The business of private inpatient psychiatry

[hypoman]

Hi everyone,

I am a 3rd year med student going into Psychiatry. I truly love the field but I also have a passion for business. Sure making money is fun but more importantly I like the process of creating and running a successful business. I am currently involved in two LLC partnerships and two sole proprietorship operations that consume all of my time outside of med school.

This post is about the viability of creating and running my own inpatient private psych unit. There is a huge demand for inpatient beds in my area and I think it would be a great opportunity for me to create something on my own and also practice medicine there.

Does anyone have any experience in this or can shed any light on the process? For all I know it may not even make sense or be all that viable. I am still quite naive to the insurance industry and I know that obviously plays a major role. I'm not looking for anything major here but maybe something along the lines of ~15 - 20 beds. Any advice or information would be greatly appreciated!

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[downwithDTB]

I was just about to start a similar thread with a very slightly different question, but similar idea: practicalities/experiences opening and running and IOP with a specific clinical focus...

 

[notdeadyet]

If you a successful business person, you're probably aware that the first step to creating a successful business would be to work for someone else for a few years and make all your mistakes on someone else's dime. Starting a company in a field you have little experience in is not the best strategy.

 

[hypoman]

If you a successful business person, you're probably aware that the first step to creating a successful business would be to work for someone else for a few years and make all your mistakes on someone else's dime. Starting a company in a field you have little experience in is not the best strategy.

Thanks for the input, I totally agree. I wouldn't dare enter this without years of inpatient experience first.

 

[notdeadyet]

Awesome.

Sorry if my response sounded snarky. I used to be in business and I am always amazed by the hubris of many of the types of folks who end up in medicine and assume since they are good students they must be good at business too.

I've seen more doctors lose their shirts in business opportunities than almost any other profession ("hey, let's open a bar!")

I'd recommend running a contract to supply physicians for an impatient unit. Much less headache than dealing with physical plant and you can walk away without losing your shirt.


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[notdeadyet]

supplying physicians to inpatient units - this can be highly lucrative as psychiatrists are hot commodities and necessary for these units to run in the first place, and they often struggle to find people. it also circumvents the ethical challenges described above.

It also plays to our strengths. If you're a good and experienced inpatient or PES doc, you have much (but not all) of the skill set of managing a staffing contract for PES and inpatient docs. But managing biohazmat contracts? Ordering supplies for RT? Negotiating with the OT Union? Plumbing or electrical or water issues?


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[thoffen]

At least in my area, the freestanding psych units that exist are pretty awful patient care wise. The good ones I think make money in their continuum of care rather than inpatient. The others are part of a larger hospital system and are seen as necessary to provide care for their cohort of patients but not money making ventures. Personally it would be hard to make business decisions and take good care of patients at the same time. I think a cash based PHP or IOP could be good in both ways, though.

 

[PikminOC]

Awesome.

Sorry if my response sounded snarky. I used to be in business and I am always amazed by the hubris of many of the types of folks who end up in medicine and assume since they are good students they must be good at business too.

I've seen more doctors lose their shirts in business opportunities than almost any other profession ("hey, let's open a bar!")

I'd recommend running a contract to supply physicians for an impatient unit. Much less headache than dealing with physical plant and you can walk away without losing your shirt.


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Midlevels go directly from their watered down educations to private practice. Scary!

 

[FlowRate]

but less so than providing for-profit involuntary psych beds.

Just like for profit prisons, the idea is inherently immoral. One should not profit off of involuntary customers.

Then again, the government doesn't agree, see: PPACA insurance mandate.

As a side-note, if we had *true* medical insurance which also covered psych hospitalization, then I wouldn't see a problem with "profiting" off of emergency care (including psych), because that's why you would have catastrophic medical insurance. The "customer" in that case is the insurance company.

 

[splik]

i wasn't thinking of it like that. in for-profit prisons the government is the customer not the inmates so this line of reasoning is flawed. there is something inherently immoral about it, because there are somethings in which markets have no place in. see what money can't buy by michael sandel

it's not PPACA, it's the ACA (which is a common misconception - they are not the same thing). PPACA was the first version of the bill. It was amended by the Healthcare and Education Reconciliation Act (referred to as the Medicare sidecar bill) to become the Affordable Care Act (ACA). anyway, I personally do not agree with the individual mandate as I'm a dirty socialist and think that the government should provide healthcare to all, but it is an essential part of the ACA which could not exist if everyone did not participate as it requires sharing the risk through a large insured pool. It would be silly to argue that overall the ACA hasn't been a public good in terms of expanding access to healthcare and it could be argued that this good outweighs the negatives of coercing people to purchase insurance. Additionally, the coercive element is done through taxation, which is quite legitimate given that failure to insure oneself rises premiums for everyone else and shifts the cost to the government, providers, and the insured public. I think an employer mandate would have been better (but this was one of the things that spelled the end of HillaryCare) - it is disgusting that large employers like Walmart and McDonald's rely on the state to pick up the slack and have their employees on medicaid when they could reasonably be expected to provide health insurance.

 

[FlowRate]

in for-profit prisons the government is the customer not the inmates so this line of reasoning is flawed. there is something inherently immoral about it, because there are somethings in which markets have no place in.

I know the inmate isn't "actually" the customer, but they are the person who is actually affected by the quality of service. This could lead to a really interesting discussion about the possibility of non-governmental/voluntarist legal systems, but I think it would bore everyone else and I'm a little too tired to get into it.

PPACA, it's the ACA (which is a common misconception - they are not the same thing). PPACA was the first version of the bill. It was amended by the Healthcare and Education Reconciliation Act (referred to as the Medicare sidecar bill) to become the Affordable Care Act (ACA).

edit2: reading more about this, splik was also right here.

it is an essential part of the ACA which could not exist if everyone did not participate as it requires sharing the risk through a large insured pool. It would be silly to argue that overall the ACA hasn't been a public good in terms of expanding access to healthcare and it could be argued that this good outweighs the negatives of coercing people to purchase insurance. Additionally, the coercive element is done through taxation, which is quite legitimate given that failure to insure oneself rises premiums for everyone else and shifts the cost to the government, providers, and the insured public.

The ACA itself raised premiums for everyone else dramatically. Yes, if the no-PEC-pricing clause were instituted without a mandate, it would cause death spirals.

I don't think the forcing people to purchase any private commodity is a good thing. (edit:I was wrong about what was originally here.) What if I told you that you had to buy private life insurance or the government would give you a fine? Doesn't matter whether or not it's a good idea to have life insurance, it's still unjust.

An entirely separate argument can be made for single-payer or public-option because they are not for-profit/private corporations. But our government is largely corporatist, so it's not surprising that's what we ended up with.

 

[splik]

I am not going to get into an argument about yes I do know more about this than you especially as evinced by your claims that the government is "wiiling to throw you in jail". They are not going to throw you in jail for not purchasing health insurance. So that's just nonsense. in fact the individual mandate is fairly toothless as there aren't any major consequences of not paying penalties for not having health insurance. The act specifically states "In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure." see the original PPACA (p.131)

 

[FlowRate]

I am not going to get into an argument about yes I do know more about this than you especially as evinced by your claims that the government is "wiiling to throw you in jail". They are not going to throw you in jail for not purchasing health insurance. So that's just nonsense. in fact the individual mandate is fairly toothless as there aren't any major consequences of not paying penalties for not having health insurance. The act specifically states "In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure." see the original PPACA (p.131)

You're right, they just withhold it from other tax returns. Thanks for enlightening me.

 

[LPpostbacc]

have you questioned why there is such a shortage of psychiatric beds and what kinds of bed have a shortage? It is almost certain that the shortage of beds is for civil commitment patients and not voluntary patients. I am in a part of the country with one of the fewest psych beds per capita and we struggle to fill our voluntary inpatient units and taken many out of area patients in order to keep the unit afloat (and it does make money). In contrast, we struggle to find beds for involuntary patients. these are often medicaid patients or may not be insured at all. They are a massive money loser for hospitals which is why so many psych wards and beds have closed over the years. the only way you could possibly make a decent amount of money here is by providing the crappiest care possible. profits and good patient care do not usually go hand it hand. it would mean always keeping the beds filled, kicking patients out after a few days once their insurance won't cover anymore, hiring minimal staff, not having OT/recreational therapy/psychology or running groups, hiring NPs over psychiatrists - really keeping services offered to a minimum

OTOH private insurance companies have been paying for these sketchy residential chemical dependency and eating disorders programs. I say sketchy because there is no good evidence supporting these fancy residential treatment programs and they are often quite luxurious and expensive. some thrive off cash paying patients. there was an interesting article in the NYT about this recently - but there is definitely money to be made here. Again, there are obvious ethical issues, but less so than providing for-profit involuntary psych beds. At least in these sorts of services you have the option of actually providing evidence-based quality care if you so choose to. it seems may of these places have been successful at securing private capital for their development, showing that investors see this as a potentially lucrative endeavor.

also second NDY's suggestion of supplying physicians to inpatient units - this can be highly lucrative as psychiatrists are hot commodities and necessary for these units to run in the first place, and they often struggle to find people. it also circumvents the ethical challenges described above.

What do they pay psychiatrists who work shifts in those units?

 

[michaelrack]

Just like for profit prisons, the idea is inherently immoral. One should not profit off of involuntary customers.

In the state of my primary practice (Mississippi), involuntary pts (either under an order of retention awaiting their court hearing, or after their court hearing while awaiting a state psychiatric hospital bed) are often held in a private psych ward/hospital. Some are held on "crisis units"- I believe these are public but I am not sure. The rest are held in jail. For those held in a psych hospital, payments often come from the patient's county (sometimes insurance).
My point is; in the state of MS it is ethical for private psych hospitals/wards to "profit" from involuntary patients. One could make the arguement that the system (state policy, waiting times for the state hospital) is immoral.