OUR GENERATION

We must return to fee-for-service

By Steven J. Fleischman, MD

The only way for women's health care as we know it to survive is if young ob/gyns lead the way in saying NO. Let's stop taking the horrible contracts offered by insurance companies, HMOs, and managed-care organizations and take back control of our futures.

I am now in my fourth year of private practice in a group of six physicians, and I can say with certainty that the business of medicine is not what I had anticipated.

Because my father was a Chief Financial Officer (CFO), I learned about business through osmosis at the dinner table. Over and over, for as long as I can remember, Dad extolled the benefits of self-employment and said, "Be your own boss." That phrase returned to motivate me as my residency progressed and I considered various career options, which finally led to private practice.

From a patient-care standpoint, I love what I do. The relationships with patients and my colleagues are extremely rewarding. It's the "business model" of medicine that's the problem. To put it bluntly, the business of medicine is like a tin can submarine sinking to the bottom of the ocean. We are so deep now that the sub is caving in from the pressure on all sides.

• From below we have the pressure of continually rising overhead expenses. Right now, the worst part of it is due to the professional liability insurance crisis. On the employee side, we also have increasing health insurance premiums and cost-of-living raises every year. Even with tort reform, overhead expenses will always go up.

• The pressures from the sides are the increasing demands of our patients—who now present us with long lists of Internet-derived questions—and growing government regulation.

• The real kicker is our fees, which are caving in from above. We have no ability to raise fees to cover expenses. Or better stated, we can raise our fees all we want, we just won't get paid because of the terrible contracts we sign with the payers.

So here we are, plunging to the bottom of the ocean, and with the liability crisis, our speed is dramatically increasing. As I said before, my father is the CFO of a large corporation. I have spoken with him on numerous occasions and his answer is always the same: raise revenues. There is no way to cut costs any further. There are two ways to raise revenue: increase fees or increase our patient volume. Taking this logic one step further, I am sure that many of you would agree that increasing the volume any more is dangerous to patient care and to our personal lives. So, only one thing is left: increasing our fees.

I propose that the only choice for the survival of women's health care as we know it is to learn to say NO! We must stop taking the horrible contracts offered by insurance companies, HMOs, and managed-care organizations. We must take back control of our futures.

Can you name any other industry that charges one fee for services and gets paid a lower rate? I seriously doubt it. If a mechanic fixes the brakes on my car, does he get paid in full for the first pad, half for the second pad, and nothing for the other two brakes? I don't think so. I now make less per hour for providing obstetrical care than my local mechanic does for servicing my car.

Our system is truly broken. Insurance companies continue to merge and the Anthem and Wellpoint merger will create the largest payer in our country. What really irks me is that Anthem is reporting increasing revenues to Wall Street and other payers are issuing dividends to shareholders. So I could probably make more money investing in Cigna than participating with Cigna.

Now, I know many of you are sitting there thinking, "This guy is nuts, and his proposal is preposterous." You may be right, but I truly believe that our specialty is in real danger. Fewer people are applying to residency programs, many new graduates want to work part time, and our senior partners are retiring early. Who will fill the void? If the situation doesn't change, you and I will be working harder and harder for less and less money. The pool of physicians will decrease and our volume will go up. We will spend less time with more patients. That isn't only bad medicine, it's bad business.

Going back to fee-for-service medicine isn't a new idea. Many practitioners around the country are trying it (see "Could you survive in a fee-for-service practice?"). When a pregnant college friend of mine sought prenatal care from a group of obstetricians in New York City, she was required to pay a third of the obstetrical fee in each trimester. Thanks to VISA, that obstetrician got more in my friend's first trimester than I get for a whole pregnancy from Blue Cross!

On the other hand, there is a group of internists in my local area who tried fee-for-service care and couldn't make a go of it. Their volume dropped because too many other physicians in the community were participating with insurance programs. So the internists went back to accepting insurance assignment.

If fee-for-service might fail, why try it? Because within the next 5 years, there may be no other option. Fee-for-service isn't practical for every practitioner today (particularly in areas with a glut of ob/gyns), but I believe that all of us need to assess our practice environment and at least give it serious consideration. If you do a large number of deliveries and are constantly at maximum patient capacity, would you rather do 100 deliveries at a fee you can establish or 300 deliveries for one third of that amount?

I am a believer in "power to the people." We are witnessing a meltdown in the health-care delivery system. Unfortunately, for years patients have been walking through the door and handing over their co-pay without any idea about what happens behind the scenes between their physician and their insurance company. The public simply doesn't realize that their health care is at risk. Until the people—our patients—are mobilized, we will never succeed in changing the system. If we go back to fee-for-service care, patients will witness first hand how the insurance companies handle claims. They will be shocked at how little they are reimbursed for the fees they pay. Only then will the insurance companies be held accountable.

I will leave you with two thoughts: (1) We must return to fee-for-service; and (2) Say NO to the next lousy contract. We are all fearful that the doctor next door will still take assignment and we'll lose patients. Yes, that may happen in the immediate short term, but I assure you, there is no future in medicine if we continue on the current path. We really are sinking, and fast. I call on all young physicians to question the current system. We must open the hatch on our sinking sub and swim to the surface. I guarantee you that the first breath of fresh air will be well worth it.

"Our Generation" offers real-world solutions to problems faced by ob/gyns new to practice. Written by young readers for young readers, each column sketches out a specific problem and offers practical "street-smart" advice. Columnists Steven J. Fleischman, MD (sfleischman@snet.net), Elizabeth Lapeyre, MD (Lizlapeyre@yahoo.com), Maria Manriquez Gilpin, MD (mmgilpin@yahoo.com), and Editorial Board Advisor Nanette Santoro, MD (glicktoro@aol.com), welcome your questions, comments, and ideas. Let them know how life is going in the trenches.

DR. FLEISCHMAN is Clinical Instructor of Obstetrics and Gynecology at Yale University in New Haven, Conn., where he also is in practice with Gynecology and Infertility, P.C. He is Past Chair of the ACOG Junior Fellow College Advisory Council.

Could you survive in a fee-for-service practice?

By Barbara Weiss

Younger ob/gyns are not the only ones tempted to return to the Golden Age of fee-for-service medicine. A great many older physicians are longing to do the same. Is it possible? Interviews with ob/gyns who have attempted the switch suggest that the answer is perhaps—in very limited circumstances.

There are virtually no statistics on how many physicians refuse to participate in managed-care plans. The last time Medical Economics asked the question on its Continuing Survey—in 2000*—only 27% of ob/gyns' earnings came from indemnity insurance and 7% from patients' pockets; the rest came from HMOs, PPOs, Medicare, and Medicaid. That same year, Medical Economics, OB/GYN Edition reported that income was slightly higher among ob/gyns who did not accept HMOs and PPOs, but they were less than 18% of the specialty.

Mohit Ghose, Director of Public Affairs for America's Health Insurance Plans (formerly the Health Insurance Association of America) says that there's no detectable movement to cash-only practices. The trend is moving away from capitation and toward PPO arrangements, he explains, but the "cash-only" segment (cash/checks/credit cards) is still small and "holding steady—rather than exploding."

Some brave souls have severed ties with insurance companies to collect directly from their patients, and their success seems to depend on having the right location and practice mix. It helps to be in an area that is not "over-doctored" and has well-heeled patients. Most physicians can count on losing a certain portion of their practice when they no longer accept insurance. (Patients will pay more out-of-pocket than they did previously even if they submit their bills for reimbursement, because the deductible will be higher and so will the out-of-network rate.)

On the other hand, overhead may shrink if you no longer need a large back-office staff to argue with insurance clerks. You can make do with the simplest computer software and billing system. And you'll make up for at least some of the decrease in patient volume when you charge higher fees.

Why would a patient with insurance go to a cash-only doctor? Better service would be one reason. You could offer the convenience of same-day appointments, spend more time with each patient, and return phone calls immediately.

But obstetrics is an especially difficult hurdle, warns Keith Borglum, a practice management consultant in Santa Rosa, Calif. "It's such a large expense that patients tend to fall back on their insurance. Even family physicians who have cash practices for their office visits tend to accept insurance if they deliver babies."

For that reason, the few ob/gyns who are trying to survive without health-care plans tend to be those who have given up obstetrics. Sharon Diamond, MD, of New York City, who has been practicing for 20 years, maintains a successful practice without insurance plans, but she does neither obstetrics nor major surgical procedures. Diamond broke the ties about 5 years ago because she found the delays in reimbursement were simply untenable and was uncomfortable with the degree of control insurers demanded and the time-pressured practice style.

"I did it against all advice," Diamond confesses. "Everyone said, 'You have to join every plan.' I really worried about losing patients. But I lost remarkably few; the majority were supportive. My practice actually increased the first year."

Diamond has an advantage in practicing on Manhattan's affluent Upper East Side, but not all of her patients are wealthy, she says. In a letter informing patients of her decision, she made clear that she'd be happy to work with patients who have financial issues. In fact, she often reduces her fee, works out a payment plan, or even sees patients without charge—and enjoys the new flexibility that allows her to do that.

Diamond says her independence allows her to practice the kind of quality medicine that appeals to physicians' "old-fashioned idealism." She has time to listen to patients' problems to evaluate how stress might be impacting their health. She has phone hours every day and returns all calls. (When the news about the Women's Health Initiative broke, she received 900 patient phone calls the first week and returned every one.)

As with most physicians who have dropped insurance plans, Diamond finds the Medicare issue difficult. She doesn't take on new Medicare patients, but treats established patients as a non-participating provider, so her patients can be reimbursed. (Non-participants can charge no more than 15% above the Medicare allowable, which is 5% less than what participating doctors receive.) She'd prefer to opt out of Medicare altogether, but then her patients would not be reimbursed at all.

For many more ob/gyns, the move to fee-for-service simply doesn't work. An organization called SimpleCare (www.simplecare.com) hooks up patients and physicians who want to conduct cash-only transactions; SimpleCare patients are charged less if they pay in full at the time of service. Two ob/gyns listed on the SimpleCare Web site, James Moruzzi, MD, and Kenneth Edstrom, MD, both in Washington State, say they think the idea is great. Nevertheless, they've had relatively few cash patients come their way.

Given the risks, consultant Michael Wiley of Bay Shore, N.Y. recommends cutting ties with third-party payers gradually. Shed the worst first, with perhaps Medicare as the last to go. And be prepared to take a hit in income. "Older doctors who want to cut back may be the best candidates," he says.

*The 2000 Survey contained data from 1999.

MS. WEISS is the former Editor of Medical Economics, OB/GYN Edition.

 

Steve Fleishman. Our Generation: We must return to fee-for-service. Contemporary Ob/Gyn Jun. 1, 2004;49:32-36.