There was a time, not so long ago, when a career in medicine was both honorable and reliable, as well as reasonably lucrative. That was, however, before it was considered "un-American" to make a profit on the practice of medicine, and certainly before the passage of the now infamous "Patient Protection and Affordable Care Act".
The sad reality presently, is that many physicians, and more and more hospital systems, are already going broke and closing their doors – All at a time when there will be a predictably huge influx of new patients into the system as a result of Obama Care.
What most people don't understand about healthcare, is that it is the only industry where there is essentially no connection between the amount charged and the true cost of goods and services; it's largely a fabricated cost structure that relies on the insured and private payers to cover the cost of the un- or under-insured. In this regard, the "haves" have long been providing a healthcare subsidy for the "have-nots". Furthermore, medicine is a bizarre aberration where a third party pays the tab for services rendered, often months after the fact, based on a complex formula that is negotiated and independent of actual costs – sort of like filling your shopping cart with merchandise at Wal-Mart, without the benefit of prices on the shelves, and walking straight out the door past the cashier with a wink and a nod, having previously signed something that says "yes, I agree to have my people pay your people an amount of money for which I am not responsible at some as yet to be determined later date". To boot, Medicare and Medicaid, our historical "government healthcare insurance options", have notoriously under-reimbursed for care, leaving those shoppers with the better reimbursement plans to pick up the shortage.
For years, the "dirty little secret" in medicine is that most doctors (and the healthcare system as a whole) have survived by "making up" the deficit from the Medicare/Medicaid component of their practices by charging higher rates to those with private insurance. It's the only way to run a viable business. Despite the running joke about doctors' lack of business acumen, the reality is that doctors figured out what they had to do to take all comers (private insurance and Medicare/Medicaid), and still make ends meet.
At the root of all of this is the fact that Medicare was never intended to be an insurance program; it was conceived as a reimbursement mechanism, the sole purpose of which was to disburse funds set aside to subsidize the cost of healthcare services for seniors. Doctors negotiate Medicare reimbursements rates with the state (not the federal government), basing what they are willing to accept, in part, on the percentage of Medicare patients within their practices. Physicians who have 12-15% Medicare patients may be willing, for example, to accept a 78% reimbursement rate (accepting 0.78 on every dollar of true cost), knowing that they can make up the deficit on their 85-88% private pay patient base.
In addition, Federal law dictates annual adjustments in Medicare reimbursement rates to assure "fiscal sustainability" for the program – A program, which in and of itself, has never been sustainable. Every year for the past decade, those calculations have called for cuts in physician and hospital reimbursement, despite the fact that the cost to render care is, in fact, rising. Without a vote from Congress to block these reductions, physicians are looking at an impending 27.4% pay cut in 2012. Medicare has recently levied cuts as steep as 35-40% on certain cardiovascular testing, and private insurers have begun to follow suit.
Physicians quickly calculated ways to mitigate the impact of certain reimbursement changes by, for example, addressing patient complaints one at a time, over multiple appointments, rather than on one comprehensive visit to avoid the "bundling" of reimbursement by Medicare. While this clearly proves to be far less efficient, and less convenient, for patients, it has allowed many physicians to continue to operate, however narrowly, in the black. Short of taking out personal loans to fund their practices – which many have already done – playing the insurance loopholes has in recent years provided the narrow margins necessary to meet payroll and keep the lights on.
Now, to complicate matters further, along comes Obama Care that has threatened to double or triple the percentage of patients on some form of "public option" – Instead of having, as in the previous example, 12-15% of one's practice being Medicare/Medicaid, now it is likely to be well upwards of 50%. That same physician who previously accepted a reimbursement rate of 78% will now go bankrupt, as he does not have enough of a private payer base to cover the short fall.
There are currently 45 million Medicare beneficiaries in the United States. The bottom line is that with the aging of the population, and healthcare reform legislation that will exponentially increase the number of recipients in short order, the economics of providing healthcare in this country simply won't work.
On top of steadily decreasing insurance reimbursement, add increasing regulations, new mandates for electronic medical record keeping, escalating liability costs, and 30 million newly insured patients, and it all adds up to the collapse of an already tenuous system.
Despite all of its problem, its inconsistencies and high cost – hands down, Americans have had the best healthcare on the face of the planet; if you ever have the misfortune to find yourself ill or injured in a foreign country, that fact will come barreling home to you.
With the current strain on the system and more and more doctors crying "uncle", the idea that the United States will continue to lead the way with innovative research, cutting edge technology and aggressive therapies will be a dream of the past. Furthermore, there simply won't be enough of a private pay base left to run a practice –- or a hospital -- even if you are one of the dwindling few who has private healthcare insurance. The question to be posed in the new world order will no longer be whether or not you can keep your doctor, but whether or not your doctor can keep you.
Kelly Victory Steamboat Springs is produced by Kelly Victory M.D.
Kelly Victory Steamboat Springs is produced by Kelly Victory M.D.
