Will a New Mood in Washington Keep Wealthy Doctors from Extinction?

Medicine as a profit-seeking enterprise was under existential pressure before the Affordable Care Act. Even if you want it repealed, the pressure won’t go away. Time to evolve.

While a lot of physicians are understandably tired of rolling with the policy punches, shifting control of the Senate is unlikely to do much to shore up the faltering economics of the profession.

Back in 2008, when Obamacare was still a vague prospect on the horizon, 49% of the doctors the Physicians Foundation surveyed were planning to cut their patient hours or quit practicing altogether.

Repeal Obamacare tomorrow and those MDs would still be looking at year-to-year uncertainty over Medicare reimbursement, endless interference from managed care organizations and crushing paperwork.

There was never enough time to see enough patients to make the business work for everyone. Today’s med school grads can still make a good living and even accumulate wealth, but the old guard private practice was already in crisis years before 2010 rolled around.

It’s time doctors who want to make money and keep their sanity to evolve with the times.

Already an urban legend

Despite the stereotype, very few physicians are swimming in cash relative to their counterparts in dentistry, law, finance or even higher education.

Six-figure paychecks are famously prevalent, but the years of additional training add up to vast sunk costs – usually in the form of staggering student loans — and a significantly shorter career earnings period.

Even prodigies might only have 35 years to cash paychecks before hitting traditional retirement age. Others might end up paying down their education debt into their early 60s.

With those chips stacked against the profession, there simply aren’t enough years in a lifetime or hours in the week for even the most ambitious go-getter to catch up.

And with most physicians already feeling tapped to personal capacity or beyond in a 53-hour week, efforts to squeeze in just one more billable appointment feels not only unfair to the patients but futile.

At best, the hustle becomes a race between diminishing returns and eventual burnout.

After years of year-to-year postponement of theoretically crippling Medicare reimbursement cuts, practices that felt financially unsustainable six years ago still look precarious. Add in overhead that can easily chew up 50% to 60% of income and it’s a wonder anyone goes into medicine with a profit motive at all.

Preventive financial medicine

The old guard who grew up in a pre-managed-care world are overwhelmingly searching for ways to get out of the rat race: cutting back on clients or hours, finding non-clinical positions or retiring outright.

Some of them stayed in the business through the 1980s when many of their peers filed a mental health claim, activated their disability coverage and jumped ship rather than work with the new HMOs.

They’re tired of rolling with the punches. Younger physicians are more optimistic about the opportunities medicine still provides to make good lives for themselves. Perhaps as a simple matter of necessity, they’re more willing to adapt than quit.

The Affordable Care Act itself is giving them quite a few nudges in what could become extremely profitable directions.

For example, a family doctor can now theoretically do nothing but remotely monitor senior rural patients’ chronic conditions 40 hours a week and book $260,000 in Medicare reimbursement.

That’s what a typical pulmonologist makes, without the added years of specialization. And it’s an extra $100,000 for the average family practitioner – for the same number of hours.

Of course, it takes investment in technology and training to capture that kind of remote patient list. You need to actively pursue this business, think outside the box.

Speaking of the “box,” other innovative practice models might support the compensation environment that makes a doctor wealthy.

Quite a few younger physicians are exploring concierge or direct subscription approaches that can easily generate $300,000 a year or more while leaving time open for pro bono appointments.

Others are going straight to direct employee relationships where the hospital picks up the overhead and the MD simply practices medicine and cashes a paycheck.

Throughout the industry, non-clinical work – teaching, R&D, even administration – remains a tempting avenue for those simply looking for that paycheck.

Tighten the private practice

Even conventional private practices can survive and thrive.

At this point a full 1 in 4 physicians already participate in the Accountable Care Organizations (ACOs) established in Obamacare as a way to share the rewards of cutting Medicare treatment costs.

They’re not exactly looking forward to earning big incentives any time soon, but the simple possibility of adding value to Medicare relationships seems to be making that slice of the patient landscape more bearable.

Close to 40% of physicians have eliminated or curtailed the number of Medicare patients they see. With close to half of the overall industry’s patient load coming from that payment environment, the math implies that Medicare dominates the day for just about all of the rest of you.

Very, very few ACOs are making money here yet.

But as HMOs and other big providers look to roll up capacity into their own ACOs, private practitioners could sell themselves into an employee relationship, effectively earning a big recruiting bonus for serving the same patient load they do now.

In theory, the networks operate more efficiently and throw better technology at problems of professional capacity. You know how well that works in reality, but the motive at least is sound.

The network exists to let doctors practice medicine and delegate the work of running a sustainable business to outside staff and administrators.

With most MDs spending about 40 hours a week seeing patients and another 10 doing paperwork, it’s clear that offloading the paperwork could boost practice revenue by 20%, which goes a long way toward hitting a lot of professional financial goals.

Let staff do the filing and coding as much as you can. If you don’t want the money, you can actually take the time off.

Will a New Mood in Washington Keep Wealthy Doctors from Extinction? - overview

Summary: Medicine as a profit-seeking enterprise was under existential pressure before the Affordable Care Act. Even if you want it repealed, the pressure won’t go away. It’s time doctors who want to make money and keep their sanity to evolve with the times.

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Scott Martin
Scott Martin

Senior Editor | Scott is occasionally considered “the greatest secret in the wealth management business,” having tracked developments since 2001 for publications like Research, Buyside and Institutional Investor. An advocate for the trust industry, he has testified to the Nevada Senate Committee on Commerce, Labor and Energy on issues of national competition.