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Dr. Darrell White's Personal Blog

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How Doctors (Don’t) Get Paid

I got a bill the other day for care that was provided to a member of my family. The care was provided at one of the huge behemoths here in Cleveland. Now, this was just an office visit, not anything exotic like a fancy test or some new surgical procedure. And yet, there it was, at the bottom of the billing statement: “facility charge”. I knew it would be there, but still seeing it made me chuckle. “Facility charge.” What a great gig! Not only do you get to charge for the professional services provided, but you get to put a separate fee to cover your overhead on the bill! Dude, where can I sign up?

Well, that’s just the point. I CAN’T sign up for that cruise. You see, I’m a physician in private practice. You know, old-time medicine. The doctor owns his own business, pays the rent, makes payroll every two weeks. If something breaks he or she writes a check. Exactly like the pediatrician when you were a kid who gave you that scratch on your shoulder when it was time for your polio vaccination. No “facility charge” associated with that visit! Nope, Just a few dollars passing between your mom and the lady manning the front desk. You never really thought about what happened to those few dollars, of course. Heck, you were only seven! Your mom never really thought about it either.

Until recently the vast  majority of medical care provided in the United States, at least care that came from physicians, was provided at the hands of private practitioners like me and like that pediatrician you saw with your snotty nose as a kid. Contrary to the wishes of countless faceless bureaucrats in Washington, a significant percentage of care continues to be provided in exactly the same way. Even in very large, institutional medical groups a “facility charge” is nothing but a happy fantasy. The money that your insurance company pays to your doctor does NOT go into your doctor’s checking account until all of the bills are paid

This is why the proposed 21% cut in physician’s fees for the care of Medicare patients is so much bigger than even 21%. This is also why it’s so difficult for patients who are covered by Medicaid to find a doctor. The notion that somehow increasing the Medicaid rolls, taking people off of the uninsured list and placing them on the bigger list of people whose medical care might be covered by Medicaid, is such a farce. People who have Medicaid now have enormous difficulties getting access to the care that they need. What makes those same faceless bureaucrats think that they have made any headway increasing access to medical care by putting more people on Medicaid? Doctors and most hospitals avoid seeing patients on Medicaid, just as they will avoid seeing patients on Medicare if that 21% cut goes through, because they DON’T GET PAID.

Well, how about technology? Is it possible to increase the efficiency of doctors working in their offices with the use of new technology? Efficiency, yes. Efficiency while making sure that our doctors get paid, no.A USA Today article looking at the daily workload of primary care doctors found an average of 55 services performed each day in a 4  doctor group that went unpaid. Services like answering phone calls and refilling prescriptions, reviewing lab reports or consultation reports, or interacting with patients by e-mail.  On the face of it,  increased access to your doctor through alternate venues, something different than coming in to the office where the bricks and mortar have to be paid for makes sense. It makes sense, that is, if the doctor gets paid for it!

Why should you care if your doctor gets paid? I mean, didn’t President Obama point out how much pediatricians get paid for taking out a  patient’s tonsils (read that carefully)? Wasn’t it some huge number that made no sense? Aren’t we supposed to be moving toward a system where doctors are paid a salary, where there’s no incentive to order extra tests or do extra procedures since we know that doctors are incapable of separating their own economic interest from the best interests of the patients in 2010? You know, like World Class Hospital, repeatedly beatified by both the President and those same nameless, faceless bureaucrats in Washington, held aloft as the shining beacon of hope, the one true path to higher quality care at lower cost.

Funny, that. The World Class Hospital is actually an extremely good example of both the best and the worst of where healthcare economics has been and where it might yet go. The World Class Hospital is enormously successful financially because it has mastered the arcane business of doing as much as possible for each patient within the rules of the billing game. There would also be that “facility charge” thing where the bricks and mortar are covered by a surcharge. Although the doctors at the World Class Hospital do indeed work for a “salary”, in many cases that salary is tied directly to not only their own personal production, but also to the amount of money that is generated at the institution as a secondary effect of their labors. Human nature being what it is this produces two very different types of behavior on the part of doctors at the World Class Hospital, and indeed doctors everywhere who are paid like this. While there is still upside, room to do more work and thereby prove that a doctor should be paid more, the doctors are always available. Ready to work. Access to these doctors is rarely a problem.

Unfortunately, the opposite also occurs. Once a certain salary level has been reached many doctors simply slow down. It’s a funny quirk in the system, salaries are rarely if ever decreased. Why work harder if there is neither incentive to do so, nor disincentive not to? The best example I’ve seen recently is a group of general surgeons formerly in private practice who sold their group to the World Class Hospital. This group used to be noted in the community, especially among primary care doctors, for the amazing availability of the surgeons. Whenever a patient needed surgery, or whenever a patient needed a surgical consult, one of these doctors was ALWAYS available. Now? Not so much. 9-to-5, Monday through Friday. Why? Well, they don’t get paid for all of that availability anymore.

It’s a funny thing, money as an incentive. It’s an even funnier thing, how forgetful everyone becomes about money as an incentive when it comes to paying doctors. The mantra from Washington regarding “health care reform” has been the fantasy of better care and greater access at a lower cost. Doctors  to work harder, work longer, and be available to all of us whenever we need them.  We want this as we walk around with “alligator arms”, unable and unwilling to reach for our checkbooks, appalled by a $15.00 co-pay, insulted that there might be some service or care that’s NOT COVERED BY INSURANCE. More and more for less and less… who wouldn’t want that?  I do wonder, though, what the reaction would be if all doctors handed their patient an itemized “bill”   detailing what happens to that egregious $15 co-pay. At last count in our office? Exactly $3.00 to me.

You know, come to think of it, I got paid pretty well in the year 2000. I think I’d be okay with my 2000 salary; you can even keep the 1% pay raise. I’d be willing to work for my year 2000 salary, maybe with a little cost-of-living raise, you know, like the one those nameless, faceless Washington bureaucrats get every year. I’d even be willing to work the way I’ve always worked, available pretty much 24 – 7, 365. How would I do that, you wonder?

Well, let’s talk about that “facility charge”…

4 Responses to “How Doctors (Don’t) Get Paid”

  1. May 20th, 2010 at 2:03 pm

    Ken Lee says:

    Darrell my friend, I can guess the identity of the above-mentioned general surgery group, and unless things have really changed in the past year, our coverage has been 24/7/365, and our style of practice has not changed from when we were in private practice to becoming World Class. And c’mon Darrell, I would venture to say General Surgeons work outside of M-F, 9 to 5 as much as anyone.
    And your own topic, of “How Doctors (Don’t) Get Paid,” I would argue applies to General Surgery as much as any other specialty. If not for the option of joining World Class Hospital, we would be GONE. How’s that for access?

  2. May 20th, 2010 at 2:22 pm

    darrellwhite says:

    Ken, I will say only that I won’t identify the group involved, that several groups have been purchased, and all could be described in a similar fashion. I might have put in the body of the post that this particular information comes from “personal communication that was not solicited, freely offered in the course of unrelated discussions and coming from more than several primary care doctors or groups.” I would have little direct knowledge given my specialty, of course.

    If it is indeed, or could be, your group one might consider the “perception is more important than reality” rule and embark on a campaign to reverse any such perception, especially if that perception was endemic in large parts of the groups’ traditional referral sources.


  3. July 18th, 2010 at 8:16 am

    Palma Spindler says:

    Excellent stuff.

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