Double Whammy for Weary Physicians

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

For America's doctors who areworking hard to provide qualitycare and build a stable financiallife—your job just got tougher.Two critical issues—rising malpracticepremiums and slashed Medicare pay—aremoving in the wrong direction, and there'slittle expectation for swift reform.

New research from the MedicalGroup Management Association (MGMA;www.mgma.com) reveals that doctorscontinue to get pounded with large premiumincreases in medical malpracticeinsurance. A survey of over 750 USmedical group practices found that theaverage increase was 37% from 2003to 2004, on top of an average boost of39% the year before.

Paying a Price

Among medical specialties, the averageinternist saw increases of 33%; familyphysicians, 19%; cardiologists, 48%;gastroenterologists, 44%; OB/GYN doctors,35%; and surgeons, 49%.

In truth, the real "malpractice" is inWashington, DC. For the third time in 3years, tort reform legislation that wouldcap noneconomic damages was killed inthe US Senate, where lawyers hold sway.That bill only addressed damage limitsfor OB/GYN and emergency room physicians,who face the brunt of malpracticetroubles. Over the past 10 years, accordingto the Center for Responsive Politics,lawyer groups have given $455 million(70% to Democrats) and health professionalshave given $215 million (60% toRepublicans) to US political parties.

The lone bit of "good news" is afterclimbing steadily by more than 100%from 1996 to 2000, the median compensatoryjury award for medical-malpracticecases remains at about $1 million,according to Jury Verdict Research.

What Pay?

With those challenges, you'd thinkthat doctors were entitled to combat pay.Hardly. After paltry increases of 1.5% for2004 and 2005, annual payments to doctorsunder Medicare could be slashed byabout 5% a year from 2006 to 2012.According to the AMA, about 85% of USphysicians treat Medicare patients.

All this is in the face of rising practiceexpenses. According to the MGMA,average medical office overhead costsnow consume 60% of annual revenues.

It's bad enough that these problemsand the inability to find solutions couldbust many medical practices; they alsoundermine the vital doctor–patient relationship.On Medicare pay, 40% of doctorssay they will limit or discontinue thatcare if there are more cuts. Due to malpracticepressures, 20% of physiciansplan to retire, relocate, or restrict theirservices in the coming years. How sad.