Back to Business

It's back to business for Jeff Brown, MD, who is looking to learn, and earn, something. Do you know how important it is to watch the fees on your 401(k)? Or how physicians who operate a cash-only business do?

After all of the heavy health care industry lifting and ranting in my last few columns, it will be useful to get back to business to see if we can learn, and earn, something.

For instance, do you know how important it is to watch the fees on your 401(k)? Even a measly 1.3% per year fee, which you don't think much about, might end up costing you about $150,000 over your lifetime. Keeping those fees down is either free money, or being paid thousands per hour of your time spent on it.

— Likewise, studies done on wellness and safety programs run by employers show a $4 return for every $1 invested. Again, more “free” money over the course of your career, especially if you are in a sizable group where you can scale these benefits.

— A Medscape survey tells us that this year 6% of docs, particularly in primary care, operate a cash-only business. Even if fees are dropped as an inducement for patients to pay cash at the time of service, the savings in back office personnel, the huge reduction in the stress of all of that insurance hassle and the elimination of an accounts receivable is an almost irresistible combination. Especially because financial types tell us that the decline of the health care receivable over time is much steeper than in other industries.

The survey did not disclose if the net income of these cash practices is more or less than prior to the switch, but it would be encouraging, and logical, if net income is up.

— Even with insurance, the American Medical Association reports that about 25% of all medical bills end up being paid out of pocket by patients. This includes deductibles, co-pays and coinsurance. What it does not include is the huge amount that people pay for unreimbursed medical supplies and home care. For instance, financial planners are now telling people to plan to spend $250,000 in retirement on medical expenses outside of Medicare and gap insurance coverage.

— Error rates in insurance billing have been reported to have dropped to “only” 7.1% (still many billions), with the claim that Medicare does best with “only” 1.9%. Some days it feels like that much of that has fallen on me alone. Recently, no joke, I received two checks from Medicare for my treatment of a woman with pneumonia for, get ready, $.14 and $.40. The postage cost more and the gas to drive to the bank to deposit them cost more.

— Likewise, the AMA claims that the delay in insurance payments to docs has dropped in a range from six days for Humana to 14 days for Aetna. Show of hands; how many can say "Not in my experience!"

— For years I argued to hospital administrators that primary care docs were responsible for more income to hospitals than specialists. I guess that they are finally convinced. Not only because they are buying up as many primary care practices as they can, but now Merritt Hawkins, a job placement firm, has documented about $1.5 million per year per primary care doc in hospital revenues to $1.4 million per year for the average specialist.

One catch was looking at the difference between whose name was on an admission and whose name was behind the admission.

— Lastly, a recent Harvard study of investment habits showed something counterintuitive about investors. Those who received no news performed much better over time than those who received a constant stream of information, good or bad. It's another vote for the “buy-and-hold” school, a la Warren Buffett, who ignores the noise of the daily shuffle.

But you should still keep reading PMD, of course.