Wednesday, January 3, 2007

A medical practice is/is not a small business

I love practicing medicine, which is good, because it's how I pay the bills. My patients often seem to forget that I charge for my services because I need to make a living, but I also need to pay my staff, pay for vaccines, pay for rent and utilities and office supplies and table paper and toilet paper and malpractice insurance and other insurance and what not. Just like any other small business, right? Post-Katrina, FEMA and the SBA have said so. Medical practices received no special treatment. So I try and pursue grants, loans, and other assistance to rebuild my practice. But my revenue is solely and entirely dependent on me seeing patients. So if I'm out of the office (say, for a meeting), I'm not making money.
That's not special, you say. Same as any other professional in a service field--lawyers, plumbers, electricians.
Yes, but an electrician sets his rate, gives you a bill, and you pay.
In healthcare, the insurer sets the reimbursement and pays what they feel is appropriate. This is like walking into Circuit City, seeing a TV for $1000, and saying, "no, I'll give you $700 for it. Thanks!" In theory, the insurer gets to take a cut off the doctor's standard prices in exchange for steering patients to the provider, enabling prompt and worry-free payment. In practice, it's done this way because doctors usually have no choice.
So unlike any other business in town after Katrina, I cannot increase my revenue by increasing charges, because it won't make any difference. I can charge Medicaid $65 for an office visit, or $650, and they still pay me $50.48. But I still have to pay an extra $2 for my $6 roast beef po' boy (mmm...roast beef po' boy). I still have to pay when Merck raises prices on its vaccines. In short, trapped. The only way to make more money is to see more patients.

And there's the final catch: there was an initial surge in population here after Katrina as everyone started coming back, and the contractors and workers started flooding into town. But now the population growth has slowed. Why? Housing. Here in Waveland MS about 90% of the houses were damaged or destroyed. As a result, people aren't coming to the area because there's no place to live. Few houses are on the market; the houses that are, are overpriced (simple market economics, supply and demand), squeezing out poorer working-class families. You can buy an overpriced empty lot, but you'll have to wait about 6-12 months before you can hire a contractor to even start construction.
So the doctors can't raise fees, can't see more patients, still have to pay the bills, and--oh yeah--try to recover all of the losses and expenses related from the storm and the loss of practice. (I'll try to post on that at a later date.)

Why does all this matter? So if I can't make it, shouldn't I just leave town?
First is the personal, community aspect. I feel a commitment to my patients. I want to be there for them when I'm most needed, and see them (and me) through this recovery.
Second: well, doctors are all rich anyway. Shouldn't I just sell off one of my 3 Lamborghinis, or my vacation home in the Bahamas? Actually, pediatricians are generally not rich. Most middle class 2-income families earn what I make--without the associated student loans, and with a good many years headstart on saving for retirement. I realize I'm doing better than many others, but I certainly don't have the resources to weather this for much longer. As is, I've taken out a $40,000 home equity loan and $60,000 SBA loan to cover post-storm and restarting expenses. That's $100,000 in new debt. OUCH. At least the SBA loan can be paid back over 30 years--just like my Stafford loan from med school.
Third, and most importantly, if I leave, who will see my patients? This is not a rhetorical question. There are two other pediatricians in town (one is now employed by the local hospital, the other works for a community health center). They could probably cover things, and patients could also see other pediatricians further away. But then what? A town without good medical care won't be very enticing to new families, or new businesses. And the recovery stalls out and the community never rebuilds.
Is that okay for little old Waveland, MS? How about New Orleans, LA? How about the next city hit by a major disaster?
I'm not even bringing in the moral arguments, that health care is a necessary community service and should be maintained for the good of the community. Or that doctors such as me are being not rewarded, but penalized, for staying on after Katrina. (Every week I get a flier for "Lucrative position! Starting income $200,000!" or something similar. Yet I'm still here????) Just on an economic basis, physicians face inherent difficulties unique to healthcare. We can't respond like other businesses can, yet we're expected to anyway. No special treatment, despite special circumstances.
So what to do? More to come.


DrGwenn said...

Welcome to the blog world! I love your blog.

I'm living in the town in Massachusetts that has been helping your town since the hurricaine - Wayland, MA. Wayland to Waveland signs are all over town and all the kids, including my own, are committed to helping their new found friends.

Dr. Gwenn

Anonymous said...

Welcome to the blogosphere doctor. I just found your blog via Dr Flea who had a really nice post for you. I am a medical biller and I totally know your pain about insurance reimbursement. Medicaid/Medicare and Private Insurance, coupled with the 'cannot afford to pay' patients makes it hard to keep clinic doors open. I like to say that I do my best to help get every nickel and dime owed my docs. They really need it because clinics, personnel, and clinical supplies are not free.
Infact I posted a blog about some of the frustrations. My initial post An Introduction to a Mad Medical Biller pretty much correlates that Clinics are not a small business.
Keep on blogging and welcome.

Dr. Mary Johnson said...

Welcome. Flea sent me.

My God, don't we all have our different reasons for being here?

Good luck to you.

Blog on.

Dr Dork said...


I'm not a flea but blame the Flea for the influx...

A blog is another way to teach, to the general public.

Ideally, for us all.

Each drop in the sea counts - may you be a tsunami!

mchebert said...

Nice post. Glad to here from another Mississippi doc; I am blogging from McComb, and have moved here after Katrina flooded out my practice.

Keep up the good work.

The Independent Urologist said...

I enjoy your blog very much.

Owen said...

Pretty effective data, thanks so much for your article.
retirement cards | star signs | sex secretary