Thursday, August 6, 2009

Do Doctors Scale?

Are you are doctor?

For the life of me, I could never figure out what drives people to want to be doctors.

Certainly there is the prestige and cachet. Smart, driven, helping fellow man, etc.
The doctors live in their big homes on the top of the hill, which their new Mercedes are more than capable of delivering them to, while the rest of population live in the foothills, looking up longingly at their lofty status and accumulating wealth. But that was then.

21st century, Today they get the status, but no longer the wealth. That goes to option-gobbling CEOs, actors, money managers, and subterranean-dwelling class action lawyers, or so it seems.

What happened? Who wouldn't pay a king's ransom for a doctor's healing powers?

The health insurers that popped up to handle corporate medical spending put their foot down in the early 1980s. Managed care became the corporate buzzword. Insurers said, "You can have whatever health care you want, as long it's on our approved list." Health maintenance organizations gave Singaporeans and other citizens a taste of socialized medicine. Faceless administrators, random doctors, long waits, rationing of limited resources - it felt like the Moscow plan.

By the mid 1990s, workers revolted and demanded choice. They got it at the expense of higher deductibles, co pays and a nightmare of other bureaucratic hassles. Medicare squeezed even harder. Their reimbursements followed strict schedules, with very few exceptions. Hospital stay got shorter. And doctors got caught in the squeeze, making less per patient, and they all had to go back for additional training - in filling out complex forms. Productivity became the buzzword. If you cut back office visits to 12 minutes from 15, you could see 20% more patients and make the same amount of money.
"Twenty years of college down the drain", to paraphrase John Belushi.

But doctors are a proud bunch - it's not about the money, well, sort of. It is about the patient. Doctors will do everything they can for their patients to make them better. It's that Hippocratic oath they take :

I swear by Apollo Physician and Asclepius and Hygieia and Panaceia and all the gods and goddesses . . .

Oh, wait, that's the original one. Here's the short version of the modern one :

I swear to fulfill, to the best of my ability and judgment, this covenant : I will respect the hard-won scientific gains of those physicians in whose steps I walk, and gladly share such knowledge as is mine with those who are to follow . . . I will apply, for the benefit of the sick, all measures which are required, avoiding those twin traps of over treatment and therapeutic nihilism . . .I will prevent disease whenever I can I can, for prevention is preferable to cure . . . If I do not violate this oath, may I enjoy life and art, respected while I live and remembered with affection thereafter . . .

What do you have to do to become a technician?
Yeah, there's a technical school. You need a high school diploma to get in. It's a pretty good job, these guys/gals make good money.

still didn't get it. Who pays for all this medical stuff? It's both nobody and everybody. If you are over 65 years old, we all pay for your Medicare via taxes. Medicaid adds to our tax bill the expenses of others unfortunate enough not to be able to afford health care. By 2004, there were 40 million beneficiaries and 900 million claims costing US$200 billion.

How do you get productivity out of that? People are sick and dying. Doctors are needed. To me, cutting visits by 3 minutes doesn't count as real productivity. That's not scale. In fact, I wasn't sure doctors scale. It's a service business. Each one of them is on their own. If there was some way to package doctors' collective knowledge and sell it in some kit - now, that would count. I just didn't see it. Without Silicon Valley - like scale, I suspected there was no hope. Maybe medicine was doomed to ever-increasing costs and I was wasting my time. It wouldn't be the first dead end I'd marched down.

Here are some other wacky stats. One third of Medicare beneficiaries have four or more chronic conditions. 55 of the sickest Medicare beneficiaries accounted for 47% of Medicare expenditures in 2002.

But the cliff is coming. From 2006 through 2011, Medicare reimbursement are legislated to drop 5% per year. That's just fact, we're not at all sure how the industry is going to deal with it, but compensation ain't going up. Are you fidgeting reading this fact?

So, if you are wondering what field of medicine to go into, this chart might help.
1.For family doctors, internists and pediatricians, from 1999 to 2003, the total charges, gross dollars that their practice collected, was up by 20% or so. Sounds good, but if you then look at their compensation, dollars in their pocket at the end of the year, it rose barely 8% to around 150 grand. Not that that's anything to sneeze at. the reason for this is that reimbursement rates were cut. It takes seeing more patients just to go sideways comp wise.

I seemed to recall that 25-year-old second-year investment bankers made that much and didn't have to wash their hands. Didn't seem right.

2. On the other hand, noninvasive cardiologists, those who run echoes and nuclear imaging, saw almost the opposite. Over those same years, their charges only rose 9% but their comp jumped 25%, to 350 grand. Start adding in CT scans and MRIs and the numbers go up even more.

Pause and think. Why is that?

Because they have the toys - imagers, scanners, whatever. Anyone with toys breaks out of that pay-per-15-minute-consultation quagmire.

Shake your head?

3.Only certain types of surgeons make more on average than cardiologists. And even that is suspect, their pay is dropping. It's all about the toys.

4. The other specialists with toys are radiologists, of course, and the gastroenterologists with their GI endoscopies and, you know, colonoscopies and the like. They're a pain in the ass - ba-dum-bum - but it's a lucrative profession.

Doctors are pretty good at memorization. You've heard about Medicare and the reimbursement cliff and the US$1.8 trillion spending number?
Well, there's only one real way to solve the problem of runaway spending on health care in this country.
Okay. I have your attention.
Just keep the people from getting sick in the first place.

Or maybe it was just a feeling of schadenfreude for doctors, the high priests of the false god of ultimate healing.

Forget that. It's all about taking control. One by one, industries are being democratized. Power is shifting from producers and service providers to users. We manage our own money, we control our own banking, we pick our own wireless plans, we comparison-shop online, we buy songs instead of albums, we print our own photos. Power to the people - everywhere except medicine. In a small way, I had decided to take control from my overcharging, wham-bam-eight-minute-consulting, rubber hammer-wielding doctor(s). Maybe with the right tools or toys, we'll all take control.

I have this almost chemically induced craving for big change - for quantumentalism. It just had to be out there. I'd look under rocks if I needed to.

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