Grasp the Shaky Economics of Medicine

Physician's Money Digest, May 15 2004, Volume 11, Issue 9

In a perfect world, Brian Lewis, MD, a Maryland basedcardiologist, would be running a privatepractice with enough time for 45-minute patientconsultations and 20-minute follow-ups. Instead,Dr. Lewis left his solo private practice this past fall for ajob with the FDA. With regular work hours and 1 day aweek still devoted to patient care at the VA MedicalCenter in Washington, DC, Dr. Lewis is happy with thedecision he made. "It's been a treat," he comments.

Why did he leave private practice and a career that heloved? "Today's medical business model is unfavorablefor providing primary care," he says, citing such things asrising malpractice insurance and the difficulties of collectinghealth insurance reimbursements.

Washington Post

This past December, the 44-year-old doctor candidlyshared his decision with reporter YukiNoguchi. The article, "No Heart for the Business,"detailed the economic challenges of running a medicalpractice. Here's what Dr. Lewis revealed:

  • He didn't take home a paycheck last June, July, September, or October.
  • He worked 10- to 12-hour days, 6 days a week, averaging around $30 an hour.
  • He collected less than half the fees he billed.
  • He still pays $320 a month in medical school loans.
  • His malpractice insurance increased from $12,000 to $18,000 last year (he has never been sued).

Post.

With a gross revenue of $18,000 to $25,000 a month,Dr. Lewis paid rent, phone bills, loan payments, malpracticeinsurance, a lawyer, accountant, billing agent,secretary, copier lease, office supplies, staff health insurance,and computer support. "It's sad to do things justthe way that I wanted and discover that the economicrewards are so problematic," he told the

Malpractice Liability

Of course, the AMA realizes how threatened patientcare is and has put part of the problem—malpractice liability—as its top legislative priority. The AMA's president-elect Dr. John C. Nelson told Congress in October2003, "As medical liability insurance becomes unaffordableor unavailable, physicians are being forced to closetheir practices or drop vital services—seriously affectingpatient access to care."

There are now 19 states designated as AMA "crisis"states for malpractice liability. In states like Wyoming, thesituation is of special concern. "In a rural state like ours,where the loss of one physician can have dire consequencesfor a community and its local hospital, we can'twait any longer to fix this problem," comments DougMcMillan, chairman of the Wyoming HospitalAssociation. Dr. Stephen Brown, president of theWyoming Medical Society, says, "Patients suffer whenWyoming doctors must consider the three Rs—restrictthe kinds of medical services they provide; relocate toanother state with a better liability climate; or retire frompractice altogether."

Physician vs Businessperson

Despite his recent experience, Dr. Lewis doesn't railagainst malpractice premiums, but he is bothered that theoverall economics of medicine seem to make so littlesense. He says there's no correlation between skills, pricing,and payment. Dr. Lewis calls insurance reimbursement"a perplexing, archaic system, whereby individualphysicians cannot figure out how to get paid." To buildpractice income, Dr. Lewis would have had to add threeor four patients a day—extending his already lengthydays and cutting patient time.

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The 1986 Northwestern University Medical Schoolgraduate also notes that many physicians are often forcedto generate income in ways other than classic medicine."Over the years they have been forced to make a living inways that don't relate to brain and hand skills—it may bebuying equipment for testing." He continues, "What isworthwhile is focusing on thinking, diagnosing, andpatient care, but it's not the main medical mission. Themedical business model has been degraded." In the article, Dr. Lewis says, "The business side of practice iscompeting side-by-side with the much more interestingside of taking care of patients."