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Sneaky Things That Doctors Do To Survive Financially – Introduction

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Dr. Val’s note: My friend and co-blogger Alan Dappen is going to prepare a series of posts to expose the convoluted billing and procedural tactics that primary care physicians adopt to survive the ever decreasing reimbursements that would otherwise put them out of business. Below is his introductory post – others will follow each Wednesday morning here at Better Health. Enjoy!


The Doctor’s Huddle

By Alan Dappen, M.D.

On the great gridiron of healthcare, the team of primary care providers is leaning inward, supportively embracing one another.  They have huddled together for 15 years, calling plays against their opponent, the Insurance Team.  The two-minute warning has sounded and the Physician Team is losing. The Physician’s play book pieces together strategies culled from cocktail party conversations, doctor conventions, office staff meetings, back hallways of hospitals, online blogs, and a plethora of practice management magazines; routinely circulated offering grand strategies to teaching doctors how to tackle the Insurance Team. The rising mantra is “Hit them again! Harder! HARDER!”

This game began in the 1980s, when concerns that rapidly inflating healthcare costs would consume all the U.S. gross national product within the foreseeable future unless something was done.  Insurance companies lobbied regulators and advertised to the public not to socialize healthcare. Most people sighed relief when laws were passed granting insurance companies broad powers to regulate the price of care.  Little did these politicians realize that they inadvertently were “socializing” care by handing the keys to the health care gold mine to Team Insurance’s privatized, for-profit model.

Up until this point, the healthcare system had experienced 40 years of run-away costs. Patients with insurance hadn’t worried about the costs of care. Inside of this cash rich environment, many important innovations occurred but employers, who subsidized most of the cost, questioned the sustainability of paying for it.  All the while, physicians, hospitals, pharmaceutical companies, and medical suppliers eagerly reassured the patients:  “Since you aren’t worried about the price, then no one else should worry about it either. We’ll pass the bill to the insurance company–they pay what we ask.”

This modus operandi came to a screeching halt in the late ‘80s, when the aforementioned game began, and Team Insurance was allowed to fix prices via preferred provider contracts. Insurance providers understood that the key to these contracts was not to change the rules for patients, who needed to perceive their care as virtually free so that they would continue to seek care.

Instead, Team Insurance spelled out new game rules in contracts for physicians, where the physicians “negotiated” to accept roughly 50% of their customary rate in order to be listed in the insurance company’s Preferred Provider Directories. These rules were never acceptable to physicians. Docs refusing to sign contracts rudely were awakened by the new world order when 95% of their trusted clients refused to return until they could say, “Yes we are preferred providers.” And, “Yes, all you have to pay us is your co-pay.”

Patient expectations remained unchanged. Quality of service, patience, time to explain oneself, attention to wellness, review of multiple issues, meaningful personal relationships, prescriptions, detailed explanations of risks and benefits of treatments, reviews of other possible ideas in a differential diagnosis,  labs, call backs with results, and introductions to specialists were never connected to a price for patients before. After all, haven’t physicians had spent 40 years reassuring patients, “Don’t worry your silly little head about the price.” This time the boomerang came right back at physicians who suddenly were demanded to deliver all the same service for half the price.

The power of “owning” the patient for a $20 co-pay is not lost upon the insurance team.  Every year, as they hand out new contracts, these insurance companies congratulate their preferred doctor players for their work, quality, and dedication and try to not rub in the following truth, “We own the doctor and we own the patient. Any doctor who dares not sign our next annual contract for less money will find themselves without patients. Remember, for the patient the big thing that counts is that you can say yes to the $20.00 co pay. Now sign on the dotted line.”

Every “negotiated” dollar saved from paying Team Physician means smiles all around for Team Insurance and their fans (shareholders.)  Price fixing initially did control costs, but only for about five years.  The U.S. now is back on the trajectory of health care pricing doubling every 7-10 years.

So what’s going on in those primary care huddles? The game plays are called out: “More work, less money, patient demands, protection from malpractice, keep smiling … Somehow we’re going to make somebody cough up our money …Hit them again harder!  Let’s do it!  On one, break.”

Up next, I’ll show you some of the plays physicians have put into place to survive. And why you the patient might feel like the football. Play along, with us. Hup one, Hup two, hike!

Until next time, I remain yours in primary care,

Alan Dappen, M.D.

The Value Of “The Oath”

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By Steve Simmons, M.D.

When I graduated from the University of Tennessee’s Medical School sixteen years ago, my last act as a student was to take the Oath of Hippocrates with my classmates and 98% of the other medical students graduating in the United States that year.  This oath still resonates within me today and connects me to all physicians reaching back over 2,500 years to the time of Hippocrates.

Implicit in an oath is the understanding that the profession chosen will require more sacrifice than the average vocation, that the occupation’s rewards should be more than a paycheck, and that a paycheck would impart less value than the enrichment gained from nobly serving others.  The high standard which society holds physicians to is still accurately described by the Hippocratic Oath. Regardless of what changes seep into our profession from outside influences, doctors will always be held to the ideals written in the Hippocratic Oath.

When I was a young medical student, the hope that becoming a physician would bring value and meaning to my life was more rewarding than thoughts of job security or financial stability.  This helped propel me and my classmates through many long nights of study.  One sentiment oft-heard in my medical school, and I suspect many medical schools today, was that no one would put up with ‘this’ just for money–usually stated prior to a re-doubling of the effort to get past a particularly challenging task.  Painful physical effort often was required, such as waking at 3AM to make hospital rounds,  or spending 24-hour long shifts stealing naps and bathroom breaks, sometimes even working over 100 hours a week during demanding rotations.  Steven Miles, a physician bioethicist, wrote, “At some level, physicians recognize that a personal revelation of moral commitments is necessary to the practice of medicine.”

I would proffer that few students would endure the sacrifices necessary to graduate without understanding this point.

In Paul Starr’s 1982 book, The Social Transformation of American Medicine, he stated that in the future the goal of the health industry would not be better health, but rather the rate of return on investments. This unfortunately has come to pass.  Arguably, medicine now is controlled by CEOs and other executives in the health industry — individuals who are not expected to take an oath.  Physicians, remaining loyal to the Oath, are an unwitting weak and junior partner in today’s health care industry.  Worse, doctors are now employees, often seen as interchangeable parts with one doctor considered no different than another. Third party providers in the health care industry fail to place any value on the personal interactions between doctor and patient.  It may be better that the CEOs of health insurance companies are not required to take an oath, since many are on record, admitting loyalty to the share-holder alone with profits their first consideration.

Before the Great Depression, only 24% of the U.S. medical school graduates were given the Oath at graduation.  Does this suggest they were less ethical? I don’t think so.  I believe the increased use of the Oath demonstrates a growing awareness on the part of our educators that business has taken a controlling interest in the practice of medicine and that their graduates should be reminded that society still expects them to deliver on the noble promises of the past.  Hippocrates’ Oath helped pry medicine away from superstition and the controlling interests of Greece’s priesthood in the fifth century B.C. Hippocrates plotted a course towards science using inductive reasoning while his Oath anchored his fledgling art on moral truths unassailable even today.  I suspect he would see little difference between those profiting within the priesthood of his day and those monopolizing healthcare today.   He would find familiarity in those putting forth their difficult-to-decode rules of reimbursement, recognizing these rules as intentionally confusing, pejorative, and detrimental to patients and physicians alike while profiting those few in control. 

How would Hippocrates advise today’s students and physicians when shown how monetary realities have finally subsumed us all?  He might remind us that money was not our motivation in pursuing this career and show us how a return to the reverence for our art, embodied by the Oath, could become a modern conveyance to the ideals of the past.  By regaining our reverence for what motivated and guided us through medical school and residency we should find ample courage to do whatever is necessary.  Much is needed to wrest control of today’s broken healthcare system from those making huge profits…. and an oath can remind us why it is important. 

Until next time, I remain yours in primary care,

Steve Simmons, MD

Moral Hazards: What Happens When You Think Healthcare Is Free


By Alan Dappen, M.D.

“Doc, you’re the best! You saved my life, and my wife’s. You delivered my kids and brought them through sickness — time and again. I trust you, and can confide in you … Hey, wait a minute … Are you still a Preferred Provider?”  

This is a statement I heard all too often as a primary care doctor beholden to third-party providers. When a long-time patient asked this question, I felt like the mythological Damocles, who precariously sat beneath a sword suspended by a horse hair, for if I answered “No” to that question of “Are you a Preferred Provider” the sword would fall, swiftly.

No matter skill, knowledge, talent, caring, quality, experience, price or level of trust of their current primary care practitioner, 90-95% of patients who ask “Are you my preferred provider?” paradoxically will exit one primary care provider’s office to entrust the decisions of their day-to-day health care to another physician picked by their insurance company, even though this new doctor may be a stranger who signs a contract to do the job for less money.

For decades now patients have been led, like lemmings, by the belief that the vast majority of healthcare is virtually free because they have health insurance usually wholly and partially funded by someone else, like their employers of the government. Furthermore, patients trust that the providers of this health insurance know what is best for their care.

Because someone else is footing the bill, we as patients have absolved ourselves of the responsibilities associated with finding and consuming good care. Instead, the hope of getting what appears to be virtually free health care trumps all other considerations of care, whether it is quality, level of expertise, convenience or accessibility. Few of us are immune to wanting to get something for less, or better yet, something for nothing. This behavior leads to moral hazards, which are most easily explained by the WIFM (“What’s in it for me”) concept, and best exemplified by the way we eat at a buffet, drink at an open bar, or most recently by how the banks flocked to the sub-prime market to make easy, big money.

In health care, these moral hazards mean patients do not hold themselves accountable for finding the quality of care they desire at a price that makes sense. Instead, patients often rush for more health care believing that more care is better care; or to specialists because this means more competent care; or to more tests because this translates to more comprehensive results; and finally to more drugs and more treatments because these mean a longer, happier life. And patients do so because they believe their care is “free.”

Most patients are loathe to believe the numerous studies contradicting many of these beliefs. Due to the set up of the current “free” care healthcare system, patients are shielded from the actual costs of care, so they do not carefully consider these costs when assessing care. Take, for example, that a new chemotherapy drug for colon cancer cost $40,000, and yet only adds an average 1.5 months onto a patient’s life. Or that the newest brand name antidepressant costs 6 times more than its older, generic cousin (Prozac), with no evidence that it works any better. And finally, consider this example: a 70 year-old man with severe, irreversible chronic end-stage heart and renal failure, who has been bed-ridden for 3 months with numerous deep bed sores, and whose family demands “keep him alive no matter the cost.”

Unfortunately, the WIFM game doesn’t end with the patient.  Imagine the beauty of running a business when all your customers say, “Don’t worry, just send the bill to Mom (the employer) and Dad (the government) and they’ll pick up the tab.”  It is not rocket science to understand how this led physicians to a business model that guaranteed customers as long as they played by the providers’ rules; nor to understand how drug companies produce more and more “me too” drugs that offer no advantages over generic precursors but cost 6 times more; nor to see primary care physicians moving to specialization, with little difference in training compared to primary care while doubling or tripling fees; nor insurance companies keeping 30-40% of all collected money for “administration, policing, and profits,” and their executive team pocketing exorbitant rewards, like the United Health Care CEO who amassed almost $2 billion in just a few years.  How dare he?!

This then is the systemic toxic effects of our health care system. The moral hazard of free healthcare binds us into one big dysfunctional family. Whatever happens, let’s make sure someone else is paying for care.

Here’s the rub: insurance has a social value for protection against large or chronic, recurring costs to help ensure your financial well-being. Primary care, on the other hand, is something all of us need, on average 1-2 hours a year and a can cost the patient as little as $300. What minimal cost to pay for staying healthy today, building for a healthy tomorrow, and ideally decreasing our need for more expensive healthcare later on. Yet few are willing to pay only a little bit today for their day-to-day care – no matter its level of quality, accessibility or convenience, unless it is “free.”  So, in a world of moral hazards, what is going to happen to typical primary care?

Stay tuned and we’ll review the dirty little secrets primary care plays to survive and why it really does matter to you.

Until next time, I remain yours in primary care,

Alan Dappen, M.D.

The Gordian Knot: Ensnaring Today’s Healthcare System

No Comments » Steve Simmons, M.D.

Gordian Knot: 1: an intricate problem ; especially : a problem insoluble in its own terms —often used in the phrase cut the Gordian knot 2: a knot tied by Gordius, king of Phrygia, held to be capable of being untied only by the future ruler of Asia, and cut by Alexander the Great with his sword

Generations ago, the American Medical Association’s (AMA) Code of Ethics stipulated that allowing a third party to profit from a physician’s labor was unethical.  This tenet resides in a time when house calls were common place; when trust and respect helped forge an immutable bond between doctor and patient; and when it would have been unthinkable to allow anyone other than the doctor, family, or patient to have a role within the doctor-patient relationship.

The landscape of today’s healthcare system and its delivery methods make the authors of the AMA’s forgotten code look prescient.  Insurance companies, controlling the purse strings, have become an unwelcome partner within the doctor-patient relationship, frequently dictating what can and can’t be done, and are reaping a healthy profit from their oversight. Obscene salaries and large bonuses are awarded to the CEOs   of these companies for keeping as much money as they can from those providing health services, with the CEO United Healthcare being reported as receiving a $324 million paycheck during a five year period.  Thus, short-term business strategies are given priority, often at the expense of patients’ long-term medical goals, creating a Gordian knot so entwined that no one – patients, doctors, insurance providers, or government regulators – can see a way to unravel it.

A result of so much money being skimmed off the top is that no one seems to be getting what they need, let alone want.  Patients long for more time to discuss problems with their doctor and wish it were easier to get an appointment.  Yet physicians are unable to receive adequate reimbursement from insurance companies for their services, and if they do get reimbursement, it’s after months of waiting and often at the high expense of having a posse of back office staff needed to negotiate these payments. These physicians therefore are forced to overload their schedule and rapidly move patients through their office if they are to earn their typical $150,000 per year, pay off medical school debt, and afford the salaries of their office employees.  Finally, government agencies, looking for the elusive loop to tug on, ultimately burden physicians further with a myriad of onerous rules and regulations.

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Making the Right New Year’s Resolution … And Keeping It

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By Steve Simmons, MD

What do New Year’s Resolutions tell us about ourselves?  Will they cast light on our hopes for the coming years or embody regrets best left in the year past?  Resolutions tell us about our hopes, about who we want to be, and if made for the right reasons can lead us to the person we wish to be tomorrow.  A positive approach utilizing the support of family, friends, and caregivers will help us follow through with our resolutions and improve our chances for success.

For the last two years, resolutions to stop smoking, drinking, or overeating, have ranked only ninth on the New Year’s Resolutions list, while getting out of debt, losing weight, or developing a healthy habit are the top three.  If you find this surprising, you are in the company of many physicians. Yet this demonstrates the positive approach preferred by a majority making a New Year’s resolution. For each person making a resolution to stop or decrease a bad behavior, five choose to increase or start a good behavior, instead.  We can learn from this and maintain a positive focus when considering and following through on a resolution.  Keep in mind that only 40% find success on the first try and 17% of us need six tries to ultimately keep a resolution.

Avoid making hasty New Year’s resolutions based on absolute statements, which all too often meet with failure at the outset.  We recommend an approach based on The Stages-of-Change-Model, developed from studying successful ex-smokers.  For 30 years, primary care doctors have used this model to help their patients successfully rid themselves of a variety of bad habits.  The Model’s foundation is the understanding that real change comes from within an individual.

Below, I’ve outlined the five typical stages a person progresses through in changing a behavior, using the example of a smoker:

1.    Stage One/Pre-contemplative: This is before a smoker has thought about stopping.
2.    Stage Two/Contemplative: A smoker considers stopping smoking.
3.    Stage Three/Preparation: The smoker seeks help, buys nicotine gum, etc.
4.    Stage Four/Action: The smoker stops smoking.
5.    Stage Five/Maintenance and Relapse Prevention: Still not smoking, but if our smoker smokes again, keeps trying to stop, learning from mistakes.

The family and friends of a resolution maker are an intrinsic part of success and should avoid a negative approach. Instead, help them move through the stages, advancing when ready at their own pace.  The following exchange is typical of an office visit where a spouse’s frustration spills over, finding release:

“Dr. Simmons, Tell John to stop smoking!” John’s wife demands of me.

“Mr. Smith, you really should stop smoking,” I request of John.

“Well Doc, I don’t want to and that’s not why I’m here,” John says, pushing his Marlboros deeper into his shirt-pocket, clearly agitated with his wife and me.

“I’m sorry Mrs. Smith, John doesn’t want to stop, perhaps I could hit him over his head, knock some sense into him?”

Once negative energy has been interjected between me and my patient, I struggle to find an appropriate response.  Should I use humor to redirect?  I have rarely seen someone stop a bad habit after being berated.  I would prefer a chance to help him think about smoking and how it’s affecting his health.  Does he know that smoking is making his cough worse?  Has he been thinking about stopping lately?  Nagging seems to be more about our own frustration than a desire to help and should be avoided since the effect is usually the opposite intended.

A resolution can show the path to a happier and healthier life.  If you or someone close to you is planning to make a New Year’s resolution, just start slow, stay positive, have a strong support network….and one more thing: Resolve to stay Resolved.

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