Tuesday, July 14, 2009

Implications of Cutting Cardiologists' Payments

It's been interesting to hear my cardiology colleagues in the community discuss what the proposed CMS cuts might mean for their patients and the implications for therapy access for patients requiring cardiovascular services.

In one local group, 40% of the cardiologists are over age 55. Now imagine cutting their practice income between 11 and 42% this year, with the potential for additional cuts yearly afterward. Recall that payments collected must first pay for office overhead: staff, collection personnel, lease payments, rent or mortgage, taxes, etc. These expenses do not go down annually. Cardiologists' take-home pay will be the item ultimately affected by these cuts. If a cardiologist makes, say, an average of $350,000 and one assumes a 50% overhead cost for his practice before the cuts, then $175,000 must first go to support his overhead. If income to the cardiologist's office is reduced 20% (on average) in 2010, then of the total $525,000 that was collected last year will translate to only $420,000. Since the practice expenses remain (at best) constant, the cardiologist's salary will be $245,000. ($350,000-$105,000 = $245,000).

Most internists and primary care doctors are quietly smiling right now. "Serves 'em right!" they snicker under their breath.

But if we consider this threat, is there an incentive to order fewer tests to offset their losses as they struggle to pay their kid's college educations?

No.

Further, recall the fact those "rich" cardiologists do not finish their training until age 30, on average, and that about a third of them are over age 55. We have to wonder if many will opt for early retirement instead of tolerating the bureaucratic hassles and salary cuts. After all, the nice thing about an MD degree is there are plenty of other options besides clinical care.

Alternately, in exchange for the dramatic salary reductions, they might demand a better life-style with better hours. If so, 90-minute door-to-balloon times might not be so easy to come by for hospitals. ER's might not find cardiologists quite so available, too, since the added 8% added to E&M codes won't offset the economic losses enough to warrant this extra workload. Hospitals' quality ratings will likely fall as they fail to meet their benchmarks and Medicare payments will dwindle to them, too.

While these cuts might help the Medicare budget very slightly and look good to policy pundits who have never had to go to a hospital at 2AM for an acute MI (heart attack), it's an entirely different thing in real life. Regretably, it's often the patients that lose.

Is this the price our system is willing to pay?

Perhaps. These cuts are certainly on the table. (Warning: pdf, 1277 pages).

But one thing's for sure, with these cuts will come consequences. Given the fact that cardiovascular problems are one of the most common ailments in man and a large number of cardiologists are approaching retirement age, these are going to be every tough times for doctors, hospitals and patients alike.

Is this who should be affected most by our current reform plans?

I wonder.

-Wes

23 comments:

HugeMD said...

The bottom line is I don't think DOCTORS' salaries, primary care or others, are the biggest expense in healthcare right now. I have no numbers whatsoever to back this up; it's just my opinion. I think the big money is going to insurance companies, administrators, drug companies, etc. The amount of money I see wasted in healthcare on stupid things on a daily basis is amazing.

lostonthefloor said...

I hate to say it, but when any one of these guys (the folks intending to cut the payments), or their family ends up in an ED at 2am on a weekend and there is no cardiologist to take them to the cath lab until Monday morning, things will change. It's only when you put skin in the game (so to speak) to the actions you're about to take can the reality of one's actions be measured.

And you're right. Scores will fall, Medicare will continue to slash payments (in the guise of "quality") and in the end the ones who suffer the most are the patients - the ones we are supposed to be here for in the first place.

All of these policy wonks need to come down from their marble castle, otherwise known as Capitol Hill, and spend a week or month in the trenches to really be able to see how the decisions they make 2,000 miles away (literally and figuratively) pan out. I'd like to believe that something like that would make a difference, but I truly doubt it.

/end rant, sorry

christophil said...

no,no,no...you are missing the big picture. You are correct in your argument that cardiologist numbers may decline BUT, the need for cardiologist will decline as well. It will be a wash. My understanding is payments to physicians will go down but taxes will go up on cigarettes, hot dogs, beer, big macs and the like leading to less consumption. This will result in healthier, happier patients and fewer myocardial infarctions. No worries. (smile).
christophil, M.D.

Keith said...

Wes,

One of your fellow cardiologists at your fair institution cleared more than 700 grand and he does not even do interventional cardiology.

In the new economy, I don't think specialists can expect to make this sort of money any longer. We need to get past the "your money or your life" type arguments. I certainly don't see any shortage of any kind of doc in the Chicago area; just a maldistribution of where they practice. And I doubt that if you tell students applying to medical school they will only make 500 grand vs 700, they will still be filling cardiology fellowships by the droves. If not, there are always all the FMGs waiting in the wings to fill those empty slots. After all, it's a global economy.

DrWes said...

Keith-

2007 data, outlier, not in private practice. I stick by my generalizations. Few general cardiologists are clearing $700K any longer, unless subsidized by a larger organization or having no life. 90% of non-vasive cardiologists make less than $453K and average $282K. I'm talking Medicare payments here, not subsidized salaries from hospital organizations.

Anonymous said...

just out of curiosity dr keith, what do you consider reasonable income for interventional cardiologists (i am not one)?
for the frequency of call and the busy calls and 90 minute balloon times and acuity of issues?
it sounds like you think 500 is too much? if i look around the hospital and try to find the most beat up guy post call, it is almost always the cardiologist. i honestly think they need to make more than 500k. of course the take home pay is not necessarily as directly affected as dr wes projects. overhead can be cut. if we don't need to do the consult badgering of paperwork anymore, maybe the number of fte's will diminish? event monitor/holter work will be outsourced to achieve efficiency and economies of scale. answering services will be hired to replace receptionists. and as noted above, without question call coverage will be increasingly spotty.

i live in an underserved area and we can't get cardiologists even at 500k income guarantees. ymmv. people who don't have to stress about finding these docs may have an easier time commenting on the relative income of cardiologists. there are definitely easier ways to make a buck imo.

Keith said...

Wes and Anonymous person,

Why would a hospital subsidize a cardiologist? Because they make a bundle of loot off of cardiac procedures? They seemingly have a shortage of primary care docs too and yet I don't see any willingness to subsidize primary care docs!

The medical arena is full of examples where those who engage in direct patient care and have after hours responsibility are not compensated for their time. That is the essential problem you address when you talk about cardiolgists coming in during the wee hours of the morning. We in primary care are all too familiar with this issue and the fact that medical students want a life away from medical practice is often raised as the issue of why they choose other fields of medicine.

As far as I know, the cardiology training programs are not going unfilled, so the balance of compensation/prestige/working conditions does not seem to be deterring anyone from going into cardiology unlike other primary care fields

As to salaries and what I would consider fair compensation, how about a comparison to Obstetricians who seem to earn much less, but have the same responsibilities of having to go in on off hours and a much riskier situation if you consider what they pay in malpractice premiums. I would say their average salary is fair for what sounds like a similar situation.

Anonymous said...

dr keith-same anonymous here

how much do ob docs make? i understand there is a shortage of ob docs and residency spots are going unfilled? does that suggest they need to be paid more than they are?

i would maintain that other specialties generally do not come in as much overnight as the interventional cardiologists. obviously i can't know that for sure. my wife is a primary care physician and has been in 4 different practices. her pager goes off about 1/20th the frequency of mine at night. also her primary practice has someone triageing her calls whereas if someone asks for me they get me.

as far as subsidizing primary care docs, the hospitals do it in our rural area. apparently it has to be done more caerfully due to some stark law, but it is still done.

thanks for your thoughts

doc ev said...

It"s really unbelievable that 2 doc's are even having this discussion. The point gentlemen and women is that all doctor's are victimized by what is being proposed. While the CEO 's of big pharma and insurance companies cut side deals with Congress. By the the way if you think primary care is not going to bashed again you are wrong this is just the beginning. All of us must get together right now!!! We are all valuable assets and have spent the better part of our lives and missed many family events to save a life and to become physicians. Yes we should be paid well( and better than any CEO) as we are the only thing left in this country that still brings value to society. Lets stop bickering about this the mechanic's, what CMS has done is wrong and an insult to all physicians. I condemn any physician for reveling at colleagues expense. This is what is wrong with American medicine.

Anonymous said...

Given the infighting among the specialty groups vs. primary care physicians, it's no wonder the medical profession is losing out in the healthcare reform battle. Get you collective acts together, work together and come up with a better plan.

The Happy Hospitalist said...

This is what RVU economics has created.

Divide and conquer

Danimal said...

All economic changes eventually lead to equilibrium in the market. Yes, the short-term effects of the cut will decrease the number of cardiologists, and adversely effect the patients. However, when enough patients die off, we'll eventually have enough cardiologists for those who remain! Presto! Problem solved.

The beautiful part about it, of course, is that there's no way any of our "leaders" will be stuck using the same healthcare system as they're planning to inflict upon us. What's the door-to-balloon time for a Congresscritter, I wonder?

Anonymous said...

Cardiologists should at least make what Michell Obama made as a mid level bureaucrat with no call, liability, nights, weekends, etc. She was being paid $350k/yr.

Anonymous said...

Re: question about unfilled ob gyn residency and not enough of them. I was talking to my wife's ob gyn recently after a procedure. His malpractice insurance was $160,000 per year and he has never been sued. The issue with ob-gyn is lack of tort reform. If he makes $500,000 with 50% overhead --> $250,000 is left. Take his mal practice insurance --> $90,000 is left. I am a cardiac electrophysiologist and I know he is on call more often and gets less sleep than I do. My malpractice is close to $20,000 per year. We need tort reform.

I would also say that if the current CMS cuts go through...there is a good chance my practice will go bankrupt. EP procedures cut 35% with a 21% cut in medicare with the current SGR and 11% cute in specialist payments. This is a scary time.

docted said...

Wes makes a number of interesting points.
Cutting Evaluation and Management (E&M) reimbursement, especially doing away with a premium for a consultation (who can believe that a real consult (requested by a PCP or Surgeon) isn’t more complex than a “new patient” visit) in both the inpatient and outpatient venues is not a way to get more “cognitive services”. It is distinctly possible that some imaging and invasive services (routine cardiac catheterization, angioplasty or surgeries) may be overpriced. However, they are more highly reimbursed per hour spent than are E&M. Given the choice between carefully evaluating a patient history, exam, and personal preferences before doing something; or doing and reading an echocardiogram (which will pay more than twice as much for the time spent), which would the average business person use? Then we wonder why so many procedures are done in some locales.
My son, who does what you do Wes, didn’t finish training until he was 35 years of age. I believe that he will behave like your partners and only do procedures when the data on risk/benefit for a recommendation is quite heavily weighted on the side of benefit and not necessarily on the side of what gives the greater reimbursement per hour spent. Hopefully, his and your E&M revenue will be at least as much per time unit spent as will be anyone’s revenue per hour for procedures.

Docev notes that CEOs (who generally have less time spent in training than physicians) started making significant monies earlier than cardiologists and probably make more per hour spent at any time from training. Their salaries are not dictated by a 1997 amendment to the Balanced Budget Act of 1997 called the Sustainable Growth Rate (http://www.cms.hhs.gov/sustainablegratesconfact/downloads/sgr2008f.pdf). People involved in the business of medicine are better at negotiating their reimbursement than those spending their time in the clinical practice of medicine. No one is crying that physicians are not doing well. The question is really are physicians seeing a reward for the time spent in training or work that is concordant with that seen by health care executives, lawyers, or investment bankers?

Mike M.D. said...

Hi Dr. Wes-

Love your MacGyver moment, BTW. Disclosure: I live in Boston, am an EP fellow, PGY-8, likely staying in academics and likely doing some funded research as well.

It has been interesting to see the changing focus on physician reimbursement (not just specialists, mind you) over the past year; this seem to coincide with the private insurers' sitting down at the table with policy makers. Suddenly, physician salaries are billed as the biggest driver in healthcare expenditures. Its not uncommon to see percentages as high as 20-30% of total expenses being attributed to "doctor pay."

I agree with Huge MD's opinion that salaries aren't the number one driver. The math just doesn't work:

1. Almost 50% of physicians in the US are salaried at this point (more on that sad point in another post); they have no personal incentive to drive up spending.

2. The average physician income (all specialties) in the US is about 200,000 annually. There are about 850,000 docs in the US, for a total of 170B. That's ~ 7% of the total 2.24T spent every year in this country. I would like to see more physicians take the media to task on the factoids being thrown around.

With respect to Keith's comments, healthcare economics is certainly linked to a global, integrated economy. But fortunately, physicians who see on either an emergent or regular basis are relatively protected by more local economies-this of course changes over time as global economies become integrated/consolidated, but this will be a problem for all Americans, not just doctors. Also, cardiology demand for services is never going to decrease in this country-at least not for a very long time. If you're a cardiologist and excellent at your job, you're always going to do just fine.

My only other rant at this time is the tired canard on specialist vs PCP pay. Guys, this is a brilliant move by policy makers and insurers to keep us focused on infighting while the big changes are made without us. First, the concept of "budget neutral" moves in a "crisis" is absurd. Sure, we don't want to spend more money than we need to, but robbing Peter to pay Paul doesn't make sense, especially when it takes 3-8 years after med school to train either one of them. If this new bill is successful as they would like us to believe, then there will be more than enough to offset a 15-25%increase in PCP pay without impacting specialty pay.

Anonymous said...

my son is 30 years old, finished first in his med school class, is in his fourth postgrad training year, and will likely spend four more before completing his cardiology training. He will be 34 years old when he leaves the academic training world and actually "goes to work".
No one who is paying attention can seriously believe that spending 7-8 grueling residency years after med school is equivalent to the three years required for family practice or pediatrics. We baby boomers have had it all and have had it very good, but will probably not like what awaits us at the doctor's office in our golden years.
Enjoy Obamacare.

Anonymous said...

USC Title 15 Chapter 1 Section 17 clearly states: "The labor of a
human being is not a commodity or article of commerce."

Yet that is exactly how the government treats doctors and other healthcare professionals in how they reimburse for services rendered.

Anonymous said...

While I can see the logic behind some of your arguments behind cutting cardiologists' payments, I wonder about your opinions in other specialties that are known for high incomes relative to primary care specialties, particularly radiology...

Anonymous said...

Well, still most US physician make more than other counter parts in world and global economy is if we can get everything cheap from China, why should we pay more for physician services. Angiography in India can be done with 100 dollars including drug, hospital and cardiologist charges.

Anonymous said...

I am cardiologist in a small town in Virginia. I don't think that the cardiologist is the one who drives the health care dollars. As we all know a combination of defensive medicine because of the lawyers, drug companies, health insurances and aging population are the drivers of the health care cost.
Now to my internist colleges: Don't you think that additional training of 3 or possibly more years for cardiologists, higher laibility insurance premiums,working in a high responsibilty and demanding field with much higher overhead (as compared to treating sore throat and lower back pain) deserves higher income? You should consider the cardiologists as your friend who takes care of those patients who saw you for years with poorly controlled HTN and DM and now he has CAD.

Don't smile! It is too early for celeberation.

The Happy Hospitalist said...

I don't think the overhead for cardiologists is higher than internists. Do you have data to support that? last I read it was hovering under the 50% range.

I would argue that people with higher acuity of illness have a higher mortality and perceived expectation of mortality, and there for the perceived risk of liability is actually lower, not higher, because the patient is more likely to die to begin with.

I would argue that the perceived risk of a bad outcome is actually higher for a young healthy 40 year old with a sore throat that dies of pneumococcal sepsis.
I fear the unknown in the healthy far more than I do the unknown in the sick and debilitated because the perceived risk of liability in the healthy is greater, if you miss that diagnosis. There is a higher expectation that a sick patient will get worse than there is in a healthy patient.

The demanding nature of your field is what you make of it. You can make it less demanding if you choose. Many family medicine and internists work very demanding schedules. You can choose to operate under any schedule you like.

You can choose to do 48 hours of call. Or you can choose to do shift work. You can choose to block your schedule after a night of call or you can choose to fill it up.

The acuity you speak of is present in every field. Septic shock. Acute respiratory failure. Strokes. COPD exacerbations. There are extreme presentations of disease in every field. And there are not.

Cardiology is no different. Do or die exists in every field. Most of a cardiologist's practice is not standing in the ED waiting for the helicopter to fly in with the critically ill patients. It's rounding on stable cardiac disease in and out of the hospital, with a subset of critically ill and really stable patients on both ends of the spectrum. Just like internal medicine. Just like family medicine.

MD/JD said...

Doesn't look like anyone has posted recently but found this. I have been a practicing primary care MD, 4 year med peds residency. Agree many cardiologists particularly the interventional ones have very stressful lives. I don't have a problem with paying cardiologists well. Believe primary care is underpayed relative to cardiology and most other specialty but do not believe cardiology is overpaid. Orthopedics can make 1/2 mil, dermatology and plastic surgery even more. Some of these are boutique practices with no night, no weekend. If someone is overpaid in medicine that would be the group. Argument is we live in a society where the rule is as high as the market will bear unless the government is involved then government monopoly and their insurance company ceo and and pharmaceutical ceo cronies can make any amount and that is ok while squeezing doctors, nurses, anyone who actually does the work and that is ok. Real problem is medicare does not even keep up with inflation under the SGR since many of our costs our volatiles like supplies, wear and tear getting to and from hospital with gasoline that costs more than 25% more than 4 years ago. Bet if we added up the take home pay of all the lawyers and MBA's in healthcare today, a relatively smaller number of people than all the doctors we would see that a greater percentage of the healthcare dollar today goes to MBA/JD then to MD's. This despite the fact far fewer MBA's and JD's work in healthcare than MD's. Its time to stop picking on other doctors and target the professions that are really creating all the healthcare problems.