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The Changing Economics of Medicine

Austin, Texas, March 25, 2015

As physicians face increased pressure to focus not just on patient care but also on the cost of care, healthcare leaders need to find ways to minimize frustration and maximize value.

The healthcare industry’s drive to reduce variation in order to achieve cost savings and improve outcomes and quality is changing how physicians practice, affecting their compensation, and impacting their satisfaction with the profession. Some doctors are unhappy with the changes and say they do not recognize what their profession is turning into, nor do they believe it is better.

“Medicine has been turned into a business,” says Robert Brenner, MD, a 63-year-old gastroenterologist who gave up his independent practice in San Diego in 2014 to become an employed physician at ProCare Odessa, the physician group that is part of the Odessa, Texas–based Medical Center Health System, a network that includes a 402-licensed-bed regional medical center and outpatient services that cover the 17-county west Texas region known as the Permian Basin.

“I’m expected to be a physician, but at the same time I’m forced to be a businessman; I never wanted to be one.”

Brenner says giving up his solo practice after 26 years was hard. But he “crunched the numbers” and figured that at the rate he was working—80 hours a week—and the compensation he was getting, he’d have to wait until he was 75 years old to retire. After three years of thinking about going to work as an employed physician, he pulled the trigger in late 2014 when consolidation in the San Diego market reduced his referral stream.

“We were also coming up on receiving penalties for meaningful use; my reimbursements for managed care were at 85% of Medicare, and fee-for-service for Medicare was being ratcheted down,” says Brenner. “With all the headaches I have had mount over the years, I’m happy to have someone else worry so I can get back to doing what I wanted to do, and that is see patients.”

Brenner’s dissatisfaction over the regulatory burden is widespread. In October 2014, the Medical Group Management Association, a national nonprofit organization of 33,000 physicians and medical practice executives, reported that a resounding percentage (76%) of physicians were unhappy with the impact of three of Medicare’s quality reporting programs: physician quality reporting system, meaningful use, and value-based payment modifier. All three are supposed to increase the quality of care and control costs, but according to the 1,005 practices surveyed, the programs are taking up staff time and practice resources while decreasing morale.

The increase in the administrative load isn’t just inside a doctor’s office either. First-year resident Amy Ho, MD, who is at the University of Chicago’s emergency medicine residency program, says she sometimes feels like a “glorified secretary” in the ER.

“I saw it as med student, but I thought it was because I didn’t have all the privileges as a doctor,” says the 24-year-old. “Depending on the patient, I can spend about 80% of my time just making phone calls to social workers, consultants, and therapists, and spend maybe 5 to 10 minutes with that patient.”

“I’m expected to be a physician, but at the same time I’m forced to be a businessman;I never wanted to be one.”

Spending less time with patients is a universal complaint, says American Medical Association President Robert Wah, MD.

“Things like administrative burdens, red tape, hassles … we’re in an environment where a lot of those things are on the rise instead of the decline,” says Wah. “There’s no meter on satisfaction, but what dissatisfies us are those things that get in the way of our ability to take good care of patients.”

A new generation of expectations

While Brenner and Ho share frustration about limited time with patients, that’s where their similarities end. And the differences are more than their experience levels. It’s generational, says Chris Van Gorder, president and CEO of Scripps Health, the San Diego–based private nonprofit integrated health system.

“Frankly, we have a different generation of physicians,” he says. “They have different expectations of life once they graduate with an MD degree.”

Ho is an example of what Van Gorder sees in younger physicians. She wants more of a work-life balance. She likes to travel, and although she is single now, she doesn’t want to rule out having a family in the future. All of those factors played a part in her decision be an emergency room physician.

“I knew I wanted to make enough to pay off loans and live a comfortable lifestyle,” says Ho. “The thing about emergency medicine is that it is shiftwork. There’s a lot of flexibility; if you want to work more, you do more. If you want to work 10 or 20 hours a week to pursue other interests, it’s doable with this specialty.”

Before picking emergency medicine, Ho also considered pediatrics, internal medicine, and primary care, but those didn’t pay enough.

“It’s not that emergency medicine attracted me because of the pay, but the other specialties detracted me because of the pay. Like pediatrics, and it’s heartbreaking because they’re taking care of the future of our country, but they’re paid pennies compared to every other specialty.”

The average salary of a pediatrician in the United States is $181,000, according to a 2014 physician compensation report by specialty from Medscape. The average amount of debt that medical students graduate with is $170,000. That kind of financial burden is daunting to young doctors who are eager to begin practicing and may be making big (and expensive) life decisions, such as marriage and kids, says Ho.

“That’s a hard thing to sign up for when you’ve basically given up your 20s to go into med school and residency, and at the end of the day you don’t get to enjoy it from a financial perspective,” she says.

Ho has significant medical school debt, though not quite as much as the national average of $170,000. But even if her debt was $170,000, the average salary for emergency medicine is $272,000, which is a generous cushion to pay off her debt while living the comfortable lifestyle she wants.

Money was not her only consideration. Ho considered being a surgeon. But a pediatric surgeon who mentored Ho warned her the hours were long and didn’t leave much room for anything else.

“She looked at me and said, ‘Amy, I’m 46. I’ve never had a relationship longer than two years. I really wanted kids. I really wanted to be married.’ That kind of terrified me, so I took her words to heart,” says Ho.

Younger physicians may be distancing themselves from the days when a personal life took second priority to the profession, but Ho says it also means she is dissociated from the frustration of midcareer and older doctors, such as Brenner.

“My generation didn’t come in thinking we were going to go into independent practice, and so now that healthcare is changing, it doesn’t annoy us,” says Ho.

Robert Brenner, MD, is a 63-year-old gastroenterologist who gave up his independent practice in San Diego to become an employed physician in Texas at ProCare Odessa, part of Medical Center Health System. He says that in addition to improved compensation, the main attraction is reduced administrative burdens and more time for patients.

Balancing workload, money, and passions

Some physicians are coming to terms with the changing economics of medicine by starting up their own businesses.

Tim Gueramy, MD, an orthopedic surgeon based in Austin, Texas, took a break from medicine and stopped seeing patients in 2012 to focus on a startup company he began with his wife, Tracey Haas, MD, a family physician. At the time, Gueramy says he was frustrated with the increasing pace at which he needed to see patients to stay financially afloat. “I was seeing a lot of patients, but money was not increasing,” he says.

“This other workload that we weren’t trained for, designed for, didn’t have a passion for—documentation and the business side of things—really became a larger part of medicine and I really felt like there was this treadmill. You can’t do anything else or be innovative or think of new things,” he says.

Haas, too, stopped seeing patients, and the couple poured their energy into the startup, DocbookMD, a HIPAA-compliant app that allows physicians to share information. Gueramy says being able to solve problems that physicians face gives him the opportunity to see things from a different perspective and be more active in his industry. He was named one of 10 Leadership Fellows for the class of 2013–2014 by the American Academy of Orthopaedic Surgeons, and kept his skill set sharp by going on physician missions in Libya and India. The startup has grown, and Gueramy and Haas have been able to hire someone to help run the business.

“Things like administrative burdens, red tape, hassles … we’re in an environment where a lot of those things are on the rise instead of the decline.”

“Now that we know where DocbookMD is going and how it’s going to make money, I need to take care of patients,” he says. “It’s part of my passion.”

In January, Gueramy began working part-time for the Texas Orthopedics, Sports, & Rehabilitation Associates in Austin. He says the two-year hiatus from patients helped ease the dissatisfaction he felt before.

“I don’t care about the money anymore,” he says. “I know what my minimum is, and not going back full-time gives me time to research and nurture my creative side.”

Some organizations are listening to physicians’ concerns about a lopsided work-life balance and are adjusting hours for physicians to have more time away from the office.

For example, Minnesota Gastroenterology (also known as MNGI), a Minneapolis–St. Paul–based specialty practice with seven outpatient clinics and centers, began offering various part-time options in 2008. Instead of working at a full 100%, physicians could work at 90% or 75%.

Initially, the part-time options were open only to physicians who were also shareholders in the practice, says Marit Brock, SPHR, CMPE, chief performance officer for MNGI. But Brock says in the past three years the practice has expanded the options, adding a 50% alternative for physicians who are not shareholders, as well as offering a no-hospital, noon-call option that is open to all physicians, even new hires.

“For us, being able to offer it was a competitive advantage,” says Brock, who estimates that 38% of the 67 physicians at MNGI are taking advantage of the part-time alternatives that allow them to work less.

Initially, Brock says, there was resistance to offering new physicians the alternative work schedules.

“There was a culture of, ‘Wait a minute, those people have to pay their dues!’ ” says Brock. “We’ve been able to get around the concept of part-time as somehow less than the commitment of full-time with strong physician leadership saying that having these different options is valuable in trying to attract and retain good physicians.”

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