Advertisement - Members don't see this ad
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 FranciscoAfter 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 annuallyand thats 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 yearthats 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.
Its 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 $516,158mostly 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. Madans practice.
After expenses were paid, the surgeons 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
Surgeons pre-tax earnings $71,566
This study shows that its just not possible to have a practice with 100%even 80%Medicare patients. Wed have to close our program down. My own salary wouldnt 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 youre in an academic center or a private practice.
However, Medicare reimbursements directly affect the take-home pay of private practice physicians. Its 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 wouldnt 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 cant make ends meet, he said. My argument is that the Medicare payment structure is poor, but its 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 doesnt reverse the problems, but it does improve it, he said. It wont 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.
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 FranciscoAfter 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 annuallyand thats 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 yearthats 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.
Its 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 $516,158mostly 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. Madans practice.
After expenses were paid, the surgeons 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
Surgeons pre-tax earnings $71,566
This study shows that its just not possible to have a practice with 100%even 80%Medicare patients. Wed have to close our program down. My own salary wouldnt 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 youre in an academic center or a private practice.
However, Medicare reimbursements directly affect the take-home pay of private practice physicians. Its 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 wouldnt 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 cant make ends meet, he said. My argument is that the Medicare payment structure is poor, but its 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 doesnt reverse the problems, but it does improve it, he said. It wont 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.
