honored tradition of caring for the poor
• Hiding their errors and mistakes from public view
• For not fixing their broken emergency rooms

Forgive the physicians for:

• Not taking control of health care away from the government and the insurance companies. In our zest for profit and immediate gain we have lost our way. Starting with the early pay-for-service insurance plans the early Medicare program that made a generation of doctors wealthy and the next generation searching for the holy grail of greed we have gotten totally caught up in medicine for money
• Advertising false claims of cures with all sorts of non-evidence based medicine
• The ill-will that doctors have towards their colleagues and the negatives things they say about each other
• Allowing the drug companies to infiltrate our offices and our minds and convince us to prescribe a billion dollars worth of medicines that are mostly unnecessary
• Hopping on the bandwagon of every next great advance - not because it helps the patients but because it helps our pockets.
  
• Prescribing unnecessary tests and treatments at facilities that we have ownership in like MRI facilities in our offices or physician-owned physical therapy.

Forgive the patients for:

• Blindly getting their health information from the Internet with no regard for the source.
• Doubting that the doctors actually do know better than their neighbor, friend, and especially their insurance company.
• Thinking that it is the doctors and not the insurance companies that are to blame for our health crisis.

So we all must look to a higher power and ask forgiveness for this health care system we have.
To quote one of the greatest of philosophers:

"Well, here's another nice mess you've gotten me into"
-Oliver Hardy


Dr. K

Related Topics:

• Crisis Ahead for Elderly Health Care?
• How States Rank on Health Care

Technorati Tags: heathcare, reform

Doctors & Money: The Last Three Piggies

Roast Beef, Bankruptcy, and Happiness

To round out our group of Piggies I thought that the last three sort of go together. These three Piggies may very well be at the center of how doctors are actually behaving and may give us all some insight into the future of how we will all get our healthcare in the coming years.

The Beef Eaters: Who really is the Piggy that had roast beef?

While much of the public tries to grasp onto the erroneous idea that all doctors do extraordinarily well financially this is clearly not the case. This I showed in the first Piggy that went to market. Read that. Twice. There are many doctors who do VERY well financially, though. We can define the financial winners (roast beef eaters) into three groups:

1. The doctors that work their butts off 90 hours a week and run efficient offices.


2. The doctors who are in specialties that are more involved in cosmetic aspects of medicine who built large factories of delivery of cosmetic care.


3. The doctors who decided to remove themselves from all insurance plans and charge high rates for their services.

I am sure there are more groups but these represent the majority. Please feel free to blog on some more.

Let's look at these three groups not as much to make value judgments but to see if we can learn something from their effects on health care in general and our own health in particular.

I know many doctors who work very long hours, take a healthy number of health plans to assure diversity in their patient population and commitment to their community, charge reasonable rates for patients in plans they choose not to take and run the best offices they can. Take pictures of these doctors the next time you see them. Put them in the next space capsule so that future generations will know who they were. They are dead and but they don't know it yet. They will not be coming back. Count on seeing a Tyrannosaurus Rex before you see one of these dudes walking down the hall.

The cosmetic doctors and surgeons are neither doctors nor surgeons IF they are practicing their craft for the sake of vanity. Don't even try to convince me that they are doing anything good in the world concerning the self-image of those they operate on. That motivation affects less than 5% of plastic surgeons. The other 95% are hairdressers with licenses to hold scalpels instead of barber shears. They will make a lot of money (and eat a lot of roast beef) because we are a society consumed by youth and beauty. They are not surgeons. They just don't count when discussing medicine. End discussion. I laugh when I hear of a prominent Hollywood Plastic Surgeon. What a joke. Prominent for what? Saving lives - NOT. Helping the health of others - NOT. Making some already fathead actress have even puffier lips. If we define prominence based on that we are surely are on the road to perdition.

There is a third group that is more controversial and represents those most difficult aspects of the money crisis facing doctors. These are doctors who truly do outstanding medicine and surgery and decide to be out of all insurance plans and charge what they feel they should get for their services. This is difficult in that on the one hand I highly support their personal choices to charge what they want for their services. The problem is that, over time, only a select few in the population will be able to afford them. This means the truly best and the brightest will be treating rich people from Beverly Hills and Park Avenue and no one else.

Let's make this clear. The fault is not in the talented doctors that want to charge what they choose to but rather in that we do not have an insurance system that can even pay a pediatrician for a flu vaccine in a timely manner let alone complex brain surgery. This third group is the one that is growing most rapidly.

As general physicians, specialists and surgeons get more in demand it is only natural they will leave the insurance plans that offer below market pay, extra paperwork, and interference with decision making. This group will continue to grow and what will be left you will not want to operate on your worst enemy. It is already happening. If you are a patient in one of these large multi-medical groups that mixes primary care doctors and surgeons and you think that the surgeon in the group is the best one in the community then wake up. Of course not - it is the surgeon that the medical doctors hired to make money from. The better doctors went off to eat roast beef and you are the meat that is left for the surgeons in the multispecialty groups. This would be a good time to eat cake.

This brings us to our fourth Piggy: This Piggy Had None

In the war between insurers and insurers and insurers and more insurers with pharmaceutical and device manufacturers and politicians there will be casualties of this war. Patient health is one. For the purposes of this post the casualty will be good and well-meaning medical practices. They will not have roast beef. They will not even have liverwurst. They will have none. They will go bankrupt. They are the roadkill on the highway of health.

In the last five years alone I have seen countless 1-5 person medical groups close their doors for a variety of reasons. Some because they can't keep up with the expenses. Some because the paperwork and administrative time to practice is just not worth it. Others because the numbers don't add up after the 90th hour of work. Where did they go? Some joined multi-specialty groups for the "protection amongst the many" philosophy. I view this as temporary salvation as they are probably becoming medical refugees in large refugee camps until the insurance companies and politicians create havoc for these groups. Some have taken full-time salary positions for hospitals. This can be a great thing for a forward thinking hospital and a bonus to the physician but it does represent a change in the level of service and personalization. Others, if they are of a certain age, just decided to retire. The great sadness of the death of the smaller groups is that they were the backbone of service and dedication that made American medicine great. Without these groups we are becoming a bit more of an assembly line of medical practice.

So what will make doctors happy when it comes to payment and job dedication? Will we ever see the day when:

This Piggy cried wee, wee, wee all the way home.

Happiness is subjective. In this current medical environment represented by our five Piggies it is hard to determine what the mix should be. If money makes you happy then become a beef-eating plastic surgeon (medical beautician). If what you want is that amazing dedication type job but need to make more money and can't work 80 hours a week then you will surely stay home, work for a private equity firm, and cry wee, wee, wee for the rest of your days but you will not be a Dr. Piggy and the world will be without you as a talented Surgeon Piggy. If you are that good in medicine and charge a retail rate for your surgery you will be driving that great big car but all your patients will be industry fat cats. You will soon ask the question: Did I go into medicine to only treat the top 5% of the economic scale?

What will allow this Piggy to be happy and cry wee, wee, wee all the way home? From what I hear from my colleagues here are some of the major things that doctors would like to see happen in medicine:

1. When a patient comes to the office for a service and that service gets rendered then the service gets paid. There are no denials by the insurance company for any of their classically lame reasons like- "we want more documentation," or "we are sending the bill for medical review."


2. There absolutely needs to be serious reform of medical malpractice. I support caps on liability that have been in the State of Illinois for the past few years where the most a person can receive is 500K for an adult case and 1 million for a pediatric case. I also think there needs to be a state medical review that would allow a case to even go to a trial jury.


3. If we ever do get to a universal insurance model there should be two options of participation: (a) complete joining by the doctor with payment of medical malpractice for those that accept the universal insurance and (b) joining partially where the doctor gets the universal payment but is allowed to charge any amount over that (no payment of this doctor's medical malpractice). This may assure a wide range of providers. Possibly.


4. Allow doctors to partner with hospitals where hospitals can pick up certain costs like malpractice, office equipment and maybe even central scheduling or supplying of office workers. Currently these kinds of partnerships are illegal.


5. Dismantle the entire private insurance industry. It is a failed model. Notice how I just sort of snuck that last one in...
   

It is unlikely that any of the above recommendations will even be remotely followed because generally speaking the free market will determine what happens. Smart Piggies will find out they will not get their value in medicine; they will seek other fields leaving a certain lesser-quality pool behind. That pool will be further diluted because the smartest Piggies left will go for the roast beef medical jobs and careers leaving whomever is left to be your and my doctor. That person will be our doctor for 3-5 years and then starve from the lack of any roast beef at all as they are the Piggies who had none. They will leave for other types of pastures. The few good souls who remain will not cry wee, wee, wee all the way home. They will just be crying during the eulogy service for the death of American medicine.

Oink.

Doctor K.

Related Topics:

• Election 2008: Focus on an Issue: Health Insurance
• Cost: A Deadly Barrier to Health Care

Technorati Tags: health care, health reform, medicine, medical practice, universal health care

Medical School - This Little Piggy Stayed Home

Photo: Jim Champion

In my last post we delved into the idea of payment of doctors. A touchy subject for some reason. It is still remarkable to me that everyone in this country can earn a market rate for their services but everyone wants to control doctor salaries. Let's move on.

Now that we live in an uber-regulated world of medicine what has this produced? Nothing particular good for patients. The insurance companies continue to rape the American public and the pharmaceutical companies and other companies assure themselves of profit.

How does a person decide what to do for a career? I think we all have gone through this in any field of endeavor. Here is a partial list of things someone considers when looking for a career:

• Is it interesting to me?
• Will I be good at it?
• Am I helping people?
• Will I actually get a job?
• How much will I make?
• What will my lifestyle be?

This and many other questions arise whether you want to be a nuclear physicist, small business owner, or a doctor.

What is the career that looks like this?

• It is interesting to me
• I know I will be good at it
• I will definitely be helping people
• I may not get a job (at least in the geographic area I want)
• I will not make nearly as much as I could in other fields open to me
• My lifestyle in this field is overworked and over-regulated by politicians and lawyers

The above career is actually medicine for a lot of people. Talented people who have choices put all these things into a hat and a decision is made. For many talented youth, medicine is not coming up on the radar.

There are numerous studies predicting the shortage of physicians that we will be beginning to experience within the next ten years. This has prompted certifying organizations like the Association of American Medical Colleges (AAMC) to recommend increasing medical school spaces significantly. There are many studies and editorials as to whether this can practically be done. Issues related to the massive debt incurred by the cost of medical school with uncertainty of reimbursement in future years decrease the raw numbers of talented applicants. We are also seeing more students who went to off-shore medical schools or foreign-trained non-Americans who perceive the medical environment more favorable in this country than their own.

I am not completely sure whether these changes are good or bad. They may just be the factual state medicine and medical education that we will all need to adapt to. One can certainly argue that people who choose to go into medicine for the money may not be the doctors we want caring for us. Does this go against American nature, though? Money does seem to attract talent in many areas of the marketplace. On the other hand, a dedicated physician who has a reasonable balance of commitment and expectation of reasonable reimbursement would be a good model as well.

We will be running into problems though because there will certainly be many dedicated people who simply can't afford to go to medical school. The cost of medical education is so prohibitive (over $50,000/year) that a $200,000 debt upon leaving school is not possible for anyone except the children of the wealthy.

It seems that in this scenario, the Piggies will stay home. If you are in it for the money then medicine is not for you. If you are in it for the passion and to help mankind you are staying home unless you can afford to go.

I recall having a breakfast meeting with a dean of a major American medical school a short time ago and I asked him about the issue of funding for medical education. He told me that at his medical school (ranked in the top 15 in the nation), that 80% of the revenues came from government research grants, 10% from donations, and 10% medical school tuition. Then came from me the following obvious question- If only 10% of medical school revenue comes from tuition then why do you charge tuition at all? Why can't you make up the 10% in cost savings, more donations, or more grants? I told him to imagine the talent pool he would get by being a free medical school.

Here is the bottom line.

If we are going to force upon doctors regulations on how much they can earn with Universal Health Care and regulations restricting revenue from other sources it is clearly obvious that in exchange, medical education should be free and medical malpractice premiums should be paid by the insurers (government and private) and not the doctors. Then, and only then will we have a pure, dedicated talent pool to assure our health care for many generations and all the Piggies will not stay home from medical school.

~Dr. K.

Related Topics:

• Health Matters in the 2008 Election: Compare the Candidates
• Health Matters in the 2008 Election: Health Issues 101

Technorati Tags: medical school, health care, doctors, money

Doctors and Money - This Little Piggy Goes to Market

Photo by **Maurice**

Let's go to Market! What would happen to doctor payments if the free market was allowed to work? Let's begin.

A few postulates about the public:

1. The public has absolutely no clue how much their own doctor gets paid
2. The public has no clue how much the average doctor gets paid
3. The public has no clue how much even the wealthiest doctors make.

A few postulates about doctors:

1. Doctors have no clue how much the doctor across town is making ( or how much their patients make for their jobs)
2. Doctors have no clue what their services are actually worth in a free market
3. Doctors have no clue what their worth is as compared to other professions

But wait, there's more...

1. The public thinks that doctors are grossly overpaid.
2. Doctors think they are grossly underpaid.

Now let's look at cost:

1. The public has no idea how much it costs to support and run a medical office
2. The public has no idea of the cost of training a doctor
3. The public has no idea of the amount of time their own doctor spends treating patients

Of course, the other side:

1. Doctors are not the most savvy businessmen and have no idea how to efficiently run a service company
2. Doctors think the world owes them forever for the financial and personal sacrifice they made to go to medical school
3. Doctors think that they are entitled to a huge amount of money for every service they do with the patient.

I hope that at least some of the above completely annoys both patients and doctors. The patients reading this will be saying to themselves that I am wrong about the things I say about the public perceptions of doctors and the doctors will say I am totally on drugs (a charge often made on this site after one reads what I write. Some may even call me a traitor. I am none of those, but I'm not afraid to air the dirty laundry, either.)

The Experiment

by BeeldenZeggenMeer

If the public think doctors are pigs let's send the piggies to market and see what we are worth. BTW, I think pigs are pretty cute, very smart, and quite tasty.

At least the last time I looked, the United States was a free democracy that allowed capitalism to thrive. Every kid can grow up to be President, and that the free market rules in business. The law of supply and demand. The more people that want your service, the more you will get paid. If no one can afford your service, you will be forced to lower the price of your service. The free market. It actually works. It may explain why a majority of people in this country sleep in beds rather than caves.

To look carefully at this issue I devised the following thought experiment. I actually did real research for this article. I talked to other people. Colleagues, friends, and patients. This is how is all went.

Here are the assumptions I made:

I invented a sample practice based on real numbers after interviewing a number of colleagues in the practice of Orthopaedic Surgery. This model is based on Orthopaedic Surgery because it is the world I know. I kind of like to write on something I at least know something about. The conclusions drawn from this informal study probably applies to all medical practices, but you make your own decision on that.

Based on real information this is what our "WebMD - Get a Medical Life" practice looks like:

1. The practice has three surgeons
2. The gross revenue collected from patient fees is 3.6 million dollars
3. The overhead of the practice which includes everything except salaries is 60% of revenue (believe me this is a real number!). In actual dollars for our thought experiment this is 2.16 million dollars
4. Each doctor works an average of 70 hours a week, not including being available for phone calls or visits to the emergency room on off-hours every other day = another real number.
5. The practice is in a community where there is a normal mix of insurance companies and Medicare.
6. The practice is on the panel of every insurance company that exists in their area. This goes by other common terms: The doctor accepts the patient's insurance, the doctor is par with the insurance... I think you get it.
7. Each surgeon in this busy practice sees an average of 4,000 office visits a year. This is a lot of visits. Needless to say, they probably don't spend a ton of time with each patient.
8. The practice philosophy is based on excellent surgery, commitment to proper diagnosis and treatment, and making money, which is why this group chooses to work longer hours and see more patients.
9. The group is a respected group in its community from the point of view of patient satisfaction and the perception that if you need surgery this is a group to have it with. A "Go To" group.
10. In the town next to this group is a group from a prestigious university clinic that chooses to accept no insurance. They charge what they consider the rates they feel they are deserved. For the purposes of this thought experiment, assume that the quality of the surgery and the diagnosis and treatment as compared to our hypothetical practice are completely equal.
11. One major procedure that this group does is a hip replacement. They do a full range of Orthopaedic procedures, though.
12. The surgeon you go to is Dr. SmithJones. You are going for a hip replacement.

Here is the experiment -- a survey which I want all of you to take. Answer the questions in order. At the end of the question group are the real answers and then we let the sparks fly.

Questions:

1. How much to you think Dr. SmithJones receives from Medicare/HMO to perform a total hip replacement? This fee includes the pre-operative evaluation and ninety (90) days of post-operative care rolled into a single fee.
2. Dr. SmithJones has another surgeon there as a first assistant (assume this is a required and important role). How much does the assistant surgeon, Dr. Surgical Assistant, receive to assist a total hip replacement?
3. Dr. SmithJones has an assistant, Dr. Patient Assistant, who shares in daily visits to the patients every other day. How much does Dr. Patient Assistant receive for this service each time he visits the patient?

(Theme from Jeopardy... Da da da da da da da, da da da da DA da da da da da, da da da da da da da, da da da da da da da.)

Write your answers on a paper. No cheating, now!

Here are the results of my straw poll when I asked a bunch of people the answers to this question. See if your answers compare to what the people I asked told me what they thought. Compare what you wrote to what people I asked told me. They probably are quite similar.

1. In answer to the question: How much do you think Dr. SmithJones actually receives for the surgery? One person came in with the lowest number at $3,000.00. The next lowest was $5,000.00. The majority had numbers ranging from $8,000.00 to $12,000.00.
2. In answer to the question: How much do you think Dr. Surgical Assistant receives for assisting in the surgery? The numbers ranged from $500.00 to $2,000.00
3. In answer to the question: How much do you think Dr. Patient Assistant gets for seeing the patient in the hospital after the surgery (per day/per visit). The numbers ranged from $50.00 to $150.00.

Okay. Now answer the following multiple choice questions.

I will give you an answer (not necessarily the real answer) to the above questions. You answer each with one of the following choices:

1. That amount is too little
2. That amount is too much
3. That amount is just right

Answer the following three questions:

1. Dr. SmithJones received $3,000.00 from Medicare/HMOs to perform a total hip replacement. This fee includes the pre-operative evaluation and ninety (90) days of post-operative care rolled into a single fee.
   1. That amount is too little
   2. That amount is too much
   3. That amount is just right
   
   
2. 2. Dr. Surgical Assistant receives $500.00 to assist in the hip replacement surgery.
1. That amount is too little
2. That amount is too much
3. That amount is just right


3. Dr. Patient Assistant receives $50.00 for each day he visits the patient in the hospital after surgery.
1. That amount is too little
2. That amount is too much
3. That amount is just right

Write your answers down. I will give you some time.

Da da da da da da da, da da da da DA da da da da da, da da da da da da da, da da da da da da da. Repeat once. Extra credit fill-in: I am singing the ??????? Theme?

Based on what you wrote and what I supplied you from my survey, you have an idea of not only what the public perceives what Dr. SmithJones gets for the hip replacement but also, based on the lowest amount mentioned on the first survey you learned whether you thought this was too low, high, or just right. Pretty good information. Remember, this is the free market in action.

One last question and then we put it all together.

Make the following assumption: There is some type of insurance plan that pays 100% for the hospital, hospital physicians like anesthesiologists and pathologists, equipment, blood transfusions and all other institutional type services (often as high as $25,000.00). You, therefore, pay none of these pills under the DRK Universal Health Plan (DRK- Doctor K). You are, though, responsible to pay only for the doctor's fee (like you may pay for a plumber, for example).

Answer the following questions:

1. I need to pay Dr. SmithJones $3,000.00 for the hip replacement. I can pay in a single payment or over a one-year period at 0% interest. This would work out to $250.00/month for 12 months. The payments are fully tax-deductible.
   1. I think this is fair and reasonable and I would pay this.
   2. I think this is too high for this service.
2. I need to pay Dr. Surgical Assistant $500.00 for his role in assisting Dr. SmithJones for the hip replacement. I can pay this in a single payment or over a one year period at 0% interest. This would work out to $41.67/month for 12 months. The payments are fully tax-deductible.
   1. I think this is fair and reasonable and I would pay this.
   2. I think this is too high for this service.
3. I need to pay Dr. Patient Assistant $150.00 ($50.00/day for three days) for his role in seeing me in the hospital after the surgery. I can pay this in a single payment or over a one year period at 0% interest This would work out to $12.50/month for 12 months. The payments are fully tax-deductible.
   1. I think this is fair and reasonable and I would pay this.
   2. I think this is too high for this service.

When I conducted the survey, a near 100% answered section 2 either that the made up numbers (for example $3000.00 for the hip replacement) was either "Just Right" or "Low." No one thought the amount was too much. Needless to say, considering one does not get a hip replacement often, the yearly pay-off of this reasonable fee seemed to all an interesting and realistic idea.

What are the real numbers?

Doctor Procedure Minimum - Acceptable Free-Market Fee - Actual reimbursement

• Dr. SmithJones Total Hip Replacement $3000.00 - $1347.86 - 42%
• Dr. Surgical Assistant Assisting Surgery 500.00 - $183.31 - 37%
• Dr. Patient Assistant 3 days of post-op visits $150.00 - $00.00 - 0%

The current reimbursement going to this group of 3 surgeons is severely and artificially depressed as compared to lowest the free market would accept to pay. Based on the lowest the public would be willing to pay a doctor for services, doctors are receiving less than 50%.

What happened to the free market?

After all, there are few industries in which people choose to work where the salaries are artificially depressed to below-market rates.

Keep in mind that doctors are not a single group of workers. Each doctor or doctor group is an independent business so medicine as an industry cannot be viewed as though the doctors are employed by others. If that was the case, then doctors would legally be allowed to unionize and act in concert in negotiations with insurance companies. Currently, even this is illegal.

It is illegal for physicians to collectively bargain or organize as any single group because the government views them as separate businesses organizing to influence the market and this is considered against antitrust statutes. It is amazing that the government uses one law that tries to assure free trade and protect a fair market while the same law actually prevents competition with the insurance companies and inhibits the free market!

The artificial depression and selective destruction of free markets in medicine continues in medical programs like Medicare. Many patients are unaware of the gross inconsistency of Medicare regulations as compared with regulations in other industries. For example, if a physician chooses to be part of the Medicare program, that physician cannot charge higher than allowable Medicare rates. That, of course, I believe, is fair. If you choose to be part of a program then you need to accept the provisions.

Did you know, though, that if a physician chooses NOT to be part of the Medicare program, the physician is legally not allowed to charge the more than the allowable Medicare rate? This means that when Bill Gates turns 65 and has Medicare for insurance the doctor can only charge him 15% above the allowable $33.10 for that follow-up visit for his high blood pressure visit.

When did we give the government permission to dictate the amount of money a person in private business is allowed to charge? Are there national dry cleaner rates for people over 65? Are there national designer clothing rates that a department store must charge? The only industry I know of that does anything close to this are gas and electric utilities.

Medicine is not a public utility -- yet. Whether it becomes one is neither the issue nor scope of this entry. This issue is that in when physicians pay vendors for services such as supplies and employee wages, they live in the free market. When it comes to reimbursement, current government programs coupled with the inconsistent regulation of the industry prevents doctors from living in a free market.

Here's what a true free market would be like: Dr. SmithJones would earn anywhere from twice to six times what he currently earns. The reason for the large range is because if the reimbursement will be increased and expenses will remain fixed.

Once Dr. SmithJones starts getting paid even the lowest market rate he will probably stop trying to squeeze in 100 patients a day in the office, spend more time with each patient. This will lower the raw number of patients he sees and possibly improve patient satisfaction and treatment which is yet another benefit of following the free market.

Is the fair-market price too high or too low?

Wrong question. This is the real life answer representing the free market for services rendered. The free market does not lie. The free market is not emotional. Is $25,000 too high or too low for a new car? Also wrong question - the cost is based on the free market. The rest of the country functions on free market principles; your business probably does as well. Pharmaceutical companies and insurance certainly do. If the doctor went to market, the numbers presented show what he would get.

Health care in the United States is reimbursed at below-bargain basement rates. In businesses in this country where you pay bargain basement prices you get bargain basement quality and service. It is only through the ethical nature and dedication of a majority of doctors in this country, who choose to practice blind to the reimbursement and treat individual patients equally and fairly, that this does not happen and medical delivery remains of the highest quality.

Unlike a piggy going to market, doctors are lambs to the slaughter of the business and political agendas at work in this country.

I will see you later; I have an errand to run. I am definitely going to the market...how about you?

QED

Next installment: This Piggy Stayed Home- What happens to the future of health care when the best and the brightest choose not to go into health care but into corporate Wall Street type jobs?

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