The Business Model Of Medicine – Part 2

In response to my rant about a lack of primary physicians on Kevin’s blog, a couple of people decided to come over here to play.

One was The Hospital Pharmacist, who left the comment below on my post. I was initially going to respond in the comments section, but I want everyone to read and digest what I have to say. I think it is that important.

The Hospital Pharmacist stated:
Well, no one is forcing the physicians to sign the third party contracts, just as no one forces the retail pharmacists to sign them either. I know many retail pharmacists that have dropped third party plans and are doing quite well.
I believe there is a market out there for cash-only physicians as well. But I’m sure it would be scary to take that leap.

My response:
While pharmacists and physicians may cater to the same customers, they are two very different business models. Pharmacists are retailers. They sell goods – medications, health care products, birthday cards. Physicians sell services. Your analogies between the two business models won’t work.

On an esoteric level, you are probably right. Just like no one forces people to pay taxes and no one forces you to drive safely, no one holds a gun to a physicians’ heads and forces them to sign these third party agreements. On a practical level, you are just as wrong as Mr. Economist.

For example, emergency physicians work in emergency departments. Emergency departments are contained within hospitals. Part of every hospital service agreement is the requirement that the emergency physicians working within the hospital must agree to accept Medicare, Medicaid, CHAMPUS, etc. If you don’t sign the third party contracts, you don’t have a job. So we technically don’t have to agree to sign the third party contracts, but then we technically wouldn’t have a job, either.

Then again, hospitals might be able to make the “business decision” to stop caring for Medicaid patients. Then look what can happen.

There is a large difference between “cash only” pharmacies and “cash only” physicians. Here are a few examples:

1. Pharmacists can refuse to give medications to patients that don’t have the ability to pay. Emergency department physicians cannot (and probably would not even if they could).
2. As more and more of the public learns that the generic medications are generally just as effective as their high-priced counterparts and they refuse to pay exorbitant prices for designer medications, there are few members of the public who wouldn’t be able to afford to pay $4 per generic prescription out of their pockets.
3. What’s going to happen if emergency departments become “cash only”? How are you going to pay $15,000 for your chest pain work up? “Will that be cash or credit? Gee, sir, your credit card was denied. Guess you’ll have to just take this $5 aspirin and keep your fingers crossed. Do you have exact change? Have a nice day.”
4. What about invasive cardiologists going “cash only”? You don’t get your stent placed until you front the cash? “I know you’re in the throes of death from your acute anterolateral MI, Ms. Peel, but business decisions are business decisions. Sorry.”
5. Oooh. How about diagnostic radiologists as cash only? “I know what’s wrong with you and I’m not tellin’ till you paaaay me. Nyah nyah.”

All doctors can go “cash only”? Stop being ridiculous.

But you’re right that there is a subset of physicians that can choose to go “cash only.” Those who are able to use the cash only model are slowly migrating to that business model.

Watch what happens with the next set of Medicare cuts. There will be a large attrition of physicians from the Medicare system. Some will just leave practice altogether due to the bureaucratic nightmares of practicing medicine. Others will probably get fed up and go “cash only.” Here’s a news flash. Most patients would rather pay nothing for medical care than pay a retainer fee for a doctor that knows them. Why do you think there is a constant flux of patients every time an employer changes insurance plans?

Baby boomers are just hitting Medicare age. More patients needing Medicare, less physicians will be willing to provide services under Medicare. Sounds like a stable system to me. I actually WANT the Medicare cuts to happen. Stop rearranging the deck chairs on the Titanic. Cut more payments to physicians. Let’s see what happens when there aren’t enough primary care physicians to care for the masses. That’s what everyone wants, isn’t it?

Now think about this: What will happen to the patients?
Those who can afford it will have excellent care by physicians who can take their time during each patient visit. My prediction is that those patients will be in the minority.
What happens to those on fixed incomes (i.e. grandma in her wheelchair living on SSI income) who get their care from the Medicare National Bank? They aren’t going to be able to afford to see the physicians on retainer. Where will they go? To the hospital where every American is guaranteed to receive care. Just ask George Bush (16th paragraph).
So retainer practices will cherry-pick the patients who can afford to pay out of pocket for their care and leave those who are unable to afford it in a worse situation than before. Now not only will the indigent have little access to hospital services, they have even less access to primary care.

The influx of patients who must turn to the hospitals for routine care will in turn will put a bigger strain on an already overburdened system. Now not only are you waiting in line with the true emergencies in the emergency department, you’re waiting in line with the other poor souls who have no other means to receive health care. More roadblocks to care. Longer waits. More bad outcomes. When everything is an emergency, nothing is an emergency.

Each working citizen pays roughly 15% of his or her earnings to fund the Medicare system. I’ve been paying into the system for 20 years and haven’t used a dime of the money yet. By the time I’m ready to get the return on my “investment” what will be left?

I don’t know. I’m not sure I want to know. But I can tell you this … I’m glad that I’m a doctor.

Be careful what you ask for, THP, you just may get it.