December 7, 2020
There’s More Than COVID-19 In Play Here
By Michael D. Shaw
A few weeks ago, the New York Times ran a story entitled “Doctors Are Calling It Quits Under Stress of the Pandemic.” The 1400-word piece notes that financial pressures; along with COVID-19 fears among patients; combined with strains on the physicians’ families have driven the exodus. The lead anecdote in the article describes how pediatrician Kelly McGregory had to close her two-year-old independent pediatric practice, she says, because of the coronavirus.
Bear in mind, though, that sole practitioner unaffiliated medical practices have been a dicey proposition since well before the pandemic hit. Those that are succeeding usually have some sort of special niche. For example, longtime LA-based pediatrician Michael J. Goldberg began to specialize in autism and neuro-immune dysfunction issues, and has been able to maintain his independent status. I also know of internal medicine physicians who could stay independent, based on not taking insurance, and not worrying about having admitting privileges at local hospitals.
Such practices are the exceptions. These days, virtually all private practices are either part of a large group, or are directly owned by, or are closely affiliated with a hospital. Moreover, a goodly number of hospitals have also become part of a larger group. This trend started long before the pandemic, and is based on how the old “Golden Age” model of medical practice started to deteriorate in the wake of Medicare and the rise in third-party payers.
This Golden Age (in the US) is typified by the private practices of the 1950s through early 1960s. Most urban practices of that era were housed in relatively large multi-story medical buildings. A trend was starting in the mid-1950s, especially in non-downtown and suburban locations, to switch to smaller, single story multi-practice facilities. In all cases, these were essentially self-contained practices, and that means that most had their own labs, and, if appropriate, treatment rooms.
Certainly, complex lab tests were sent out, but physicians in that era took great pride in their independent practices being able to handle most of what they encountered. No one really thought about it at the time, but there was clearly some inefficiency in having such redundancy in these services, not to mention needless overhead. But, recall that fast communications of lab results were limited to snail mail, or the occasional emergency phone call. To put this in perspective, Quest Diagnostics was founded in 1967.
Small practices could operate profitably in this manner, since they were free from the burden of filling out insurance paperwork, and Medicare red tape. The practices always had to answer to the State health departments and licensing boards, but if you ran a decent operation, you had little to fear from these agencies. Managed care organizations existed at that time, and attracted those physicians who did not desire to run a business.
This would all change in 1965, with the advent of Medicare. Originally touted as a program to help those Americans aged 65 and over, many of its policies and procedures would bleed over into private health insurance plans covering younger people. Non-Medicare health insurance plans first gained favor with large labor unions, and this would soon spread to most private employers.
By the late 1970s, most full-time employees would obtain health insurance through their employers. At this stage, few doctors’ offices would initially bill a patient’s insurance company. Rather, it was up to the patient to deal with the insurance company himself. As you might expect, this policy was short-lived, and within a few years, the “providers” would charge a co-pay at the time of the office visit, and then bill insurance for the balance. Such administrative activities usually required additional personnel.
Notably, this affected the bottom line. After all, insurance companies offered reimbursements based on their own schedule, which was inevitably lower than the customary fees. Few physicians were in a position to demand that their patients make up the full difference between the insurance reimbursement and their normal fee, and had to settle for a net reduction in revenue.
The push to electronic medical records added another administrative burden, best done by providers using medical scribes. This too adds to the overhead. There are only so many ways in which a small private medical practice can economize and become more efficient under today’s structure, so it is no wonder that many of them consolidated or sold out to larger groups. In some cases, physicians simply gave up and joined managed care organizations as employees.
True enough, COVID was the coup de grace for some physicians, but other, more significant factors have been in play for over 50 years. For you philosophers, ignoring these previous elements puts one somewhere in the middle of chronological snobbery and solipsism.