NCPA - National Center for Policy Analysis

Why America's Doctors Are Struggling to Make Ends Meet

March 16, 2012

Insurers are increasingly targeting the traditional system that has paid hospitals and doctors for each service provided (rewarding them for more care but not better results). In the past few months, UnitedHealth, WellPoint and Aetna, the three biggest American health insurers, have announced plans to pay practices more if they make efforts to improve results, says the Wall Street Journal.

But to effect these changes, doctors often must make a major financial commitment.  That means upgrading their information technology systems, adding support staff and getting special training to do the kind of outreach and coordination that make a practice a "medical home."  Doctors fear a squeeze as they try to ramp up changes in tandem with evolving reimbursement schemes.

Some doctors aren't waiting to find out how this will play out. 

  • Instead, they're going to work for hospitals, which have greater financial resources and, because of their leverage with insurers, are also often paid more than small practices for the same services.
  • The consulting firm Accenture projects that, by 2013, only around a third of doctors in all specialties will own their own practices, down from about 43 percent in 2009 and nearly half in 2005.

Dr. Scott Hammond is determined to stay independent.  Hammond's Denver-area clinic has made significant upgrades over the past four years, including electronic health records, calling patients at home to check on their progress, and coordinating with other specialists and hospitals.

But it has come at a price. He says he's been forced to consider asking patients to pay a monthly fee to support the type of intensive services his practice supplies, as well as others he'd like to add.  Dr. Hammond says the practice operates on such a thin cash cushion that if a doctor or a physician assistant were gone for more than two months, it wouldn't be able to make its payroll.

Officials with UnitedHealth, WellPoint and Aetna say they are moving rapidly toward permanent reformed payment options to reward practices like Dr. Hammond's, but Hammond hasn't been approached with contract language or details about the big insurers' new plans, he says, so it is hard to gauge how they will work, or plan future budgets.

Source: Anna Wilde Mathews, "Why America's Doctors Are Struggling to Make Ends Meet," Wall Street Journal, March 15, 2012.

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