Unintended Consequences (Part XXIV)

Our government’s attempts to control all aspects of our lives have numerous unintended consequences. In healthcare, one of these is directly related to the government’s staunch refusal to fix the Medicare Fee Schedule (which in turn affects other reimbursement arrangements) and to develop payments for medical treatments that actually cover the cost of the care being delivered: inadequately staffed medical offices.

The latest news is that the government is going to enact another "doc fix" to the fee schedule. The "fix" is that there will once again not be a cut (it will be moved to next year), but there will once again not be an increase, either; the fee schedule will remain fixed where it has been for over a decade.

The history of the doc fix is covered very well by Anthony Wilson and Hanna Dubansky. In their post “The Sustainable Growth Rate Formula: Then, Now … and Forever?” Anthony and Hanna provide a helpful timeline of the Doc Fix's many versions, from 2003 under President Bush, through this year under President Obama. It's very helpful background towards understanding the Sustainable Growth Rate formula (SGR), which drives so much of this.

Due to the continuing instability of payments since February 2003, physicians have been unable to financially plan for their business needs. When a business is faced with a continuing money crunch it has two choices: increase income or decrease costs. As medicine has a fixed payment (revenue) as determined by the SGR, physicians cannot increase revenue by increasing prices because the government has determined the cost of the procedure. Thus, they are left with one avenue: cut costs. In any business, payroll accounts for up to 30% of overhead and is one of the (if not the) largest costs. Now, a physician has a choice: does he cut his own salary or does he reduce his staff? 99.99% of the time, the physician will reduce staff. It is happening to more and more of my colleagues: physicians are letting go of managers and taking over the management of the offices to “save money”. Additionally, they are freezing or reducing wages for the remaining employees.

Now it does not take a business maven to predict what will happen. When a service industry that makes money based on the volume of people served begins to make drastic cuts in its personnel, how will that affect the quality of the business? The business will need to continue to see the same number of customers to maintain its current revenue level, but with fewer employees. And what is the number one complaint about doctor’s office? Long wait times:

* Industry average for a specialist is over three months.

* Long wait times in the office; appointments are set in 15 minute increments, but it takes closer to 25 minutes for a physician to complete an appointment.

* Finally, long wait times on the phone trying to talk to someone about your medical condition, your bill, or if your test results are ready.

Simply put, very few physicians' offices in America have adequate staff to deal with the demands. Add to that low pay, long hours, and (often) arrogant doctors and it is amazing that any medical office has staff at all.

So, the unintended consequence of not having a fee schedule that accurately reflects the cost of medicine today is a medical system that is unable to meet its core purpose - medical care - in an efficient manner. Physicians have decided that administration is the area to cut, leaving only medical personnel to man the fort.

But, Kelley, you may ask, why do I need that manager or billing office or scheduler if I only want to find out if I have strep throat or mono? Because the actual medical treatment done by the physician is only one small piece of the overall appointment life-cycle:

* People to make the appointment, check you in and verify your insurance

* Billing folks to make sure you’re up to date on any payments due and process your claim after the appointment

* Medical personnel to get you to the proper room and make sure all the coding is correct for your insurance claim

* A practice manager to make sure all the government regulations are met (OSHA, HIPAA, and HITCECH to name a few), and that the staff is appropriately trained

As in any system, if one of those components is removed, then the entire system will not work as efficiently. If the cog that ensures that the entire system works correctly is removed, then the system will eventually grind to a halt.

Most American’s believe that the money crunch to physicians will incentivize them to work harder for the fewer dollars. The opposite is true: physicians will not increase the number of patients that they see to make more money, they will simply cut overhead, which in this case is personnel, to ensure that their salary stays the same. The loser in all this is not the doctor, it is the American public.