Physicians Pinned Between Rising Costs And Lower Payments
Written by Marilyn Bowden on October 7, 2010
By Marilyn Bowden
With rising costs associated with healthcare reform and the prospect of lower payments for services, private practitioners are between a rock and a hard place.
Healthcare reform is hitting physicians in private practice hard, said Robin Fielding, CEO of Orthopaedic Center of South Florida in Plantation. "We are constantly under a lot of pressure from every avenue in managing our business," she said.
As for with most businesses, she said, the cost of providing benefits for employees is skyrocketing due to preemptive rate hikes from insurance companies.
"We have been progressive in our technology," Ms. Fielding said. "Our electronic health record system has been in place for years, but the company providing our software was taken over by another company and we will need to purchase an entirely new system."
At a recent conference of orthopedic executives, she said, compliance issues also loomed large. Compliance on everything from technology and Medicare to the 1996 Health Insurance Portability and Accountability Act will require much more paperwork.
And the lack of tort reform will continue to push the cost of malpractice insurance through the roof.
"These are just a few examples of the expenses coming down the pike," Ms. Fielding said. "And yet the payers are all looking at payment reductions. Co-pays are so high right now that people are not going to get the care they need.
"It’s a constant struggle trying to maintain the high quality of patient care that we want to afford the population."
Coupled with spiraling expenses, said Ronald D. Finkelstein, a partner in the accounting firm Morrison Brown Argiz & Farra who works with healthcare providers, is the downward trend in reimbursement by both by Medicare and private payers.
"The legislation that passed in the past year has to do with access and providing benefits," he said, "but has not addressed significantly the key piece, which is how to contain costs. So what will happen is that there will be more patients who are now insured coming in under managed care or Medicaid programs."
And since those are the very programs, Mr. Finkelstein said, where there are pending reductions to primary care physicians’ fees, "what they are faced with is seeing more patients at lower fees. But many will need to increase their overhead to accommodate the larger patient volume. So that is going to squeeze their compensation and profits."
There’s a paradigm shift coming, he said, in how medical providers are getting paid.
"From a physician viewpoint, it’s shifting from fee-for-service to a cost-containment, outcomes reward system," Mr. Finkelstein said. "The national healthcare legislation is requiring providers to form accountable care organizations, or ACOs, pushing hospitals and physicians to integrate. That integration could take a lot of different forms, such as hospitals acquiring private-care practices or contracting with them."
Revenue cycle management — how doctors’ offices bill and collect — will also change under Obamacare, he said, as patients shoulder higher deductibles.
Universal insurance coverage will affect primary-care and family practitioners, the medical profession’s gatekeepers, to the greatest extent, said healthcare attorney Marc Auerbach, a partner with K&L Gates.
"If more people are insured," he said, "it’s just common sense that the gatekeeper-type guys will see the largest percentage of the patient pool."
Other issues outside the act but affecting them are a mixed bag, Mr. Auerbach said. "There are some attempts to increase the rate structure in terms of reimbursements. But as I see it, the real problem is economic.
"The cost of a medical education is going up substantially, so new doctors are leaving medical school with a higher debt burden.
"This act did nothing to address tort reform, so there’s also a high malpractice structure. So will they be able to earn a living in small practices by themselves?"
The economic squeeze, he said, is contributing to a trend among physicians towards offering more services not reimbursed by Medicare-Medicaid or insurance, but by the patients themselves, or adding Internet-based services such as selling vitamins or offering video consultations online.
"The act itself is designed to help primary care physicians," Mr. Auerbach said, "but the question is whether it will be enough."