Are Primary Care Physicians "Loss Leaders" or "Marketing Dupes"?
 

With all this talk about Medical Billing and Medicare over-billing, the people who are paying attention to what's being posted, should be getting an education on how ridiculous the US Medical System has become.

A Primary Care Physician, fresh from certification and Residency, gets paid somewhere around $250,000 per year. One with 10 or so years of experience, is likely around $300,000/year.

With the burden at 40% (medical insurance, FICA, unemployment insurance, benefits, etc.) the cost of a medical provider to employ a primary care physician, is between $350,000-$400,000/year. That works out to a cost of $187/hour (2000 working hours per year).

Medicare (for example) pays about $187 for a 1 hour office visit. Assuming a Doctor spends 40 hours per week with patients (no non-productive time doing paperwork, researching, thinking or having lunch), the money from Medicare just covers the Doctor's salary. Where is the provider coming up with the money to cover admin staff, overhead and profit?

Which might lead someone to conclude, the only way medical providers stay in business, is for Primary Care Physicians to "sell" other services. Lab work, tests, procedures, etc.?

I guess it's no big secret why providers are pushing PA's & NP's as doctor replacements.

What am I missing?

Why does the insurance company pay the same amount for a PA or an NP and the patient copay is the same as when you see the physician? Personally, I refuse to make an appointment with a PA or an NP, unless it is an emergency. I also refuse to pay a $25 copay for the physician to call me with test results, which takes about 5 minutes, when I can read the results myself. The insurance companies are driving up the cost by paying exorbitant rates for non-physician and non-medical interactions. When you see a PA or an NP, or just talk to the physician on the phone, the cost should be less than for an in-person visit with a physician.

In 2021, my wife took a covid test and had a $25 copay. They said that we could get the test results tomorrow so we told them that we would call the next day. They said that they couldn’t release the results over the phone. Instead, we had to stop by the office and get the results in person - which required another copay of $25. The doctor’s office was about 30 minutes away and we were both working so I asked if we could get the results over the phone if I paid the copay while we were in the office for the Covid test.

Amazingly, once they got the second copay, they told us we didn’t have to come to their office the next day but, instead, they could give us the results over the phone!

Brian's calculation is why a retirement community/mostly Medicare patients, is a money losing proposition for most physicians, see some of my other financial medical posts. Throughout the USA, there is a mixture of private pay, employed people and families, as the larger portion of a hospitals' patients and reimbursements, and to become profitable, there is a limit of the size of the Medicare visits which one can take in before becoming unprofitable.

However, CMS understands this, and therefore there are CMS improvement targets to care results which provide a one time annual "bonus" from CMS, which can make or break the physician's profitability in a year. CoachK is heavily involved in that process at a major medical center in MA. There are improvement targets set at the beginning of each year. Medicare for hospitals has 2 penalty programs which affects the medicare reimbursement rates in future years, and one improvement programs. There are requirements for qualifying, etc. . . One of CoachK's former supervisors went to CMS at a high level to help improve Medicare outtcomes, however, it's also very complicated, and not easily explained as each hospital is different. .

So, just start with the assumption that a PCP with medicare only patients will have a difficulty/impossible being profitable, which means staying in business, with all the EMR and reporting requirements, as a stand alone office. This scenario is also why there is consolidation in the healthcare hospital industry, where small, rural category hospitals have merged with medical centers for reducing overhead expenses for increased profitability. The biggest expense being Electronic Medical Records. I went to a local stand alone physicians' office with my mom, and they actually were resource incompetent when asked about retrieving records from the mandated state immunization database. they declared they knew nothing about it, yet its a state required for all residents from medical offices

gotta run

Some practices limit the number of Medicare patients.

Attached is Blue Cross Blue Shield of MA, information on the cost for various doctor visits.

Apparently the reimbursement rate for typical doctor visits in a non-medicare environment, is about the same.

Just as an aside to the issue. I regularly played golf with the Lakes Region Hospital's head surgeon (Lakes Region Hospital went bankrupt, a few years ago and blew about $150M. Creditors Wrangle Over Bankrupt Laconia Healthcare Company’s Assets | New Hampshire Public Radio).

He was there for about 5 years. He left and went to do a Fellowship as a Plastic Surgeon. He told me he was never again going to treat a patient who relied on an Insurance company to pay. He's only going to do "private pay" work.

We should of sent all our kids to medical school when we had the chance.

Doctors are apparently the most underpaid professionals in the USA.

If I pick up the phone and call me Lawyer's office, it's $350 an hour if I get his associate, $650/hour if I get him ... & I'm getting billed whether he's talking, typing or just plain "thinking".

I'm a consultant. If I answer the phone, it's $100 minimum & $50 for every 15 minutes after that.. I have no where near the education of a Physician and surely not as smart as most of them.

The Prevailing Wage for an Electrician in Massachusetts, is $90/hour. $56 in the envelope + $13 Health Benefits + $21 Retirement.

Doctors are working for $200/hour? Crazy!

?
If limiting your patients to just those on Medicare Advantage is unprofitable, why doesn’t TVH take non-Medicare patients?

When I first moved here I was on my employer’s medical plan and TVH wouldn’t take me until I was on Medicare Advantage.

It wasn't always that way. From 2014 to 2021, I used The Villages Health Care with private insurance from my employer and obamacare. It sounds as if they had a change in policy, I guess because of demand from those on MA plans.

I think that's the $1,000,000,000 question.

Shear speculation: When TVH started up, they made some sort of deal with Insurers, to channel residents/members to a specific program, for marketing and operational purposes. Sort of like Henry Ford's, "give them any color they want, as long as it's black".

And professional athletes get paid millions.. Seems people are OK with athletes getting big bucks.Yet a teacher or medical professional aren't valued.

It's the insurance companies pushing physcian assistants and nurse practitioners. It's also the insurance industry that's absconding with billions. Privatized Advantage Medicare allows for greater fraud. "Private Advantage Medicare plans are paid based on a "risk score" that correlates with a patient's health. To increase profits, some plans or their contractors exaggerate patients' diagnoses, making them appear sicker than they are to receive higher payments from the Centers for Medicare & Medicaid Services (CMS)."

In addition, "some health plans and brokers offer illegal incentives to gain enrollment, which violates regulations designed to protect beneficiaries.

Insurers pay brokers illegal kickbacks to steer beneficiaries toward their specific MA plans, rather than recommending the plan that best suits the beneficiary's needs." That's probably what happened in The Villages and explains why the facility rejected regular Medicare.

And your expertise in health care administration to make such accusations is........
Yep, I thought so.

PS: For people who want the facts, NPs and PAs are paid 100% of the physician fee if the visit is "incident to" an existing problem and 85% if it is a new issue.

If The Villages Health accepted Original Medicare, I would be concerned that these facilities, that were built for the convenience of Villagers, would become overcrowded with non-Villager patients. Federal law prohibits descrimination based on where a patient lives. So, they would need to treat all Original Medicare patients on a first-come, first-served basis.

That seems unfair to the patients. When I go to a doctor I want to see a doctor, not a PA or an NP.

And wouldn’t that make TVH more profitable? Hire some doctors and lots of PAs and NPs and direct a lot of your patients to the PA or NP.

Do you have a ballpark idea what the difference is in pay between a doctor and a PA or an NP? I doubt if they get 85% of a doctor’s pay.

Legnth of doctors vist.
 

While routine physical can be long, most doctor's visits are quite short. Not sure if figure quoted is hourly rate or per visit rate. Even on physical, part of the time is non-doctor time.
Pressure to keep costs down throughout medical system, but costs still growing faster than inflation.

I suspected that and Chat GPT agrees with you! .

So with PA/NP's, the provider is making about 30% or so? (I'm assuming PA/NP salaries are about 60% of an MD's salary?).

How does a medical practice pay for admin, overhead & profit, if "office visits" barely break even?

(Also curious ... most studies I've seen, conclude that "outcomes" are comparable between Dr care & PA/NP care. True?)

I don’t believe they can do that legally, but I’m sure there are ways.

Wow! How do they get away with charging a copay twice for same thing? just nuts!

In my case, I cannot be "directed" to a PA or an NP. Unless I have an emergency, I tell the scheduler that I will only make an appointment with a medical doctor. Period.

There's a lot there to respond to, so here's the highlights:

10 years ago our nurse practitioners, between salary bonus and benefits, had a compensation package of about $130,000. And no, that is not 85% of a physician's income. We made minimal "profit" on our NPs.

I don't know where that "break even" idea came from. Primary care practices generally run at about 55% overhead, we were a bit better at 47% overhead. So individually we kept about $53K out of every $100K billed and collected (another issue). But out of that we then individually paid malpractice insurance, disability insurance, overhead insurance and taxes. So on average, a primary care physician was left with 19 cents on every dollar collected.

So on average, when you see Dr. "X" billed out $1 million and are "shocked", that translates to $900K collected, $405K after overhead and about $275K after expenses---with no benefits and no pension for retirement. This comes out to less total compensation than a police sergeant married to a high school guidance counselor in a medium sized town.

Retired CFO of a hospital system here. I was working when hospitals started employing MD’s, and probably hired thousands of PCP’s in my career. They were mostly paid under a fairly complex production system, which provided a $ amount per RVU (relative value unit), with incentives for things such as quality and patient satisfaction. We always lost money on the PCP line of business, and when reporting these results to the Board, I began to refer to the PCP’s as our “sales force”. They got this, and understood that it was a supply/demand issue, and PCP’s were needed to feed our Cardiac, Oncology, Orthopedic etc. programs.

Of course, out of that $250,000, those young doctors have to pay large amounts of tax and they have to repay their med school loans. In private practice, they also have to pay for rent, employees, and all that. Around here, young GPs often went to low-rated med schools. They passed their exams, but you don’t know whether they were nic in their class standing or at the bottom. Doctors who were at the top of their class are likely to be much better at diagnosis. The life saver—literally—is that these days, lots of these mediocre doctors and physicians assistants and nurse practitioners (who may be good, but their training was only med school LITE) have excellent programs on their laptops that coach them in what to notice and ask about. They soon improve a lot. Still yes, their job is mostly to diagnose and dispense for minor problems and know when to refer patients to specialists. Sometimes they can get the patient in to see a specialist quite quickly.

I’ll mention something I mentioned last week. The best thing about Medicare and my supplemental insurance (Blue Cross/Blue Shield from Pennsylvania) is that hospitals and doctors can bill whatever they want, but the insurance decides what they will pay and what can be passed on to the patient. Thus, I had major surgery this year using the Da Vinci Robot, a top specialist, radiologists, MRIs and CTs, etc. The hospital and doctors billed me about $130,000. My two insurances paid about $15,000 total between them. I paid only my $257 annual deductible. This is why hospitals and doctors are using creative billing. If they claim you make minor heart arrhythmias, that might get them an extra $100 after they bill $1,000 for it. The Villages Imaging may bill $5,000 for an MRI or CT scan using machines that cost a million or more but get paid $150 to $300. Really. Being a doctor is not necessarily lucrative these days, especially if all your patients are on Medicare or Medicaid.

To be honest, I've never really understood the objection to NPs. They're supervised by MDs, so one can assume that anything beyond their expertise will be discussed with their supervising MD. That is the way it works at the clinic that my wife and I go to, anyway. One MD, three NPs. We always have the option of being seen by the MD, but the fly in that particular ointment is that we might have to wait longer to be seen by the MD than by an NP, which is understandable.

Seems to work that way at other practices too. After successfully evading cardiologists for the past four years, my wife and our NP finally got me to agree to go to one, a guy who really seems on the ball. I'll be completing the tests this coming Monday. I've already scheduled the visit to discuss the test results: I was offered the option of seeing an NP for this (two weeks from now) or seeing the Cardiologist (mid-November). I picked November, as if anything untoward showed up on the tests that demanded attention before November I'd be called anyway.

TVH took me when I was on my employor’s medical plan. You must have had one they didn’t accept.

I don't have any objection to NPs. But, many MDs have dedicated their life to the practice of medicine, and they do not merely consider it a job. And, they have malpractice insurance. There are NPs who are very dedicated, but there are many who consider their work to be just a job with a paycheck. I remember a few years ago, I went to an urgent care facility, and I was treated by a woman who had no identification on her clothes, and she didn't even offer to tell me her name. I had to ask for her name, but I still don't know what her qualifications were.

What people haven't talked about is the overall shortage in pretty much all medical fields. Sometimes we see NP and PAs because staffing levels don't support everyone seeing an MD. Most of us remember when it wasn't hard to get into see our MD on the same day as a walk-in. Those days are gone and unlikely to return. Government run healthcare is largely to blame because the payment system (amount, complexity, and requirements) is driving people away.

For example, our 4-hospital system was just driven to convert our individual EMRs to a single EMR called EPIC for around $150M. The process was a nightmare; the company acted like we were their first client, which we were far from being, and the EPIC processes were little more than generic, e.g. Epic had their way to do things (patient flow, schedules, limited interfaces, support) and pushed us to do things their way (not what staff wanted to hear). What does the government reimburse for the required EMR? ZERO dollars! Overall, it will improve the exchange of information between hospitals when we share a patient, but for $150M and I don't know what EPIC charges for the annual licenses and support contracts. But remember, having an EMR is a government requirement that we don't get paid anything for having.

Manpower had been a problem since before COVID, but COVID drove a lot of people out of the field or into retirement. As of 1.5 years ago when I retired, my hospital was grossing more than it ever had (and we were always lean and in the black), but post-COVID, losing $2M/month largely due to the cost of travelers/LOCUMs. It took years to find my replacement, even offering top pay and living in a really nice area. Don't look for things to get any better with the government driving the payment system.

The government requires hospitals to do more and more while bundling more and more charges with the aggregate payment continually being substantially reduced. In my primary field of radiation oncology bundling charges has been very painful, but at least we're still profitable. However, our ability to cover the cost of hospital services that are routinely losses is much more limited. There are only a handful of hospital services that make the money to pay for the others. Then there are the no-pay patients we care for, which can be 35-50% or more of the patients in some areas. We do all the same work, use all the same assets, have all the same malpractice liabilities and zero income. No, the ACA doesn't cover those people as promised.... big surprise.... not! The government is driving this bus, not the hospitals or even the insurance companies.

Interesting, that explains why it was like pulling teeth (before I went on Traditional Medicare) to get my PCP to give me a referral to a specialist outside of their affiliated practice.

I know a couple of doctors who told their kids the opposite. “I advised them not to go into medicine”

Hence the title of this thread. I assumed that had to be the process. The PCP gets the patient in the door and into the system .... the revenue is in the "after sell".

Selling the patients the extended warranty! :a040:

Heh. Remember the nine scariest words in the English language?

"I'm from the government, and I'm here to help".

If there is one thing we should have learned by now (but obviously haven't) it is that if Government is doing it, private enterprise can do it better. And faster. And cheaper. Case in point: when we first moved here, I was perplexed by the office of "tax collector". Seemed sort of odd as well as sort of provincial. We were there to get our driver's licenses changed from Minnesota to Florida. Once inside the building we were directed to the end of the hall and told to wait until our names were called (maybe 10 minutes), went to a window, filled out a couple of forms, had our vision checked, etc. At the end of the process I asked the lady how long we'd have to wait for our licenses. She looked at me sort of oddly and said "you'll have them in your hand when you leave here". And we did. In Minnesota that would have been a six-week wait AFTER we got in to see the agent, and no guarantee of even that.

And then of course there is Elon and his reusable rockets.

Driver's licenses and reusable rockets are not health care, but leaving things to the bean-counters and government career turf-builders is at best a guarantee of mediocrity, if even that. Yeah, I realize that a lot of health care is government-funded so there has to be accountability, but the system we have now is way overly complicated and (if what we read is true) incredibly poorly done; and true accountability almost impossible. Dump the bureaucracy and bureaucrats and contract it out to people who KNOW how to get things done

if you were running at 47% overhead, you running a tight ship. I would have guessed an overhead of 55%-60%.

Doctoring seems to fit into the universal model of professional employment ...lawyers, consultant, engineers. If you only have 2-5 professionals and limit staff & overhead, you can make a fair living ... after that, you enter into "no man's land" while expanding. If you can reach critical mass and become a big operation, you're back to making money, but it's always seems like a tough go for the guys in the middle.

Thanks

One thing missing is that the Primary Physicians are seeing MORE than 1 patient per hour. As a patient, I am often in and out in 15 minutes. So, I assume that primary doctors are perhaps averaging 3 patients per hour. Note: this is just my GUESS. If anyone has real statistics on this, I would like to know them.

I agree and many of our "best and brightest" high school students end up going into Business in college with the intent on ending up on Wall St.

A long time ago (about 50 years ago) Doctors WERE in charge of their medical profession. Somehow, insurance companies ripped away that leadership and took the lead for themselves. The Insurance Companies' CEOs now reap the rewards, "the big bucks" and the Physicians lost some salary and some STATUS. I would SPECULATE that America and Americans are the losers and we should be more like Canada, Australia, and Europe and have a Nationally controlled medical system. Most Americans COMPLAIN about our medical system, but we will probably be stuck with it for the next HUNDRED years.

I don't know this first hand but a friend who consulted small medical practices for efficiency and profitability told me that to break even a primary care physician had to see minimum 32 patients a day. At 15 minutes per appointment that works out to eight hours. Most of my appointments with the Dr are 10 minutes or less. I don't know if they get paid for referrals to specialists or hospitalizations, that would be an interesting subject.

I find these statements amazing. The USA spends more than 50% per person than the second highest country and yet doctors aren’t making that much money.

What are we doing wrong?


1. United States: $12,555
2. Switzerland: $8,049
3. Germany: $7,382
4. Netherlands: $6,753
5. Austria: $6,693

I understand the concept of wanting to ONLY see a Doctor and not a physicians assistant or a nurse practitioner. Personally, I have never had a problem with PAs or NPs. I have known physical therapists with large amounts of medical knowledge.

I wonder what role citizenship plays in hospital costs increasing?