This is disturbing.

[Enough]

General Surgrey News

ISSUE: 12/2006 | VOLUME: 33:12

Bariatric Surgery Brings Paltry Profit Under Medicare
$245 Per Surgery After Expenses; “What Else Is New?”

Christina Frangou


San Francisco—After paying for clinical staff salaries, practice costs and malpractice insurance, a bariatric surgeon who performs nearly 300 laparoscopic gastric bypass procedures on Medicare patients makes just over $71,000 annually—and that’s before taxes, according to a recent report.

That is $20,000 less than the average pharmacist earns in a year, $50,000 less than the average dentist and about the same as the median salary for physician assistants, based on figures from one Web site, www.salary.com.

“Being paid $71,000 for 292 gastric bypasses a year—that’s just not practical,” said study author Atul Madan, MD, director of the bariatric surgery program at UT Medical Group, Inc., in Memphis, Tenn. He presented the study at the 2006 annual meeting of the American Society for Bariatric Surgery.

Some bariatric surgeons say the study accurately depicts the financial difficulties they encounter when treating Medicare patients.

“This is scary, but very reasonable,” said Jeff Allen, MD, associate professor of surgery at the University of Louisville School of Medicine and director of the Center for Advanced Surgical Technologies, Louisville, Ky.

“It’s crazy, but true: You absolutely cannot do a practice with Medicare patients. We could not afford it,” said Daniel Cottam, MD, a bariatric surgeon at the Surgical Weight Control Center of Nevada, in Las Vegas.

Using reimbursement rates based on the 2005 Medicare fee schedule, Dr. Madan performed a cost analysis of a hypothetical bariatric practice. He theorized that a surgeon could perform 292 laparoscopic gastric bypasses a year if he or she dedicated appropriate time to pre- and postoperative visits and new patient visits, took four weeks of vacation and attended continuing medical education and society meetings. In this scenario, the surgeon paid the salaries of a dietitian, office manager, receptionist and medical assistant and treated only Medicare patients.

Total reimbursement for 292 patients was $516,158—mostly from surgical fees of $407,063. The cost to run the practice was calculated at $444,592 a year: $207,065 for salaries, $55,150 for malpractice insurance and $182,377 for other expenses. All the figures were based on costs from Dr. Madan’s practice.

After expenses were paid, the surgeon’s pretax earnings totaled $71,566.


Table. Surgeon Reimbursement For 292 Bariatric Patients Under Medicare
Total reimbursement $516,158
Practice costs $444,592
Salaries
$207,065
Malpractice insurance
$55,150
Other expenses
$182,377
Surgeon’s pre-tax earnings $71,566


“This study shows that it’s just not possible to have a practice with 100%—even 80%—Medicare patients. We’d have to close our program down. My own salary wouldn’t be covered by $71,000 a year,” said Dr. Madan, who earns an academic salary at the University of Tennessee School of Medicine and does not rely on reimbursements for income.

Although they earn a salary, academic surgeons share the concerns of private practice surgeons because they also struggle to maintain profitable practices in an era of low reimbursements, Dr. Madan explained. Reimbursement rates affect the viability of bariatric programs at universities and private centers, he said. “Some private practice surgeons have a misperception that academic surgeons are not affected by this issue. It is my responsibility as director of the bariatric program to make sure we have adequate reimbursement from our surgical fees and grow our program, which is not possible if our collections cannot even meet our costs. The bottom line is always the bottom line, whether you’re in an academic center or a private practice.”

However, Medicare reimbursements directly affect the take-home pay of private practice physicians. “It’s much, much harder to make ends meet treating Medicare patients in a private practice,” said Dr. Cottam, who completed his fellowship training at one of the largest academic medical centers in the country.

Surgeons who spoke with General Surgery News described the study as accurate, and otherwise responded with a “what else is new?” attitude. They say they have struggled for a decade as reimbursements have declined for most general surgical procedures.

“If you did 300 colon operations a year on Medicare patients, you wouldn’t be any better off,” said David Greenbaum, MD, a general and bariatric surgeon with Surgical Specialists of New Jersey, in Willingboro, N.J.

“If [Medicare patients] are all you do, you obviously can’t make ends meet,” he said. “My argument is that the Medicare payment structure is poor, but it’s poor related to everything that a general surgeon does. Bariatric reimbursement is reasonable compared to other general surgical procedures.”

But, Dr. Greenbaum added, “In bariatric surgery, there is a need for continued follow-up, as well as potentially involving a nutritionist in your practice. These can create added expenses, which may not always be reimbursed appropriately. We personally are working with the hospital to cover these expenses.”

The surgical community has tried various methods to get Medicare to improve reimbursement rates. The American Medical Association, professional associations representing surgeons and individual surgeons have approached the Centers for Medicare & Medicaid Services and legislators, but without success.

Most surgeons have sought alternate ways to improve their bottom line. The majority of surgeons appear to limit the number of Medicare patients they treat. All surgeons who spoke with General Surgery News said that only 10% to 25% of their patients are covered by Medicare.

Some surgeons have joined larger practices for more clout when negotiating with insurance companies.

Twenty years ago, Dr. Greenbaum started in a two-surgeon practice, grew to six and has 33 surgeons today. “Forming a larger group doesn’t reverse the problems, but it does improve it,” he said. “It won’t make you rich.”

Dr. Allen predicts that the situation will worsen as private insurance companies cut their rates to match those of Medicare. He thinks surgeons will be deterred from going into bariatric surgery, or close down practices.

“Surgeons are going to find that bariatric surgery is not worth the increased risk if they are interested in it for money,” he said. “Eventually, we will end up with a shortage of bariatric surgeons.”

[surgical06]

i don't understand why physicians don't use lobyist effectively. insurance companies have the most lobyist on the hill of all interest groups. this underscores our need to fight back. does anyone know why or what the AMA/ACS are doing to combat the attack on physicians

[filter07]

It could have something to do with insurance companies being led by a few billionaires and no moral conscience, compared to lots of unorganized practioners who consider the monetary aspect of medicine taboo.

[dynx]

Originally Posted by filter07

It could have something to do with insurance companies being led by a few billionaires and no moral conscience, compared to lots of unorganized practioners who consider the monetary aspect of medicine taboo.

rambo vs. Ghandi? Who would you pick in a winner take all battle royale? My money is on the guy not wearing the skirt.

[resxn]

Originally Posted by surgical06

i don't understand why physicians don't use lobyist effectively. insurance companies have the most lobyist on the hill of all interest groups. this underscores our need to fight back. does anyone know why or what the AMA/ACS are doing to combat the attack on physicians

Now wait. The AMA is considered one of the top 5 most powerful lobbies in the country along with the NRA, National Association of Retired People, NAACP, and ACLU.

I don't see insurance companies on that list. So why does reimbursement suck so bad? Because the democrats who instituted the system in the first place (The AMA argued vehemently about its very inception) did not count on the baby boom and the dramatic decrease in dollars that would be available just 50 years later. Reimbursement is decreasing because congress is concerned about the real and seemingly inevitable loss of funds in the Medicare pot. All its money will have been spent somewhere between 2017 and 2040 depending on which party you believe. Neither party wants to piss off those who will lose the benefits and therefore, they continue to decrease reimbursement to increase the length of time there is at least some cash in the wallet.

There was a bill this year to reduce the medicare reimbursement another 5.1%. That would allow you to collect a measly 27 cents on every dollar you billed. Guess who was able to lobby congress to prevent that from happening at least in 2007? That's right, the AMA.

Your job as a med student, resident, or attending is to write your congressman and share this study with them. Tell them how involved you are in the political process and that you cannot tolerate them taking away the money that will keep your business afloat and put your kids through college.

That's how it works, like it or not.

Or vote for Hillary and become Canadian.

[Tired]

Originally Posted by resxn

Now wait. The AMA is considered one of the top 5 most powerful lobbies in the country along with the NRA, National Association of Retired People, NAACP, and ACLU.

I don't see insurance companies on that list. So why does reimbursement suck so bad? Because the democrats who instituted the system in the first place (The AMA argued vehemently about its very inception) did not count on the baby boom and the dramatic decrease in dollars that would be available just 50 years later. Reimbursement is decreasing because congress is concerned about the real and seemingly inevitable loss of funds in the Medicare pot. All its money will have been spent somewhere between 2017 and 2040 depending on which party you believe. Neither party wants to piss off those who will lose the benefits and therefore, they continue to decrease reimbursement to increase the length of time there is at least some cash in the wallet.

There was a bill this year to reduce the medicare reimbursement another 5.1%. That would allow you to collect a measly 27 cents on every dollar you billed. Guess who was able to lobby congress to prevent that from happening at least in 2007? That's right, the AMA.

Your job as a med student, resident, or attending is to write your congressman and share this study with them. Tell them how involved you are in the political process and that you cannot tolerate them taking away the money that will keep your business afloat and put your kids through college.

That's how it works, like it or not.

Or vote for Hillary and become Canadian.

I'm loathe to argue with an attending, but let me offer a counter opinion.

If Medicare is a payer (ie - demand), and physicians are providers (ie - supply) then perhaps our glorious capitalist system demands this fundamental conflict, and what is an appropriate reimbursement is what the market determines?

I guess I'll be the only Officer voting for Hillary.

[Miami_med]

Originally Posted by Tired

I'm loathe to argue with an attending, but let me offer a counter opinion.

If Medicare is a payer (ie - demand), and physicians are providers (ie - supply) then perhaps our glorious capitalist system demands this fundamental conflict, and what is an appropriate reimbursement is what the market determines?

I guess I'll be the only Officer voting for Hillary.

How is a Hillary Clinton Health plan in any way related to a free market? I don't think Hillary knows what a market is.

[Tristero]

I'm loath (yes loath, not loathe) to argue with an idiot, but let me offer a correction to what you view as the "glorious capitalist system" in action.

Medicare reimbursements are NOT determined by the free markets, and are determined by a flawed SGR formula that was developed by an economist way back when. This formula has been critized countless times by free market economists because it does NOT take into account basic economic considerations, such as supply&demand, as well as inflation. To characterize Medicare as demand and physicians as suppply is to deliberately obfuscate the argument.

Vote for Hillary--when you are making LESS than that poor bariatric surgeon and most dentists/pharmacists/plumbers, I hope you still have the cheery disposition to make smug comments.

[surgical06]

i don't want to get into a political debate, but more so a solution for us in the future. what are surgeons in particular prepared to do to make sure our financial interest are protected. is there any buzz out about new ideas, strategies?

are there any conflicts of interest within the AMA, which prevent them from doing the very best for us?

if the AMA has a top 5 lobbying group, which i don't think they do, but i could be wrong, they are the only group in that top 5 that are severely failing their constituents. the NRA has made sure gun control laws are to their standards, despite the blatant need for stricter laws. the AARP has made great strides in the last 5 years, ect... AMA?

[Tristero]

AMA, is not top 5, I believe last I heard they were top 10 or top 15. If surgeons want their financial interests protected then every one of them needs to join AMA and start fighting. Hosting congressman, playing the whol epolitical game. Thats what AARP, big pharma, insurance lobby all do...they have congressman and senators year in and year out that they can count on regardless of the political climate.

The infighting and egos have to end. Everyone needs to be on board, or else divide and conquer will continue...when Medicare Rebursements were on the table AARP came out and said they supported the cuts...we need to recognize our enemies, and the AARP, insurance lobbies, HMOS are all in that basket.

The patients our on our side. 1 million patients called their congressman to avert this year's cuts, but we must get our heads out of the ORs and start playign the political game. EVERYONE needs to be sending letters, recruiting colleagues who feel similarly, and donating money to parties of interest.

[Misterioso]

If you're a surgeon and making less than what a FP makes on the low-end then you're doing something wrong. I got a bunch of relatives in medicine and all the ones who are surgeons are making way, way more than that. The lowest that one of them makes is about $200K after taxes, after overhead, and after paying for insurance. You need to be smart with the kind of practice you join, its location, how you invest your money, etc in order to maximize your benefits...you know the kind of stuff that's important in the real world that they don't teach you in school.

[donkeypunch]

This article is a lot more disturbing for those of us who know the history of medicare reimbursement and private health insurance. It may take a few years, but private insurance will eventually align itself very closely with the medicare reimbursement for this procedure. Some insurances pay medicare + a little bit, some pay .8 X medicare. It just depends, but no insurances are very far off the medicare rate for most procedures. My prediction is that bariatric surgery will all but disappear in a few years. That is exactly what the government and insurance companies want to happen. They can't very easily just outright deny bariatric surgery to US patients, but they can make it so that it isn't worth anyone's while to do it. Its sad, really, because bariatric income was propping up a lot of surgeons. Once that goes away who knows what will happen.

I'm loathe to argue with an attending, but let me offer a counter opinion.

If Medicare is a payer (ie - demand), and physicians are providers (ie - supply) then perhaps our glorious capitalist system demands this fundamental conflict, and what is an appropriate reimbursement is what the market determines?

I guess I'll be the only Officer voting for Hillary.

This twisted reasoning sounds very familiar. When I was an M1 about 10 years ago we had a socialized medicine indoctrination class that ran for 6 weeks. We met every afternoon for three hours. Of course they didn't call the class what really was, they called it "medicine and society" or some such nonsense. I argued like mad with people in that class. I was threatened with expulsion several times. To question the feasability (or even worse the moral grounds) of socialized medicine back then was unthinkable. The above quoted statement is exactly the kind of nonsense that they wanted us to be able to parrot without questioning.

[Sir Toalie]

Can anyone who has written a letter regarding this issue post a sample letter on SDN, maybe even under a new thread?

I'm sure many, many people in this forum would find it useful and could then send a revised version of the letter to their congressmen. Just a suggestion...

[Eidolon6]

[QUOTE=resxn;4529325]Now wait. The AMA is considered one of the top 5 most powerful lobbies in the country along with the NRA, National Association of Retired People, NAACP, and ACLU.QUOTE]

You forgot the National Association of Trial Lawyers, which is one of the largest noncorporate contributors to the Democratic party.

[Faebinder]

I dont see a problem with this... Bariatrics will turn to something like cosmetic plastic surgery... only those with insurance and money can afford it... If this is the way the government wants it, then this is the way it will be... There is no need to stuff it down their throat...

Now you can argue that is short sighted of them considering losing weight will lower chances of heart disease and all sorta wonderful weight associated comorbidities.... Obviously those fat bastards in congress dont care.... they got insurance.

[Celiac Plexus]

Don't accept insurance or medicare.

As a fully-trained surgeon, you have a valuable service to offer. Why not test the market, and see what the market will bear? No one forces physicians to sign contracts with insurance carriers, or medicare.

[Misterioso]

Originally Posted by Celiac Plexus

Don't accept insurance or medicare.

As a fully-trained surgeon, you have a valuable service to offer. Why not test the market, and see what the market will bear? No one forces physicians to sign contracts with insurance carriers, or medicare.

great idea genius. if it were feasible then almost all surgeons would have done it by now.

[Celiac Plexus]

Originally Posted by Misterioso

great idea genius. if it were feasible then almost all surgeons would have done it by now.

In spite of your sarcasm, I'll offer a reply.

Actually more and more surgeons are deciding to stop accepting medicare and insurance cases.

It's not an easy decision though because there are access issues that most of us (surgeons in training and practicing surgeons) are sensitive to. However there may come a time when the financial reality of providing care for those covered by medicare and certain insurance companies may be incentive enough to induce more surgeons to make the move to true fee for service.

Fear is also a factor. Many surgeons fear that if they stop accepting medicare, and insurance, they will stop getting referrals. And while that is a reasonable fear, the surgeons who have made the move already are reporting that if your reputation is solid, you will be very busy regardless.

Personally, I think that surgeons who avoid the medicare/insurance paradigm will be just fine. We have a very valuable skill to offer, and the market for it is tremendous. What I do have concerns for are those individuals who are covered by medicare. Those patients are the ones with the most to lose.

[Faebinder]

you guys are not bringing out the true essence of the problem. OR TIME.

As a surgeon, if you stop accepting medicare/insurance... you will definitely.. initially at least... lower your case volume...Lowering volume = loss privilages and soon the hospital will not want to give you as much OR time because they are losing money because the OR is not utilized. Soon the hospital starts looking to other surgeons or even procedural doctors to come and utilize the OR TIME and make money for the hospital.

You aren't just competing with other general surgeons... you are competing with EVERY single procedure physician (or even podiatrist or whoever got OR privilages). All those people will be accepting insurance.


There is a way to switch to no insurance...

Start doing it slowly to specific non-emergent procedures that can't lower your volume... If the other general surgeons continue to take insurance... then there is nothing you can do... but the solution is to open communication with your competition and make them understand that avoiding insurance/medicare is within their advantage for these certain procedures because they are not worth your/their time.... the problem is a lot of surgeons dont talk to other surgeons competing with them... surgeons don't like each other...much less other kind of physicians.

[Enough]

We as surgeons can not continue to play defense in this environment of healthcare. We have the training, we have the knowledge; and we need to respect our profession, our autonomy and value our time and energy. We need to collectively fight back the insurance companies, federal government (Medicare /Medicaid), and malpractice lawyers. If we do not, we will end up as hospital employees (just like nurses and Pas). The hospitals will make profit on our hard work.