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Sneaky Things Doctors Do To Survive: Financial Reality Part 3

By Alan Dappen, M.D.

What Goes On In the Back Office

The Funnel” details how physicians’ must treat patients if they expect to stay in business. Herding patients through “The Funnel” is meant to depersonalize every problem into 10-15 minute slots. It’s not that doctors don’t care, in fact, morale on the assembly line of primary care is terrible. It’s just that there seems to be no solution doctors have found to sustain the financial realities they face under the insurance-driven system. I’d like to show you some cold hard numbers.

The healthcare system has been a gold rush of opportunity.  In sixty short years the healthcare has brought wealth to lawyers, drug reps, insurance companies, malpractice coverage, transcriptionists, billing specialists, authorization departments, performance evaluators, and certification organizations, just mention a few.  Each fill their niche, presumably to add value and quality to the service.  As they’ve tagged along in the healthcare system, the patient’s $20 co-pay covers less and less, while a physician’s office pays for more and more.  Those that are making money off of the healthcare system are often predatory, inadvertently driving up the cost to the patient, hence causing insurance premiums to double by 2016.

Below details the monthly expenses for a typical primary care physicians practice (not supporting obstetrics). Most of the expenses listed are in line with a those costs for running a typical business. However, what is alarming are the salaries for administrative, or non-physician, staff salaries, which consume about one third of the incoming money received. Many members of this staff are billing specialists needed to negotiate the ever-changing rules and regulations of the third-party insurance providers and receptionists, as well as schedulers and managers to get you into The Funnel.

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Table based on both Medical and Dental Income and Expense Averages, 2004 Report Based on 2003 Data, published by the National Association of Healthcare Consultants; and expense records provided by doctokr Family Medicine.

Doctors, like all of us, can’t work for free, and want to receive a paycheck that will allow them to live comfortably, raise a family and pay off their large debts from medical school. Let’s say the above medical office paid their doctor a yearly salary and benefits of $162,750, the office then would need to bill $36,845 a month to stay in business. Since a doctor can only physically see patients a total of six hours per day (or 120 hours per month), this equates to a doctor needing to bill $307/hour to simply break even. At a more granular level, each minute costs the doctor roughly $5. Doctors have figured out that they can further reduce this per minute cost if they band into larger group practices.

But here’s the rub: the patient pays for 3-4 minutes of the physicians overhead (the $20.00 co-pay), leaving the doctor and his staff to bill and fight for every dollar they can make from the insurance company. Six hours of “patient care” translates to another four hours of uncompensated work while the physician completes medical notes, follows up with hospitals, specialists, and labs, answers patient call and prepares for the next day. The standard work week is 50+ hours before adding nights on call and weekend coverage which is done for free.

How do doctors survive? They employ billing specialists, they speed up their visits, they “upcode” their notes when possible. But most importantly, doctors deploy “The Funnel,” which brings us back to where we’ve started.

Until next week, I remain yours in primary care,

Alan Dappen, M.D.

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