Not much more than a year ago there was the opposite problem, getting in to see a busy physician, but times have changed with the economy in California. For that matter it is changing all over. Recently I had a discussion with a physician about the patient mix currently visiting his office and he mentioned to me that the total number of HMO patients has dropped considerably. Why?
They are all moving to the bare bones PPO insurance for one, in other words a policy that basically is to cover items with a high deductable of around $1000.00, which means everything up to that point is out of pocket, and with the current economy consumers can’t afford it. HMO patients used to command a large part of the patient data base in the past, and encouraged patients to take care of their health, but now that it is not on the tab with affordable deductibles, patients are not going to the doctor. Add this to patients who have been laid off and do not have insurance too, Cobra is gone if the company goes bankrupt.
The shift in consumer health plans has had a big impact at the doctors office. Next month, this physician is joining 200 physicians in a multi-office practice affiliated with Johns Hopkins Medical Center in Prince George's County, Md. Her base salary will be $115,000, plus bonuses. The small practice as we have known for years is beginning to vanish.
The office has been closed and hopefully someone else will be able to pick up the lease. In California, from July 1st to the middle of September we had no budget, thus Medicaid checks did not go out for almost 3 months, another factor that added to the problem with no money released from Sacramento until the budget was signed. One MD in Santa Rosa closed his practice as his income has slipped to $50,000 a year. Some physicians have also told me their income is “whatever is left” after payroll and all the overhead is paid, including malpractice insurance.
Specialists have felt the pinch as well, but perhaps not as hard hit as the family practice MD, who we all depend on for our general healthcare. Will the big medical institutions be the future of where we all go in the future? If current trending continues, it certainly looks like things are somewhat pointed in that direction, the business model of organizations such as Kaiser who seem to be thriving today, and who can spread the overhead over a much larger patient base. BD
Much of the problem lies in an endangered business model: the one- or two-physician general practice. Such practices are particularly difficult for primary care physicians to maintain because of their relatively slim and declining margins.
In her best year, Walford grossed about $360,000, more than enough to cover her overhead and take home a tidy income. That stands in sharp contrast to this year, when her practice slid into the red.
Small general practices afford doctors autonomy to practice medicine as they see fit and can produce strong doctor-patient bonds. But these physicians have little or no clout to leverage better payments with insurers; they have no economy of scale, which makes overhead more burdensome.
"It's very difficult, even in rich neighborhoods like Beverly Hills, to set up a solo practice," said Richard Scheffler, an economist at UC Berkeley. "The doctor has to pay rent, a nurse, have a bookkeeper, billing systems, computers. All of those fixed costs are very, very hard for a solo practitioner to have and survive."
But in the last few months, many patients failed to pay their bills. In September, she sent invoices to Medicare, Medi-Cal, private insurers and patients for $70,000. With negotiated discounts and government fee schedules, Walford, as a rule of thumb, expected to collect two-thirds of her billings, or about $45,000, that month. Instead, she got $14,000 -- less than her overhead. Walford fell behind on her rent. But she didn't bother dunning her patients.
"I can send patients to collections until the cows come home," she said. "I will never see that money."