nos-trum. pronunciation: \nos'-trum\. noun. Etymology: Latin, neuter of noster our, ours.
1. a medicine of secret composition recommended by its preparer but usually without scientific proof of its effectiveness.
2. a usually questionable remedy or scheme.
See here for more discussion.

Friday, March 26, 2010

Why Some Doctors Don't Take Medicaid and Medicare

Factoid:  over half of the cost of medical care is already paid for by the government.  Question: Then who controls the cost?

The administration's effort to blame insurers for high cost has been accompanied by little data.  A review of the net profit margins for different industries throughout the country shows that Health Care Plans rank 87th with a profit margin of 4.4% (see here for the data.).  Doesn't sound like real price gougers does it?  By contrast Cigarettes are #7 (19.2% profit),  and the Beer Industry is #14 (13.8%).

But the hype about the evil scoundrels in the insurance industry isn't really where we need to target our concern over cost.  Nor should it be Drug Manufacturers, who are an astounding #3 in net profit margin (22.2%).  Like several other sectors of the health care system Pharma was bought off by the Obama administration for $80B they agreed to spend to lower drug costs--knowing full well this is a drop in the bucket which they will make back ten-fold, later.

If we can't demonize industries, where do we put the anger?

Again, these sectors are not the problem.  As a doctor who deals with real people's problems I have a different perspective--a personal one.  Back when Medicare was a new law, I was practicing emergency medicine in Houston.  One day I saw an elderly lady who came to the ER in acute heart failure.  It took me about an hour, never leaving the bedside, using digitalis, diuretics, oxygen, bronchodilators, etc, to bring her back from a near-fatal situation.  When I admitted her to a colleague for follow-on treatment, she thanked me.

Medicare paid me $3.00.

Some weeks later I got a hand-written letter from this lady, saying she was appalled by the government's payment and offered to pay me $1.00 a week until the bill was fully paid.  That was too heart-wrenching for me, so I told her that no further payment was due.

For those who think, "well, that was then, when Medicare was new," fast-forward to a couple of months ago.  I have a government-run insurance plan, and was covered for an operation I needed.  The surgery was a success, and I feel fine.  My surgeon is one of only a couple in his specialty in this area, and is a highly-respected, Mayo Clinic-trained professional.  He charged the government $920.00 for my operation; they paid him $226.59.  I don't think that pays even his malpractice premium for one day.

Twenty three years ago Medicare paid $1700 for a gall bladder operation.  Today they pay less than $600.00.  Despite the government's control over this, costs continue to climb.  The government's answer is to spend more, institute price controls, and demonize the industry, but keep adding people who provide no revenue for the system--a prescription for failure.

The government drives the high cost of health care

In order to compensate for the government's less-than-break-even reimbursement rates, the industry (hospitals and doctors) charges more to private insurers.  The politicians then point to the commercial insurance market to make their point about high costs--completely disregarding the fact that, at bottom, they are the cause, by setting government payment rates so low.

And just so you don't think this is doctor-whining, you should know that the way the government decides on how much they will pay is to FIRST decide what the real cost is, THEN set their payment at 90% (Medicare) or 80% (Medicaid) of that (approximately).  They know they're undercutting.

In defense, many doctors limit the amount of government care they provide

So, why do doctors limit or deny Medicare and Medicaid patients?  If too many of your patients are government-supported, you don't break even.  This is why only 43% of Texas physicians take Medicare.  The percent who take Medicaid is much lower still, since the Medicaid reiumbursement rate is even lower than Medicare.  It's why one of the Mayo Clinics announced they could no longer accept Medicare patients except for cash.  They announced their losses due to Medicare for 2009 were $840M.

As a practicing physician, I (like most) hate messing with this stuff.  I didn't become a doctor to run a business.  We just want to concentrate on the patient care.  But when your business person comes to you and says the cost of running a practice is increasing by 20% a year and we can't afford to take these patients, many of us reluctantly say, OK--and damn the government for their perfidy.

I expect all this to get worse under Obamacare.  The President touts taking $500B from the Medicare program to fund the new entitlement.  How is that going to be taken out of the Medicare program?  They say it's revenue that corrects "inefficiencies."  To me, that just means "paying even less."  We'll see....




Opinions are entirely my own.

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