Should we blame the doctors for the high cost of care and the burden of medical debt?

I don't think so.

Dr. Jesse Williams was a good doctor. He was a kidney specialist when I was an Intern at Upstate Medical Center. You could go to him with any question, and he always had this slight self-deprecating laugh that made everyone comfortable. After years as a consultant, he started his own practice as a general Internist. His office was down the hall from mine, and I would visit from time to time, and we would talk. He was such an idealist. He decided that his practice should be truly egalitarian. He would see patients regardless of their insurance, even New York Medicaid.

I did not accept New York Medicaid in my practice at the time. They did not pay enough to cover my costs. It was not that I needed to make more money; I would lose money if I saw a Medicaid patient. If I spent my usual time and charged my usual fee, the payment would not cover my overhead, which was fixed at about 50% of revenue.

It was not surprising, then, when I heard after a while that Dr. Williams was unable to sustain his practice. He closed the office and took various jobs as a consultant and practitioner working in the Emergency Room and other clinics.  His patients had to find their care elsewhere, probably from the local hospital clinics or the Community Health Center.

Another colleague was a very straight arrow. He had a private practice where he saw his patients, but he added no frills. He did no fancy procedures. He just listened, did his very thorough exams, and ordered the tests and treatments he thought were appropriate. He was my doctor for a while, until he retired, young. He once told me how much he was earning from his practice every year. It was embarrassing. He probably earned as much as a bus driver and less than a nurse practitioner. I won’t give the number but, trust me, it was low – about half what I was earning at the time.

I was an administrator for an HMO and a medical group when I decided to reverse my career trajectory and go into private practice. (See Sneider JS, A Terrible Time to go Solo? Don't believe it: Transition from HMO Medical Director to Private Practitioner. Medical Economics. March 1994). I used all the skills and knowledge I had learned as an HMO physician, a Medical Director, and an administrator to open a practice that would provide high quality care to patients and still be successful financially.

Part of my strategy was to take advantage of insurance payments for ancillary services that could be provided in the office. Ancillary services included EKG – a no brainer for an Internist – pulmonary function tests (PFT), and sigmoidoscopy. I had to invest in some equipment for each of these procedures, but the return was a higher yield per time spent than the reimbursement for office visits. I also learned to do some simple dermatologic procedures, like skin biopsies and cauterizing or removing skin lesions, and I learned how to inject joints, mostly knees and shoulders with occasional injections elsewhere. Most insurers would pay for these extra service a-la-carte, adding to the income from each visit.

I made a few mistakes along the way, but I would say that my strategy with ancillary services was successful in increasing my earnings. I was also able to give my patients more service without sending them to specialists. Ironically, given my management experience, my mistakes were mainly administrative. I took too conservative a trajectory to build my practice and I could have used a professional practice manager. I also had this fantasy that insurance companies would pay me for being a careful low-cost, high-quality doctor. I was wrong about that. Although I often received excellent reports for both cost and quality from insurance companies like Blue Cross/Blue Shield and United Health Care, not one of these companies offered any incentive or reward for my good work.

Today an article in my local paper taken from the Kaiser Foundation Fund (KFF Health News) reported on the suffering of people weighted down with medical debt – “Medical Debt is Making Americans Really Angry.” While the article started with a patient who had a $4000 hospital bill that she couldn’t pay, for pink eye no less, it ended with an admonition that “health care leaders – and physicians in particular – could alleviate patients’ financial suffering.” Wrong! Wrong! Wrong!

Recent reports have shown that physician reimbursement from Medicare has decreased 26% in the last 20 years! At the same time, pay reimbursements for hospitals, health clinics, nurses, pharmacists, and everyone else in medicine has gone up! This year Medicare is asking for a 3.36% cut in reimbursement for physicians services. To add insult to injury, some airline pilots have just negotiated a 40% pay increase! Drug companies continue to cry poverty as they charge exorbitant fees for their products and get paid! Congress has so far refused to negotiate reduced cost for most drugs, especially the most profitable and expensive ones.

If physicians had all the power and could “alleviate patients’ financial suffering” don’t you think we would have been able to at least maintain our own income? Those bills that are making patients angry mostly come from hospitals, drug companies and clinics. Bills from physicians are typically smaller and not aggressively sent to collections. Physician costs are not a big part of insurance company expenses, although physicians do control most expenses. A few years ago, less than 4% of all New York Medicaid payments went to physicians, and most of Medicare’s budget goes to hospitals and clinics, not physicians.

In the last few years, as payment to physicians has continue to fail to keep up with inflation, the government has tried to make it possible for physicians to increase their earnings. This was not done by raising payment to doctors for their time caring for patients, so called E&M services. The Center for Medicaid and Medicare Services (CMS) instead has allowed physicians, including primary care doctors, to make additional money by adding services. Doctors can get paid for spending more time with patients creating plans for advanced directives, for extended services for very sick patients, and for adding certain measurements for depression and other psychiatric illnesses, just to name a few. Instead of paying doctors more for their primary care time, CMS is paying physicians more for adding services. Each service comes with complex requirements which must be met to bill for the service. The complexity of the billing requirements and the threat of costly audits by Medicare discourage doctors from billing even for some simple services they already provide.

This strategy by CMS has devalued the time physicians spend with patients as it has added value to those who can figure out how to get paid for adding extras. It puts downward pressure on physicians’ income and encourages primary care physicians, the lowest paid doctors, to change specialty or retire early. By paying more for additional miscellaneous services, Medicare encourages practices to add X-rays, CT scans, MRIs, blood tests and procedures. These services add to the cost of care, particularly for patients without insurance and increases the complexity of the medical business, thus encouraging doctors to leave their small private practices and go to work for larger organizations that can afford professional managers and billing staff.

More than 50% of physicians are now employed by hospitals, clinics, and physician groups.

Have you tried to find a new primary care physician (PCP) lately? Studies show that patients cared for by primary care doctors have higher satisfaction, fewer extra tests, better quality of care and lower overall health care costs. Unfortunately, given the pressure on primary care physician salaries (lower Medicare reimbursement), fewer students are choosing primary care, so primary care doctors are hard to find. Medical group practices have the same problem that you have finding PCPs, so they are filling the gap with nurse practitioners and physician assistants. These providers of care cost less up front which can save a group money. Even better, studies have shown that these clinicians order more tests of all kinds which makes even more money for the practice and costs even more money for payers.

This is a very complicated stuff, but choices made by the Federal government concerning Medicare and Medicaid drive the system of reimbursement across all insurance companies. Current congressional rules punish physicians for costs that they can’t control with no direct incentive to decrease those costs. This has led to a business model that drives doctors into groups that can maximize income by adding ancillary services and high paid specialty services.

My point? Don’t blame doctors for the runaway costs and the high hospitals bills. Blame a system that encourages every organization providing health care to do more tests, add costs and generally game the system so that they can make more money and survive. That is generally called greed – and it has infected medicine.

Doctors who try to practice high quality medicine like my former colleagues without gaming the system will be left behind. They can’t compete and have trouble even covering their own costs to make a decent living. Some of those doctors are choosing to retire early. Good luck finding a new primary care doctor when yours retires. You will most likely end up with a nurse practitioner or a PA as your provider of care, and I will only say one thing about these “mid-level” practitioners -  they are not doctors.

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