What’s going on behind the scenes at your doctor’s office? I met a doctor in an online group and we struck up a conversation. Her views were so interesting that I asked her to join me in a series of conversations for ClearHealthCosts. She is a D.O. (Doctor of Osteopathic Medicine) in private practice who also has a leadership role in obstetrics and gynecology at a Midwestern hospital system. She spoke on condition that we not use her name. Here is our fourth conversation, lightly edited for length and clarity. Links to the first three are at the bottom of this post.
Jeanne Pinder
We’ve touched on many of the business aspects of running private practice, but I think many patients don’t fully understand what this looks like. You mentioned specifically that you have a purchasing consortium with a group purchasing agreement so you can get an IUD at a 25% discount from the list price. Tell me more about that.
Dr. X
OB-GYN doctors formed a group to discuss common issues for private practice doctors. Early on they banded together to get better pricing on medical supplies. Every little bit counts.
JP
So what is included? You said IUD’s? What other things? Medications?
Dr. X
Typically, we don’t buy medications, patients go to the pharmacy, and then get the medication that way. So anything from office supplies to the paper that’s on the tables to Betadine to alcohol swabs, Kleenex, paper towels for the bathrooms, you name it.
Medicine and the business side
JP
I guess I knew that there were costs like this to running a business, but what are the other strategies that you have for minding the business of medicine?
Dr. X
There are two sides of the coin. First, there’s the medical part of the business, taking care of patients and making sure that everybody is scheduled appropriately. And that there are enough people to do the jobs that need to be done.
But then there’s the completely different aspect of it, which is running a small business, and making sure that you can keep costs down — giving patients the care that they want and need at an affordable cost. This means cutting costs when you can — making sure that the appointment scheduling is done in a way that it optimizes the time spent with the patient, with the least amount of human resources needed. The least amount of nurses and receptionists.
It’s super detailed, and very labor intensive to make all that stuff work. We have an accountant too, who is kind of a practice consultant also. And we really drill down into best practices for managing the business monthly.
JP
Do you have a business manager for the office or is it really you that are the business manager?
Dr. X
We have an office manager. Twenty-five years ago, we each took part of her job. My job was administering the 401(k) and stuff I knew nothing about. But now we have an office manager who is wonderful. She’s phenomenal.
Taxes, leases
JP
Does she also do things like negotiate the lease and manage the taxes? Or is that you and your partners?
Dr. X
Actually she and I do that. She comes to us with a lot of the problems of the practice, or things that need decisions made from a business standpoint — she’ll run that past one of us typically.
JP
Did you say that once upon a time, you and your partners took many of these business decisions, but now you pass it off to the office manager?
Dr. X
When we started the practice, we had somebody who was an office manager, and for reasons I won’t get into, we had to let her go. So there was sometimes a time between office managers, where we did it ourselves after she left for maybe a couple of years. Then we got somebody who kind of heard about through the grapevine, and we got her and she was good. In our 25 years, I think we’ve had like four or five. In the interim, we certainly could do it, but it’s not something you want to do full time because it’s not the most efficient way to run things.
JP
So, what are some other changes that we patients might not see, in the business aspects of running a private practice — more regulation? Your relationship with the hospital?
Dr. X
The hospital relationship has changed pretty significantly. With hospitals buying up doctors’ practices. Before that, the hospital down the road didn’t preferentially treat me any differently than they do from the other private practice a mile away. However, when they own a practice, they most certainly treat us differently.
For instance, they don’t help us do any recruiting. Even little things like the directory — find a doctor for the hospital, the hospital-owned doctors are first on the list. A patient will see those doctors before they’ll see the private practice physician. It’s not all one big happy family — they’re the preferred children, if you will, over the people who are independent doctors.
How else is it different? Just the amount of clerical B.S. that we have to deal with on a daily basis can be all-consuming. With prior authorizations and keeping on top of making sure that we’re getting paid for what we did at a reasonable rate. That’s pretty significant.
The hospital relationship
JP
Do you ever think of selling to the hospital?
Dr. X
They’ve talked to us, but they don’t talk to us anymore about that, because they know we’re not at all interested. I would much rather retire. I just don’t want to have somebody telling me what to do.
When you’ve done this for as long as I have, the thought of having somebody who tells me that I’m not producing enough or whatever, or that I have to see a patient within a certain amount of time. I don’t want to deal with that. I would just rather be done.
JP
Would selling to the hospital have been an option 30 years ago?
Dr. X
Not 30 years ago. I think, maybe 20 years, 25 years ago — it’s funny. It’s a pendulum that shifted. Like, there were people who sold and it was mostly primary care docs who sold to the hospital. There was a group that sold and then maybe seven years later, they bought themselves back. And now they’ve sold again. I think a couple of the senior partners were getting ready to retire, and they sold again to the hospital.
JP
This was primary care?
Dr. X
Yeah, it’s primary care. Most of the OB’s who sold to either hospitals or private equity did so maybe 15 years ago, or 10 years ago.
Buying and selling practices
JP
I’m in the New York City area, and pretty much all of the primary care and OB are all hospital based now. It could be a function of the fact that in a major metropolitan area, the overhead is higher. I would imagine that there are bidding wars for some of these well-known and well-loved primary care practices as people get ready to retire. And they’re like, oh, no, better this than private equity.
Dr. X
It happened to a big group at a major center in our city. They are a very well-thought-of private practice. They sold out to private equity. There were senior partners and junior partners, and there were associates who are employed physicians within the private practice.
When they sold to private equity, the people who were getting ready to retire had a big financial benefit. And the other people were really left in the lurch. Rumor has it that it was just really, really bad for those people.
JP
I talked to a primary care doc — his multi-specialty practice was sold once and then sold again in the space of two years.
Dr. X
Oh, you’re kidding. Oh, no,
JP
I said, “did you all vote for this?” And he said, “they came to us and they said, we need to do it because we have to have the money. We can no longer make it without an infusion of cash.” And it wasn’t like they all made out like bandits. He also said “you know, doctors are financial idiots.” I said “I have a hard time believing that.” And he’s like, “Oh, no, it’s true.”
Dr. X
I think that’s why a lot of people sold to the hospital or sold to private equity because — what are we good at? Taking care of patients.
I enjoy the business aspect of it, but I’m an outlier. My dad was in business. We talked about this stuff all the time. I was kind of brought up on this stuff.
But most doctors want to take care of patients, and go home at the end of the day, and when a hospital tells you that you can do that, it’s really appealing. But you know, it’s at a cost. And I think that we kind of tend to gloss over that until you’re in the middle of it. And somebody tells you, you have seven minutes to see a patient and be happy.
‘People are pretty litigious’
JP
You mentioned the last time malpractice. How has that changed in the 30 years that you’ve been practicing?
Dr. X
People are pretty litigious. With a baby, you can be sued for 18 years, until the baby reaches the age of maturity.
I think OB’s have always practiced pretty defensive medicine. How has it changed? I’m sure it’s more expensive now than it was. I do some medical malpractice expert testifying occasionally, an expert review. Some things are justifiable, then there are things that were not done properly, and most of the time it is just a bad outcome that couldn’t have been avoided.
I don’t know if it’s changed all that much. You document to make sure that your thoughts and your care plan are kind of memorialized. So that 10 years later, if you’re being sued, and you have no recollection of what happened on that day, you do have a record. That’s the only record that you can go by, that you can testify to as to what’s written down. I think we’re all pretty much trained to be careful with that.
When prior authorization didn’t exist
JP
Another topic: What percentage of your time now is spent on prior authorization? And what’s your experience with that been over the last 30 years?
Dr. X
Thirty years ago, there was no such thing. If you prescribed it, the insurance company paid for it.
It’s been progressively getting worse and worse. With my patients, I don’t prescribe a lot of things that require prior authorizations. I don’t prescribe intense biologics or chemotherapeutic agents. But sometimes I’ll have to do a prior auth. When I say I do it, my staff will do it. But that costs money, because there are people that I need to employ to do stupid work. And that has increased.
When I’m giving a medication, that this is the only medication that treats disease X, and they want prior auth — and they want to know if I’ve tried other things. Or they’ll ask me if I’ve done an ultrasound before I’ve done an MRI, when it’s not appropriate, and it’s like, OK, I’ll do an ultrasound, but it’s your money. It’s a waste, but OK.
That kind of stuff has changed where, it seems like the insurance companies have really interjected themselves into the care of the patient, which is just not good for anybody.
There is another thing they do to curtail payments. We had UnitedHealthcare do this to us, maybe a year and a half ago or so. This happened with all OB patients that had transferred to our practice mid-pregnancy. They transfer to the practice, they deliver with us, we submit our global bill, and they won’t pay it and they want all of the records. And they kept doing this.
So for a while, we said we weren’t going to accept transfers anymore because they were doing this. Half of the time, they were just denying these payments for no reason. Only when we filed a grievance with the department of insurance regulation did all of a sudden, miraculously, they start to pay those bills. It’s B.S., you know?
Payments: Insurance, doctor, patient?
JP
So when you bill, do you have a global bill that includes prenatal care and delivery?
Dr. X
The way that works is you charge $4,000 for prenatal care and labor and delivery. Say the patient is expected to pay 20% of the bill, the insurance picks up 80%. Contractually, you can’t collect that 20% until you bill the insurance company. And so there’s no installments and you hope that they pay their bill.
If we get fleeced, that’s we get fleeced — somebody won’t pay the balance that they owe. A lot of these plans have a very high deductible. So then you kind of play the game: Our billers are very good. They will hold on and wait to bill the insurance company until it goes through the hospital. So if there’s a big deductible, that will get absorbed by the hospital versus absorbed by us.
The frog in the boiling pot
JP
I feel like I’m seeing an increasing number of patients who are saying, “I had no idea that I was going to be paying this. I’m insured. Why do I have a $5,000 bill?” What do you hear about that anecdotally?
Dr. X
I’m kind of insulated from that. I think my billing people would probably say differently. I think we’re the frog in the pot of boiling water. It’s become a thing that is just expected. Twenty years ago, when I personally had an H.S.A. account, it was great. The H.S.A. account paid 100%, after it like a $4,000 deductible. Now an H.S.A. pays only 80%, after a big deductible,
I think people are just unfortunately used to it, which is ridiculous because they pay a lot of money, or their employers pay a lot of money, for insurance to get inadequate coverage. But what can you do?
JP
I think what happens is that people decide that they’re not going to have another baby. Right?
Dr. X
I wonder if that’s so. We’re not seeing huge decreases in the birth rate. I heard a statistic that recently in Illinois, I want to say upwards of 50% of births are covered by governmental insurance, Medicaid. It was a lot more than I expected. And that actually what they pay the hospitals doesn’t really even cover the costs. So those costs get covered from privately insured patients. I was very surprised that it was that much.
JP
You know, I’ve seen that number before. You always do want to look at that and see like, what’s underneath of that? Does that mean that people for whom it comes out of their pocket and not the government’s pocket are saying “no more kids”? Kaiser Health News had a story not long ago about a family in Illinois. She was a teacher. They had a baby and thousands of dollars in costs. The family outlay out of pocket was enough for them to say “No more kids. Nope. We’re done.”
Dr. X
Yeah, I don’t doubt it. She was a teacher too. So you would think that she would have decent insurance?
Private practice vs. hospital vs. private equity
JP
Well, decent insurance means a lot of different things.
Do you have anything else that you want to say about this topic about how the business of medicine has changed in the last 30 years, things that you wish patients knew?
Dr. X
I’ve had patients definitely tell me that they feel a difference in the vibe of our practice versus the vibe of the hospital practice versus the private equity practices. And I think it comes through, it’s perceivable. … We all work very hard. But we’re doing it kind of under our own volition, you know. I think that they see. I think they just can feel that it’s just a better way to do things. It’s better patient care.
We can usually do things less expensively. And I think people need to realize that. And, you know, you don’t need to necessarily have to have a CT scan that costs out of your pocket $500, when maybe you could be referred to a free-standing place and have it be a $50 copay.
In our practice, we’re not incentivized to send you to a place that costs more money. And I think it’s a level of care that — I know I’m prejudiced, but I just think it’s a better way of doing things, and I think the patients really feel it.
Here are other parts of the series:
What patients don’t know: Dr. X talks (Part 1 )
TikTok childbirth and less personal access to doctors: Dr. X talks (Part 2)
More women gynos, but women’s health issues are getting worse: Dr. X talks (Part 3)
