Monday, June 02, 2008

The Microeconomics of Medical Practice

Microeconomics is a branch of economics that studies how individuals, households and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices; and how prices, in turn, determine the supply and demand of goods and services.
- Wikipedia

It’s been a nice weekend: gorgeous weather, enjoying “connect time” with the family, and attending a mammoth high school graduation with all of the family activities that that entails. Needless to say, I failed to sit before a keyboard this weekend and reveled in the lack of computer-screen fluorescence.

But earlier this month, the Mrs (or should it be 'Drs?') has been working to shore up the coffers before the personal economic onslaught of two simultaneous college tuitions takes hold. As such, she has slowly been growing her clinical psychology practice: office space, rent, business cards, website, phone, etc. For months she has been working outside The System on a fee-for-service basis: she bills patients directly for services rendered. Accounting is simple and unencumbered: she pays her expenses from the revenues generated, and if at the end of the month she discovers her bank account is positive, she stays open for business. If not, she shudders the practice. Call it “Shoebox Economics:” put all your bills in a shoebox, then pay them off each month and see what’s left over.

Then she decided to “expand” her practice and become a Medicare provider in hopes of securing a larger patient pool.

First, she was unsure how to apply for a Medicare provider number, so being the ever-resourceful person that she is, she hired a billing professional friend who understood the system to help her with the paperwork. “Problem solved,” she thought, and continued seeing patients peacefully. At least until the Medicare provider number arrived, which it did, Friday. Suddenly and graphically, she met The Beast and reached an epiphany:
“Group number? Why do I need a ‘group number?’ Where’s my individual provider number?”

“What do you mean I must bill electronically?”

“What do you mean I can’t just complete a simple form and be reimbursed for my professional services?”

“What do you mean I have to hire a ‘billing specialist’ to do my billing?”

“There’ll be no money left over to apply to tuition!”

* blink * (Light turns on above her head.)
This morning, I saw the first flecks of dust beginning to accumulate on her Medicare provider number letter… It’ll be interesting to see where this goes.



Rogue Medic said...

Perhaps she should have read some Kafka to prepare for this.

Anonymous said...

Just think, Dr. Wes, how much simpler everything is going to be under a National Health Care system!

You can hire just ONE 'specialist' who is the 'National Health Care Specialist', who will then hire all the other necessary 'specialists' to take care of the nuances brought to you by our Friendly National Health Care System! You will pay just ONE BILL A MONTH! (But, wow, that bill is going to be a honker! And just wait for the accountant's bill!) (I made this up, but "It could happen!")

Why is it that so many otherwise intelligent (or at least self-proclaimed 'intellectuals') think that National Health Care is going to 'straighten it all out!'.

On a more pleasant note: Remember the All Creatures Great and Small show on PBS? Siegfried Farnhan's billing/payment system consisted of him getting cash, (or 'in kind' payment such as 10 lbs of bacon) from his clients, stuffing the cash in a vase on the top of the mantel, and paying the bills out of it - and replenishing his walking around money from it too.

Sounds a little like your wife's imminently sensible billing practice. Dump the medicare nonsense. It is more trouble than it could ever be worth. Make the kids pay for their own college tuition. Send them to a community college. If they do 'great' (your definition), then pay for the last two years at a 4 year school. If they don't do great, they shouldn't be in college anyway. They can become a plumber's apprentice, then open their own plumbing business and get rich that way.

It is also the way that I run my contract programming business. I bill for hours worked. When the bills get paid, I, in turn, pay my bills, and then my own 'invoice'. I get paid last.. But whatever is left over is what I write the invoice for!

How good is that? (As long as my customers pay their bills that is!)

Cheers, Dr. Wes! And remember what I said about the kids.

Anonymous said...

I practiced psychology for 20 years. It's nice when clients can pay out of pocket, but those folks are getting rarer and rarer. I preferred not getting insurance companies involved for many reasons, but found that I could not support myself on a fee for service basis anymore. Unfortunately, in these economic times, I am afraid psychology services are going to be seen more and more as a "luxury item." Not in the budget anymore.

Oh, and either you meant she would "shutter" her practice, or that was one heck of a Freudian slip!

#1 Dinosaur said...

Anon beat me to it: first, she shudders; then she shutters (as in, "closes the shutters on") the practice.

I feel your pain. I had 2 college tuitions for 2 years; this past year was the first of 3 simultaneous collegians; at least 2 more to go, as one of the first 2 is on the 5 year plan, and the second is starting over with art school.

Anonymous said...

Rogue Medic said..."Perhaps she should have read some Kafka to prepare for this....."

You may know this already, but I'll point out, Kafka had a real job of sorts, writing was his catharsis.

For most of his adult life, he was employed as a lawyer for the Worker's Compensation board in Prague.'re exactly right. I suspect Kafka got his inspiration from his day job.

Anonymous said...

Is she sure she must file electronically? If her practice is small enough, she may be exempt. Here is the relevant wording from CMS:

• Small Provider Claims-- The word "provider" is being used generically here to refer to physicians, suppliers, and other providers of health care services. Providers that have fewer than 25 full-time equivalent employees (FTEs) and that are required to bill a Medicare intermediary are considered to be small. Physicians and suppliers with fewer than 10 FTEs and that are required to bill a Medicare carrier or durable medical equipment regional carrier (DMERC) are classified as small. See section 90.1 of Chapter 24 of the Medicare Claims Processing Manual (Pub. 100-04) for more.

If anyone knows if the above is true, I would certainly like to know, since it will affect my own planned practice model!

Anonymous said...

So, You Want To Be A Doctor……

Lately in the media, others have said and appear to express concern about the apparent shortage of primary care doctors in particular. Typically, the main reason believed and speculated by others for this decline of this health care profession specialty that historically has been the apex of our health care system is lack of pay of this specialty when compared with other specialties chosen by potential physicians while in training, as the annual salary of a PCP is around 130 thousand a year on average, others have concluded may be the national average and factors in payers both of a private and public nature.
Yet considering the additional attention of shortages of students in some medical schools as well, as conceived by others, one could posit hat this professional vocation that has been one viewed in the not so distant past in the U.S. as one with great esteem and respect may not be desired as a vocation by many, that requires commitment and dedication, as reflected in their training regimen in the U.S. that consumes about a third of thier lifespan. Such reasons for this paradigm shift may include:
Primary Care Doctors perhaps more than other physician specialties seem to be choosing to practice medicine under the direction and financial security of one of the many and newly created health care systems These regional and nationally created systems are typically composed of numerous hospitals and clinics under combined ownership- frequently of a private nature that is not dependent upon their beliefs as it is perhaps on their profit motives and intentions. Yet their approach and etiology of their views regarding the restoration of the health of others are usually similar with such mergers of multiple medical facilities, which are presently preferred to save costs, it has been said, and therefore these systems have not been protested by a largely uninformed public.
Conversely and in addition, this system of increasing popularity is not necessarily a desired method to practice medicine as a primary care physician, often stated by them as members of their employer that has the power to limit and dictate how they practice medicine. This is because, among other reasons, such doctors have largely unexpected and unanticipated limitations regarding their patients’ heath provided by them. This is further aggravated by possible and unreasonable expectations of their employer, such as mandating that doctors they employ are required to see as many patients as theycan in a day, and there have been cases of physicians being fired by a health care system- along with financial rewards for seeing more patients a day than what is determined as average visits by others. Such requirements likely and potentially affect or alter the clinical judgment determined by physicians employed in what may be viewed as authoritarian employers, which would limit the medical care they provide to their patients, as well as the quality of this care. Also, such health care systems may have their own managed health care system that may be determined by factors not in the best interest of the patients of doctors employed by the health care system.
The primary etiology and stimulus for a doctor to practice medicine in this way is due to their frequent inability to provide and employ ancillary staff, combined with the increasing premiums for their mandatory malpractice insurance, which may make doctors financially unable to work independently.
Malpractice laws and premiums, which is determined in large part on a state level, are an issue with those required to have this adverse aspect of their professions. Also, these premiums become more expensive for doctors, depending on the perceived risk of their chosen specialty. For example, the premiums of an OB/GYN doctor are usually higher than one of a specialty viewed less risky for lawsuits, such as Dermatology, perhaps.
In addition, the issue of medical malpractice is also frequently a catalyst for a doctor to practice what has been called defensive medicine, which basically means that the health care provider is prohibited from relying upon their subjective factors in their assessment of their patients, which in itself raises the question of what the point was of all of their training in the first place. Because if a doctor practices medicine in such a way, it typically involves what may be considered as unnecessary diagnostic testing for their patients to rule out what may be unlikely disease states of their patients’ medical conditions. This waste of medical resources is further validated by the legality reflected in the tone of the notes a doctor usually annotates or dictates with their patients.
Such restrictions and limitations imposed on today’s primary health care provider are usually not fully illustrated during their training for this profession, which is one that has been viewed as one that is quite noble and of great responsibility on a societal level. It seems that this perception and vocation that now is greatly misperceived due possibly to being deformed by others who may have profit as their motive for the health care they may dictate to doctors they may employ in some way, which often and likely is in conflict with their motives as doctors and how they wish to deliver needed health care to others. This may be why this medical profession may no longer be viewed as distinct from other vocations, in large part, as it seems that presently the profession of a doctor has been reduced to one dependent on the financial stability and growth of its employer, which may alter how the doctors perceive what is expected of them as well, which may affect the importance of how they view their profession, as it has been said that overall, doctors are somewhat understandably more cynical and demoralized, which may be replacing the pride they historically have viewed their callings as doctors, as well as the perceptions of patients in the U.S. Health Care System.
Further complicating and vexing to these restrictions is the usual financial state of the individual physician, as theynormally have to pay off the debt acquired from attending medical school and training, which averages well over 100,000 dollars today after their training is completed, it has been estimated, along with this debt amount presently is about 5 times higher than it was only a few decades ago.
Conversely, there are some who believe that doctors in the U.S. are over-paid and are compared with some corporate monster, who behaves based upon the premise of greed. In spite of how they are judged, physicians are likely not absent of financial concerns- which may be of more of an issue than many other professions, comparatively speaking, in addition of taking on more responsibility that is of greater importance compared with other vocations. Such realistic variables should be factored in when one chooses to judge the profession of a physician. On the other hand, no physician should view their jobs as no different from any other venture capitalist when rationalizing their income and motives related to this exceptional vocation as a physician, as others are more dependent on their judgment.

It has been determined by others, and suggested often and lately, that many of today’s physicians practicing medicine in the United State do not recommend or speak favorably of their professions compared with their typical views of their profession in the not so distant past. While this self-perception physicians may have of a negative nature may be somewhat understandable it is also and potentially unfortunate for the health of the public in the future, and the nature normally associated with the medical profession which could deter ideal medical care for others
There have been cases where doctors do in fact change careers, and get into vocational fields such as medical communications or corporate medical companies. Also, expert witnessing is another consideration for those who choose to leave their profession. Finally, other choices considered include consulting and research. The training of doctors fortunately leaves them with options not involved directly with the flaws of medical care, but this is bad for us as citizens, overall. The etiology of their departure from their designed profession is largely due to the negative state perceived by themselves as well as others of their profession as medical doctors.
Then again, not all doctors are deities. Like others, some are greedy and corrupt, which complicates others in this profession in relation to how their vocation is viewed by others and based on limited judgment and analysis. Yet citizens overall should determine what sort of health care they desire, and it seems that often they fail to voice this right as a citizen.
For perhaps Primary Care Physicians in particular, the medical profession and those who provide medical care clearly needed by others to some degree appears to be absent as a desired path of today’s careerist. The authentic reasons for what many believe to be a negative perception of possibly the entire health care system may never be known, yet many would agree that most U.S. citizens are understandably concerned with the state of this system of great importance to society. Yet need to be active more in assuring this necessity is more aseptic.
“In nothing do men more nearly approach the Gods then in giving health to men.” --- Cicero
Dan Abshear
Author’s note: What has been written has been based upon information and belief of a layperson, yet also the assessments of a patient.