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Readers Strike Back

Philip Betbeze, Senior Editor, Finance, October 8, 2007

With several columns since the last time I shared readers' comments, your feedback is starting to pile up. Now seems like a good time to offer some of your letters, since I'm busy preparing for HealthLeaders Media's Top Leadership Teams in Healthcare event in Chicago this week. We have five panels consisting of healthcare's most innovative leadership teams--hope some of you will be able to attend.

Now, on to the comments. Some are reasonable, some not. Most are well thought out, respectful disagreements; disagreements, after all, are what compel most readers to write. One is a bit over the line, but I won't hold it back. Responses mean you're reading, so keep 'em coming.

Providers should worry, not docs, August 20Editor's note: This column has generated the most feedback, by far, of any opinion piece I have yet written for this e-newsletter. In it, I discussed whether doctor compensation was a chief culprit of healthcare cost inflation. Thankfully, with this one exception, your responses managed to avoid insulting my appearance, my genetic heritage or my personal hygiene. But I just had to share the one response that didn't. Maybe it'll brighten your Monday:

You must be in the pocket and feeding from the trough of the insurance industry. You could not possibly be this stupid!! For heaven's sake, have you no pride at all? I'm so sorry you blew the MCAT's (sic) and were never able to go to medical school.

Unsigned

Editor's note: Which is it? In the pocket? Or feeding from the trough? Of course this missive is unsigned, but the writer's tone clearly implies that anyone who doesn't have an MD is by definition inferior. So my sister, a veterinary ophthalmologist, got all the doctor brains. So what? My mother loves us both. Further, sir or madam, in this context, MCATs is plural, not possessive, so you don't need the apostrophe. Now, on to some more thoughtful responses.

Cost Inflation: Are Doctors The Problem? (Sept. 17)

Phil,

You bring up some interesting concerns, but I think you're looking at a portrait painted of physicians 20 years ago. While there are isolated cases of doctors who still bring in huge salaries, the average physician has seen his or her income slashed over the last two decades with some specialties making less than 20 percent of what they made 20 years ago.

Medicare has 5-10 percent cuts planned every year for the next seven to nine years. Add to that an annual increase in practice expenses that runs at 3 percent to 8 percent. Since essentially all insurance companies pay physicians at rates tied to Medicare rates, most doctors are looking at salary cuts of 5 percent to 18 percent per year for the next several years. It doesn't take many years like that to wipe out a lot of physicians.

As president of the Colorado Medical Society from 2004 to 2006, I spent a lot of time talking to doctors in my state. Traditionally, the conversations were about how the docs were trying to stay in business: decreasing expenses, increasing hours, or cutting staff--any strategy they could think of to stay afloat. But over the last 18 months, all that has changed. The majority of the physicians I talk to now say the same thing: "I'm done." They've given up and are looking for a way out. Some are retiring early, some changing careers, some going into administration, and some don't know what they'll do, they simply know they can't practice medicine anymore. I'm an orthopedic surgeon and I closed my practice in Denver last year. Not because I didn't enjoy medicine, but because I don't see any long-term future in it.

I think it's likely that in certain parts of the U.S. we'll lose 15 percent to 30 percent of our physicians over the next five years, and once they're gone you can't bring them back. I hope I'm wrong, but I don't think so. Spend an hour or two in any doctor's lounge in any big city in America and ask the docs about their plans for the future. I think you'll find a lot of those plans don't involve practicing medicine.

Rick May, MD

* * *

Philip,

I wish people would not compare physicians here with those who practice elsewhere in the world--especially in Europe. I am all too familiar with folks in the media and elsewhere who feel that we should work for nothing, or practically nothing. If we, in our analysis of the healthcare crisis overlook simple economics, then it is going to get a lot worse. We physicians are human beings like anyone else, and being American, are for the most part capitalists at heart. The harder we work, the more expertise we command, the better service we provide, the more we should be paid. That is the way it works in every other profession. That is what will maximize quality and drive incentive. That is why European physicians make less. They take six to eight weeks of vacation a year and take less call. They also are not as personally responsible for their own liability as we are here in the United States.

We care about our patients and want to provide the best care, but we are not all Mother Teresas. We have families to support and yes, we do want to enjoy the fruits of our labor like anyone else.does that make us bad?

Tom Valaoras

* * *

Phil,

Not so fast. The one thing you find really driving healthcare costs is GDP. GDP drives income and, the more income we have, the more we will spend to keep ourselves alive. Some research suggests that we may find ourselves spending as much as 30 percent of GDP on healthcare in the next 20 years, and we will be able to afford it because our GDP will be higher. The demographics of U.S. healthcare spending look a lot like Portugal; however, the Portuguese spend only 9.8 percent of GDP on healthcare. Why do we spend 15 percent when the Portuguese spend 10 percent to get the same life expectancy? Because we can. With greater income and, therefore, greater disposable income, we can steer more of our income to health and, since it's largely provided via our employer's healthcare credit card, we don't have to be concerned about whether we got value for what we spend.

The question of sustainability is really a question for employers. It may not be sustainable for them any longer. If that is indeed the case, more of the costs will be shifted to employees. If you include tax-sheltered employee health benefits as part of personal income, then a shift in payment responsibility toward consumers will feel, to them, like a reduction in income. Healthcare costs are very tightly correlated with income (up and down). Replacing the private employer with government would make us look a lot like other countries. Unfortunately, it would do nothing to change healthcare purchasing behavior in this country. Instead, employers would simply substitute "healthcare tax" for "healthcare premiums" on their income statements and healthcare expenditures would continue to climb (as a percentage of GDP) until the government controls supply, which is exactly what we're seeing in countries like Canada and Great Britain.

The real issue is not so much whether doctor incomes are driving healthcare costs but, rather, what will happen to healthcare spending as consumers have to pay a greater portion. The data would suggest that such a movement would cause healthcare costs to moderate.

Mike Freed

VP of corporate resources and CFO

Spectrum Health

* * *

Mr. Betbeze,

With respect to your commentary, and to paraphrase a noted philosopher, I think that 'what we have here is a failure of agency.' Your arguments with respect to physician incomes underline the failure of (many, most, all) physicians to act as fair agents of their patients. I would submit that agents should not be balloons--the true best interest of patients is not inconsistent with a reasonably good income but is unlikely to maximize it. Given this apparent failure, one questions the maintenance of monopoly privileges for the medical profession.

Barry Zajac

Vice President, Clinical Informatics

Cardium Health + AirLogix

* * *

I think if you did a study, you would be very surprised how much insurance companies and their structure of earning a profit affects the cost of healthcare. It is the CEOs, but not just the CEOs. Since most are public companies, they need to project earnings, and then make that bottom line to keep their shareholders happy. That is a lot of misdirected healthcare dollars that could be used to save lives.

Rita S. Woller, CMPE

* * *

Phil:

I agree that reform is needed; however, do we really want to take the incentives out of medicine? In this great country, we have some of the most talented physicians doing amazing things to prolong and save life. We have better access than Europe and more advanced technology. Who are we kidding? If you needed brain surgery do you want the guy making $120,000 a year using a knife on your brain or the guy making $750,000?

I do agree that ancillary services should stay in facilities. Hospital pricing pressure increases as ancillary services move from the hospital setting to an ambulatory setting. We have a duty to protect our hospitals' financial viability. If (physician) compensation hit the levels in Europe we would have our talented youth entering other professions where the financial rewards are preserved.

Gene Preston

Carelink Health Plans

Healthy Behavior Saves, Even For Hospitals (Sept. 24)

Good article. And good points. The problem is that in today's marketplace hospitals are paid for episodes of sickness--not wellness. However those hospitals should take a model to employers and institute it. Then they could make money on wellness, partnering with employers and taking a percentage of the money saved as they look at metrics for absenteeism, presenteeism, productivity, etc. Put a number on it, create a baseline, share the savings.

Anthony Cirillo, FACHE, ABC


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.

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